What are recursive inscriptions on Bitcoin?

Earlier this year, Casey Rodarmor introduced Ordinals, an off-blockchain system for inscribing data onto individual satoshis. These NFT-like ‘inscriptions’ gained rarity traits, became collectibles, and listed for trading on secondary markets. Initially, a new generation of profile pictures (PFPs) birthed on Bitcoin.

Although NFTs started on Bitcoin in 2009 with Satoshi Nakamoto’s “chancellor on brink of bailout” inscription as well as Rare Pepes in 2014, modern NFT collectors rarely thought of Bitcoin prior to Ordinals. Most use Ethereum or purpose-built NFT blockchains like Polygon instead.

Now, Bitcoin ranks 10th in lifetime sales by blockchain. However, over the last 30 days and mostly thanks to PFP inscriptions, Bitcoin ranks 2nd with roughly one-third the volume of the most voluminous blockchain, Ethereum.

Some speculate that inscriptions alone could drive Bitcoin NFT sales above Ethereum’s years-long dominance. Others believe that Bitcoin needs something else to continue its momentum. The leading candidate? On-chain software using Ordinals.

On-chain Bitcoin software using inscriptions

Each Bitcoin inscription may store up to 4MB of data on Bitcoin’s blockchain — an unprecedented amount of distributed storage on the world’s oldest and most decentralized network of 17,000+ full nodes.

With each of these inscriptions stored permanently on Bitcoin’s blockchain, developers soon introduced the idea of calling data from existing inscriptions and using that data within new inscriptions. They called this a ‘recursive inscription.’

A recursive inscription calls data from prior inscriptions. By daisy-chaining data through a series of calls, robust software could run entirely on-chain. Video games, movies, or complex software could reach gigabytes of data.

Supporters of recursive inscriptions have heralded reduced transaction fees by reducing the amount of data that inscribors need to add to each satoshi. Because inscribors can utilize previously stored data and only add new data, storage efficiency increases markedly with no need to store duplicate copies of files.

Proponents also note how recursive inscriptions can create new types of software — such as permissionless contracts that are enforced by Bitcoin’s indomitable hashrate and permanent storage — without requiring new cryptography. Users can simply call already-existing repositories of inscriptions that already have complex code or data. This is referred to as a way to get around the current 4MB limit on each inscription because some data may already exist on another inscription.

At present, recursive inscriptions are relatively basic. Someone inscribed two Windows Paint files on the Bitcoin blockchain and combined them for generating mint images for an upcoming NFT collection drop. Others have sharded simple arcade games across several inscriptions, then inscribed a web browser-friendly interface for gameplay.

What are recursive inscriptions’ weaknesses?

Critics of recursive inscriptions note that it depends on Casey Rodarmor’s Ordinals theory, which is not part of Bitcoin Core nor activated in consensus with the network. As such, a centralized group of developers maintain ordinals and might arbitrarily change settings in the future, disrupt software, or misdirect file storage hashes.

Read more: Bitcoin Ordinals community debunks majority ownership claim

Some even question whether recursive inscriptions will indeed reduce data storage needs or transaction fees. Although each inscription might enjoy these savings, the net effect of their functionality might drive up overall transaction fees as the entire system gains broad popularity and onboards millions of users.

Pictures, movies, repositories, software code, and all types of new data inscriptions could pile up in Bitcoin’s mempools. As inscribors bid higher and higher fees to confirm their transaction, ordinary users who just want to pay for a purchase in bitcoin will have to pay expensive premiums.

In summary, recursive inscriptions seem to be the next big thing within the Bitcoin ordinals community. Supports say it will introduce novel software, reduce storage needs, empower flexible programming, and circumvent the standard 4MB limit per inscription by allowing calls to data that is already stored on Bitcoin’s blockchain. However, recursive inscriptions are also new, relatively undeveloped, maintained by a small number of developers, and are generally untested for technical and financial weaknesses.

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