Nonfungible tokens (NFTs) are finally on the most infamous privacy-focused blockchain, but not everyone is happy about it. Mordinals, or Monero Ordinals, are similar to Bitcoin Ordinals in that they allow anyone to inscribe data alongside transactions stored on the Monero blockchain.
From reduced privacy on the network to storing illegal content on an undeletable database, the Monero community is throwing around many concerns — but is there really anything to worry about?
What are Mordinals?
In January, Casey Rodarmor launched the Bitcoin Ordinals protocol, allowing anyone to inscribe arbitrary data alongside Bitcoin transactions. This enables users to attach data to a single satoshi. The Ordinals protocol keeps track of these satoshis, the linked data and their unique identifiers, facilitating nonfungible tokens on the network.
Mordinals are essentially a modified implementation of Ordinals on the Monero blockchain. While Ordinals require data to be stored in the “witness” part of a Bitcoin transaction, Mordinals use the “tx_extra” field that exists within each Monero transaction. This has technically been possible on Monero since 2014, but until now, there has been no support for it.
Criticisms against Mordinals closely mirror those levied against its Bitcoin counterpart, but with an additional focus on how it could impact Monero’s privacy. The Monero community values privacy above all else, and introducing NFTs on a network that strives to make its tokens as unremarkable as possible was never going to be easy.
To protect user privacy, Monero transactions are signed using “ring signatures,” which bundle a transaction with a set of fake ones. If an attacker with enough capital flooded Monero blocks with Mordinals, it would be trivial to distinguish actual transactions from the dummy NFTs. This is a genuine concern for Monero.
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In 2020, the United States Internal Revenue Service offered a $625,000 bounty to anyone who could help track Monero transactions, so it’s safe to say there’s a market for conducting such attacks.
Another common criticism against Mordinals is its potential impact on decentralization. As blocks get bigger, storage requirements for nodes increase, disincentivizing smaller nodes from staying online.
Of course, the protocol could be upgraded to allow nodes to prune these transactions. However, a blockchain relies on its nodes agreeing on the network’s state, and filtering out certain blocks or transactions could be construed as censorship.
Are Mordinals really that bad?
Monero, unlike Bitcoin, has a dynamic block size, and the idea that Mordinals might cause the blockchain to expand abnormally is a legitimate concern in the Monero community. However, looking at on-chain metrics, it doesn’t appear that blocks are growing wildly faster.
Also, while Mordinals’ impact on privacy shouldn’t be taken lightly, some argue that the risks can be fixed through updates.
In a Twitter thread on Mordinals, Cake Wallet vice president Justin Ehrenhofer said that Monero should take steps to limit certain behaviors, as it has done for other privacy and fungibility risks. “The Monero network is strong because the privacy, security, and efficiency of XMR is prioritized first and foremost. Everything else needs to play nice with that goal,” he tweeted.
Some thoughts on #Monero #Ordinals (#Mordinals).
I don’t like to blame people for using a network in a way that’s allowed, but the Monero network should take steps, as it has done for other privacy and fungibility risks, to limit certain behaviors. A
— Justin Ehrenhofer ️ (@JEhrenhofer) March 17, 2023
In light of the privacy implications, he believes the best course of action is to limit the size of the tx_extra field within Monero transactions to 256 bytes. This could significantly increase the attack cost of flooding the network with dummy transactions while providing flexibility for future use cases.
“Some Monero holders view NFTs as a threat to privacy,” Apollo Greed, CEO of gaming merchant service firm QGlobe Games, told Cointelegraph. “Others recognize its potential value and believe that privacy can be maintained.”
According to Greed, there’s enormous potential for privacy-conscious NFTs in protecting financial data while selling in-game assets.
There’s also the possibility of Monero being used to store and sell illegal content. As an uncensorable privacy-focused blockchain, this could have dire consequences. But this has always been possible on Monero, though prior to Mordinals, this would have required some technical experience using Monero’s command-line interface.
There’s no doubt NFTs have drawn a lot of attention. Bitcoin (BTC) has nearly doubled in value since the introduction of Ordinals, and while there are undoubtedly other factors impacting its price, Ordinals has significantly raised activity on the network. By storing data…
cointelegraph.com