Recursive inscriptions: Bitcoin ‘supercomputer’ and BTC DeFi coming soon
Earlier this year, Ordinals — a unique inscription on the smallest unit of a Bitcoin, called a Satoshi — emerged as a controversial new development. Dismissed by some as spam and embraced by others as a way to bring BRC-20 tokens and NFTs to Bitcoin, the technology stimulated a flurry of developments.
Now there is excitement around “recursive inscriptions,” which is a very confusing yet potentially much more powerful development. Recursive Inscriptions essentially promise to allow more complex functionality to be built on Bitcoin’s blockchain, akin to smart contracts on Ethereum.
Some believe recursive inscriptions could see Ordinals develop from NFTs and “digital artifacts” to underpin a full-blown DeFi ecosystem on Bitcoin very soon. Others are confident it will enable Bitcoin to take on decentralized storage provider IFPS. One person Magazine spoke to believes it will eventually lead to an interconnected supercomputer being built on-chain.
Danny Yang, a Stanford PhD, creator of OCM Dimensions and Bitcoiner since 2013, says recursive inscriptions unlock the next evolution of Bitcoin:
“People won’t believe it when it’s presented to them now. It’s not going to operate exactly like Uniswap, but other high-value digital assets will emerge on Bitcoin. That’s what Ordinals and recursive inscriptions will evolve into. They will become a new form of programmable assets and code.”
These tech developments — while at a very early and speculative stage — are making Bitcoin interesting again. A Bitcoin maxi friend complained to me that I never write about Bitcoin. In truth, there’s been very little new to write about until recently.
“That’s pretty true,” Yang agrees.
Recursive support switched on in June
Yang has worked on recursive inscriptions since February in the form of Bitcoin generative NFT collections OCM Dimensions and OCM Genesis. He inscribed both of those innovative collections on Bitcoin in February (along with compression and 3D programming libraries) before anyone understood the significance of what he had done.
Yet OCM Dimensions was only publicly launched on June 15, the day that recursive inscription support was turned on for Ordinals.com. Yang explains to Magazine:
“You have to show something before people start listening, and finally, after months of beating the drums about the significance of recursive inscriptions on Bitcoin, people are starting to get it after we showed what was possible with OCM Dimensions — the first 3D, high resolution, animated and interactive work on Bitcoin.”
For now, the smart contract-enabled Ethereum blockchain is the home of more developer activity than anywhere else, and it dominates the DeFi sector. Until this year, the idea of building a genuine smart contract — the self-executing code used as building blocks for programmable money ecosystems — was not possible on Bitcoin.
But some now say Ordinals and recursive inscriptions could see a DeFi ecosystem emerge on Bitcoin fairly soon. It’s not going to be easy, though.
What are Ordinals and recursive inscriptions?
Ordinals allow you to uniquely identify a satoshi or a sat. A satoshi is 100 millionth of a Bitcoin. Identifying a fractionalized part of a Bitcoin means creating NFTs on Bitcoin or creating a provenance certificate on-chain is now possible. The idea of NFTs on Bitcoin, the most decentralized OG chain, is tantalizing for some.
In January 2023, developer Casey Rodarmor released the Ordinals protocol, creating Bitcoin NFTs on the Bitcoin blockchain. Rodarmor found an unintended loophole in the taproot scripts that command lines of Bitcoin code.
The Ordinals’ protocol creator argues that such NFTs are now “complete,” as the token and related images are stored on the Bitcoin blockchain rather than side chains or using off-chain storage systems like most Ethereum NFTs. Digital artifacts on Bitcoin are truly immutable.
“Now you can own the actual art, not just a contract that points at a piece of art stored on centralized databases,” says Carlo Fox, an “Ordinals OG” since February who created the Nakamoto Whales series. NFTs, as we know them on Ethereum and on other chains, are more like digital ownership certificates than actual on-chain art, and Ordinals change that.
“I got super excited for Ordinals for a few reasons: for one, we now can create and own on-chain art that is truly immutable. When you understand the ramifications of this, it’s huge. Half the time, NFTs as we know them are stored on AWS, centralized, and controlled by creators who can turn your art into pictures of turds at any time.”
Ordinals allow you to store any type of data on the most decentralized blockchain, and no one can modify it. “Ordinal artifacts may be most likely of any on-chain data to exist 2,000 years from now. That’s meaningful, and I think it is particularly relevant when in the context of important works of art, literature and science. I believe that Ordinals will become the premiere destination for the most coveted and important on-chain art. It’s akin to carving a statue out of gold,” says Fox.
So the business case for high-value NFTs minted on Bitcoin makes sense. Using the new tech to create cool 3D art for OCM Dimensions helped Yang’s company Metagood sell the idea of launching tokens on Bitcoin Ordinals to Asprey Studios and the Italian car company Bugatti recently.
But OG Ordinals could only hold 4MB of data, and that is one reason why recursive inscriptions have emerged.
Recursive inscriptions = Bitcoin cloud computing
At its most basic recursive inscriptions let you record stuff associated with a particular Bitcoin and enable smart contract-type functionality — Yang says they could have been called programmable inscriptions. By interlinking data through a series of calls (a contract for a sell order, for example), it’s possible to extract that data to run more complex processes anchored on Bitcoin blocks.
This enables recursive inscriptions to function like a distributed data repository, like putting AWS cloud on Bitcoin.
Composability — getting disparate projects and protocols to work together seamlessly — is an important part of crypto and one of the main reasons behind the exponential growth of the Ethereum DApp ecosystem.
Recursive inscriptions mean that even the most complex data sets, like video files and audio files, could now technically be hosted on Bitcoin. With a one-time cost to inscribe, data could be hosted forever on the most immutable and decentralized network in the world.
Inscriptions are like data legos, enabling data to be taken from somewhere else and built upon. In computer science, that’s where the phrase recursive comes from, as recursive inscriptions are a mechanism that extracts data from existing inscriptions and utilizes that data within new inscriptions.
Recursion is a fully on-chain process that uses scripts to combine various other on-chain data sources. These can include image layers, audio, code or other data sources. Individual scripts of code merge these layers together through recursion.
Recursive inscriptions use data inscribed elsewhere on new inscriptions, cutting down on storage requirements.
Fox uses the example of PFP art. Instead of uploading thousands of unique images (which can be prohibitively expensive), you can upload 200 and use scripts to combine them via the fully on-chain recursion process. The possibilities this offers are only just being explored.
This is powerful because recursive inscriptions enable new types of applications that were not possible before it. Applications like on-chain AI couldn’t be done on the base layer of Ethereum, but NewBitcoinCity builder Punk 3700 believes they could now be done on Bitcoin. He’s been playing around with “Perceptrons,” an early on-chain AI experiment on Bitcoin.
He explains that “it wasn’t possible to store the AI neural net models on-chain together with the artworks. So we split the AI models into different inscriptions and compose them at runtime.”
Inscriptions an important development for human freedom?
One of the most fascinating elements of recursive inscriptions is that once the data is on the blockchain once, you can simply refer to it again and again, vastly cutting down storage costs and block space utilization.
“Inscriptions are now reusable,” explains Punk 3700, “You can inscribe a very large code library like p5.js once, and other developers can reference that p5.js library at run time without inscribing it again.”
“This is super exciting because we start seeing a community-driven public infrastructure being built out.” This means more complex inscriptions are being created at a fraction of the cost.
“Essentially, any type of data can be an inscription. The most rudimentary use case combines multiple data sources together, and every piece of it can live on-chain. On-chain data might be able to communicate with each other, and data could be realized over time.”
Fox explains further: “The best way to think of it is anything you can do locally on a computer and have all little pieces live together in different files and work together.”
He gives examples like “open-source libraries, all on-chain,” meaning important research papers on Bitcoin, with citations on recursions on-chain, meaning major discoveries can be published on Bitcoin blocks for time immemorial. Javascript packages can be inscribed on Bitcoin. Essentially, a tiny internet that’s developed to live on Bitcoin can’t be taken down, building and building until one day it has created “an interconnected supercomputer living on Bitcoin.”
The public hasn’t grasped the significance of these developments, says Fox.
Let’s start with DeFi and AWS first
Long before the supercomputer cranks up, we’re likely to see Bitcoin DeFi and the chain emerge as a data storage competitor.
Toby Lewis co-founded OrdinalsBot, which automates inscriptions to help expedite development on Ordinals. He thinks that, for now, competing with the Web3 data storage provider IPFS is the best use case for recursive inscriptions. In the short term, both high-end and low-end NFTs can now be more affordably held on-chain.
“The end point of storing data onto Bitcoin will get people excited. That’s because Bitcoin has better name recognition than IPFS […] Bitcoin becomes the ultimate store of truth.”
Decentralized data storage on Bitcoin could disrupt NFT culture by allowing images, text files and audio files to be stored directly with tokens.
Lewis also thinks DeFi on Bitcoin is just becoming a realistic prospect now and that Bitcoin-native DeFi products are inevitable, even if they will be rudimentary for a while.
There is likely a large segment of users who will want to build and do something on Bitcoin, especially if the end state is a multichain ecosystem, posits Lewis. That is, use Bitcoin’s blockchain as the layer-1 base, and use Ordinals and recursive inscriptions to connect to other applications.
DEXs and automated market makers are starting to emerge. Lewis notes that Bitcoin can link up to other layer-2 applications as another way for smart contracts to emerge on Bitcoin.
This is the kind of DeFi that Punk 3700 has been building on Bitcoin. He launched a new protocol called Trustless Computer that enables writing smart contracts and building DApps on Bitcoin.
“If Ethereum and Bitcoin have a baby, that’s Trustless Computer.”
One of the first DeFi protocols it deployed was a Uniswap fork.
“Now that you could write smart contracts on Bitcoin, it turned out that building an AMM DEX was very simple. It took us just a couple of days.” A month after deploying Uniswap on Bitcoin, Punk 3700 connected it to Ethereum layer-2 network Optimism and says it can trade with two-second latency and low transaction fees.
“We now have a scalable infrastructure for DeFi to thrive on Bitcoin.”
Read also
Bitcoin maximalists aren’t going to like the use of Ethereum protocols in conjunction with Bitcoin, but Punk 3700 says it’s the future.
“This is the power of having a general-purpose programming language (Solidity) and a general-purpose virtual machine on Bitcoin. Developers can build any kinds of applications they want for Bitcoin.”
“Bitcoin is now no longer just a currency. It is becoming a DApp store.”
New generation of Bitcoin maxis?
At present, these use cases for recursive inscriptions and smart contracts on Bitcoin are highly speculative, and many Bitcoiners would no doubt argue abstracting it away on layer 2s means it’s no longer really Bitcoin at all.
But Leonidas, the founder of Ordinals marketplace Ord.io, is very excited about the new Web3 experiments on the Bitcoin layer 1 as well. He believes that “the release of the Ordinals protocol earlier this year ended a long period of stagnation” for the chain. He’s seeing a whole new wave of developers flood into the Bitcoin ecosystem, who are “eager to build everything from NFT marketplaces to DeFi protocols.”
“I think people will be pleasantly surprised with how much you can actually do on Bitcoin layer 1,” he says.
“The issue was never that Bitcoin as a technology wasn’t capable of handling Web3 use cases; it’s that a culture of toxic maximalism had driven the most talented developers to other ecosystems where they would be celebrated for their innovations rather than harassed.”
Leonidas firmly believes that through Ordinals, Bitcoin has “entered a new era where developers rather than idealists will dictate its future,” and he is optimistic that Bitcoin’s brightest days lay ahead.
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Proponents of a bill to regulate stablecoins in the US Congress will likely take up another vote on the legislation in a matter of days without responding to concerns about President Donald Trump’s financial ties to the cryptocurrency industry.
The Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act, failed to get enough votes to pass in the US Senate on May 8 amid calls from some Democratic lawmakers to halt any legislation related to digital assets until Republicans could address Trump’s potential conflicts of interest.
Immediately following the vote, some lawmakers from both parties suggested they could reconsider the bill as early as this week, but without agreeing on a bipartisan path forward.
After the GENIUS Act failed to proceed in a 48 to 49 vote in the Senate, Majority Leader John Thune made a motion to reconsider, setting up a possible vote on the matter within days. A source familiar with the matter told Cointelegraph Republicans who backed the bill were unlikely to modify it to block Trump or any member of his administration from investing in digital assets, claiming it was beyond Congress’s authority under the Constitution.
“[…] this delay is not inherently detrimental,“ said Liat Shetret, vice president of global policy and regulation at blockchain analytics firm Elliptic. “We can expect the bill to return to the floor, with this pause giving both parties time to clarify provisions and address lawmakers’ concerns.”
The Cedar Innovation Foundation, an organization tied to the political action committee (PAC) Fairshake, issued a warning to Senate leadership to “avoid political games” and pass a stablecoin bill “in the coming days.” Fairshake spent more than $131 million to support candidates in the 2024 US elections, some of whom are currently serving in the House and Senate. There are still more than 500 days until the 2026 midterms, when many members of Congress are up for reelection.
On May 12, the Senate resumed consideration of the motion to proceed to consideration of the GENIUS Act, suggesting another vote soon.
Related: US Treasury Secretary expresses support for crypto bills at hearing
Changes to stablecoin or market structure bills?
Should Republicans in the Senate reintroduce the bill without any changes, it’s unclear whether they would have enough support to clear a 60-vote majority to avoid a Democratic filibuster — a process to delay or sometimes block a vote on a bill.
The Trump family’s ties to the crypto platform World Liberty Financial and its stablecoin, USD1, have raised potential corruption concerns, as has offering the top holders of his TRUMP memecoin the chance to pay for access to the president through an exclusive dinner and reception.
“[…] the Republicans’ bill did nothing to address Trump’s conflict, and instead voted to hand Trump the authority to write the rules over his and his competitors’ stablecoins,” said Democratic Representative Maxine Waters in a May 6 statement. She blocked a hearing to discuss a possible digital asset market structure bill, citing concerns about Trump’s “ownership of crypto.”
Democratic lawmakers have already introduced possible solutions to what they called the “biggest corruption scandal in the history of the White House” — with legislation in the House and Senate to bar members of Congress, the president, the vice president, and their families from profiting off memecoins. Senators Elizabeth Warren and Chris Van Hollen also reportedly called on the president to fully divest from USD1 before making any possible deals with foreign governments.
The nonpartisan organization State Democracy Defenders Action reported in April that Trump’s crypto holdings were worth roughly $2.9 billion, which accounted for 40% of his wealth. This report came before the launch of World Liberty Financial’s stablecoin, which an Abu Dhabi-based investment firm said it would use to settle a $2 billion investment in Binance. Trump’s sons, Eric, Donald Trump Jr., and Barron, were all listed as “Web3 ambassadors” for the platform.
Magazine: Trump’s crypto ventures raise conflict of interest, insider trading questions
Sir Keir Starmer has rejected the comparison to Enoch Powell after he said the UK was at risk of becoming an “island of strangers” if migration does not come down.
The prime minister’s official spokesperson said migrants have made a “massive contribution” to society but the Tories “lost control of the system” and that is the point he was making.
The remark has drawn criticism from Labour backbenchers, who have compared it to the late Conservative MP’s inflammatory 1968 “Rivers of Blood” speech.
In the speech, Mr Powell imagined a future multicultural Britain where the white population would find themselves “strangers in their own country” as a result of migration.
Among those to make the comparison was the former shadow chancellor John McDonnell, who said on X that “Talk of an “island of strangers” shockingly echoes the divisive language of Enoch Powell”.
However, the prime minister’s spokesperson said: “The PM rejects this comparison. He said that migrants have made a massive contribution to society.
“It is also right to say that between 2019 and 2024, the previous government lost control of the system. Migration needs to be controlled, fair and people that come here should integrate.”
Enoch Powell. Pic: PA
Asked why the prime minister used such robust language, the spokesperson said he was not going to “shy away” from the issue of immigration and the British public want it to be reduced.
He added: “We have welcomed immigrants for decades, but it’s too high and must come down. Also, it’s important for our domestic skills system, which is good for our economy.”
What has the government announced?
Sir Keir made the comment at a news conference in which measures were announced to curb net migration, including banning care homes from recruiting overseas, new English language requirements for visa holders and stricter rules on gaining British citizenship.
The package is aimed at reducing the number of people coming to the UK by up to 100,000 per year, though the government has not officially set a target.
Net migration – the difference between the number of people immigrating and emigrating to a country – soared when the UK left the EU in January 2020.
It reached 903,000 in the year to June 2023 before falling to 728,000 in mid-2024. But that is still well above its pre-Brexit high of 329,000 in the year up to June 2015.
Sir Keir said parts of the UK’s economy “seem almost addicted to importing cheap labour” rather than investing in skills at home.
However, it is not clear how the government plans to boost the domestic workforce, amid a UK skills shortage and record numbers of people being out of work.
According to the ONS, there are 9.2 million people of working age in the UK who are economically inactive, including 1.8m 18-24 year olds.
The prime minister’s spokesperson said the government is “focused on upskilling British workers” and “especially helping young people in the job sector” but did not elaborate how.
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PM’s ‘tough’ migration policies explained
On care homes, he said, around 40,000 care workers came over on visas for jobs that did not exist, and companies can recruit from that pool.
Earlier, a number of Labour MPs came to the prime minister’s defence. Rother Valley MP Jake Richards said on X that Sir Keir is “absolutely right to warn of the risk of becoming an ‘island of strangers’.
“Millions of people across the country have similar concerns. This theme must be central to missions across immigration, employment, work and tackling neighbourhood deprivation,” he said.
Shadow justice secretary Robert Jenrick went further, telling Sky News he believes the UK “already is an island of strangers”, naming several areas “where we are a very divided and segregated society”.
However former Labour home secretary Lord David Blunkett criticised the rhetoric, saying in a speech at a University of Law graduation ceremony: “I never felt I lived in, or had a part to play in, a country of strangers.
“I thought welcoming people from across the world was a tribute to our society, where people want to make their homes, to build a life and their economy and to contribute to our society.
“I think we need to be kind to each other, but we need a much kinder national world as well.”
Sir Keir Starmer is getting used to falling out with some of his MPs over policy decisions – be it on the winter fuel allowance, his approach to the Israel-Hamas war in Gaza or welfare cuts.
But on Tuesday the prime minister found himself embroiled in a row with MPs over something entirely different – his language over immigration.
The prime minister’s argument that Britain “risked becoming an island of strangers” if immigration levels are not cut has sparked a backlash from some of his MPs, and the London mayor Sadiq Khan is alarmed that his own leader is using language similar to that of Enoch Powell.
Politics latest: Senior Labour figures distance themselves from PM’s speech
In his infamous 1968 Rivers Of Blood speech, Powell warned of a future where white people “found themselves made strangers in their own country”.
It was a speech that cost him his shadow cabinet job and made Powell one of the most divisive and controversial politicians in Britain. It is also a speech that the prime minister’s team is now frantically trying to distance itself against, with one insider telling me on Tuesday the PM’s team hadn’t realised the similarity and hadn’t intended the comparison.
The politician the prime minister was trying to channel was about as far away from Powell as you could get in the 1960s, when the debate of immigration and race relations raged. Sir Keir had wanted to echo former Labour home secretary Roy Jenkins who had always argued that immigration was good for Britain, but needed to be done at a speed the country could absorb.
Take this from Jenkins in the House of Commons in 1966: “Let there be no suggestion that immigration, in reasonable numbers, is a cross that we have to bear, and no pretence that if only those who have come could find jobs back at home our problems would be at an end.
“But it does not follow that we can absorb them without limit. We have to strike a balance. That is what we are trying to do and I feel that we have been reasonably successful in recent months. We cannot lay down absolute numerical quantities, but I think that we have struck a reasonable balance and also that in the past year we have made substantial progress towards producing a healthier atmosphere, in terms of integration, on both sides – amongst both the indigenous and the immigrant community.”
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PM’s ‘tough’ migration policies explained
One person familiar with No 10’s approach told me: “We want a more cohesive society, we are not trying to pick fights.
“But the last Conservative government let in 2.3 million immigrants [in the three years to June 2024] and during that time built about 600,000 homes. That creates competition between people and that is typically at the lower end of the market. Just issuing visas and creating a sense of an unfair system is not a way to build cohesiveness.”
If you look at polling from YouGov, it seems the prime minister is more in step with public mood than those in his party criticising him, with 41% of all voters polled on Tuesday about his “island of strangers” remarks agreeing with the sentiment and having no issue with the language.
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‘We need to reduce immigration’
But it is true too that Labour’s approach lands particularly well with Reform voters, with 61% of them supportive of the PM’s words.
Beyond the battle of language, there will be battles ahead too over whether the prime minister’s policies will help or hinder the economy.
Read more:
What are Sir Keir Starmer’s new immigration rules?
Starmer’s migration package is significant – but is it enough?
There has long been an assumption that higher net migration is positive of the economy and public finances, but there is growing concern in Number 10 that the benefits are being overstated, as it fails to take into account the additional resources needed for public services and the effect of lowering wages, which affects productivity growth – none of which is factored into the economic forecasts of the Office of Budget Responsibility.
There will be those in business that don’t like the cuts to visas. There will be those in government that will worry about the economic impact of cuts to visas – although the chancellor was on the front row for the prime minister’s speech on Monday. There will be those on the Labour left that will be uncomfortable about it.
I suspect the prime minister will be uncomfortable about the row over his language that has seen him attacked on both sides, as the left accuse him of trying to ape the far right and his opponents accuse him of being a “chameleon” for making the opposite argument on immigration when he was running for the Labour leadership in 2020.
But where his team think they are right is on the policy, and early polling suggests that voters from across the political divide broadly agree.
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