A Guide to Recursive Inscriptions on Bitcoin

Bitcoin is experiencing a wave of developments as novel technical solutions have opened the gates to new possibilities on the network. One such solution is the Ordinals protocol, which has simplified the creation of NFTs on Bitcoin and has inspired new standards for creating fungible tokens like BRC-20 and Runes.

At the same time, developers have discovered how to make the entire process of uploading or inscribing data onto Bitcoin more efficient, enabling more complex use cases. This method is called recursive inscriptions. 

Read on to learn about recursive Ordinal inscriptions, how they work, and how they can impact Bitcoin.

What Are Recursive Inscriptions?

While simple Ordinal inscriptions are data inscribed onto satoshis, or the smallest unit of bitcoin, recursive inscriptions allow the use of content from already existing inscriptions. This way, developers can form larger structures and upload more complex files onto the Bitcoin blockchain, bypassing the usual 4MB block size limit.

‍Recursive inscriptions create a network of interconnected data which ultimately expands the potential of Bitcoin beyond simple data storage and functions like a distributed data repository.

While Ordinals brought a wave of NFTs and digital artifacts to Bitcoin, recursive inscriptions might bring new possibilities, such as storing complex 3D images, games, or even smart contract solutions that might also expand Bitcoin DeFi.

For instance, instead of spending a hefty sum on fees by inscribing a collection of 10,000 NFTs separately, you could just inscribe 200 traits and then make 10,000 separate inscriptions that would use only a small amount of code to reference the traits and create the image. 

According to inscription experts, the result is the same as if you inscribed each file separately, but you end up saving a large sum on fees. Developers even created a separate standard for recursive inscriptions NFTs - BRC-69.

The Cirque Le Noir NFT collection on Bitcoin is an example of recursive inscriptions. It is described as containing 9,999 NFTs featuring clowns with “recursively inscribed high-res jesters clowning around on-chain.” 

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How Do Recursive Inscriptions Work?

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Unlike simple inscriptions that stand alone, recursive inscriptions refer to already existing inscriptions, creating a chain of data. This is achieved by including pointers in the metadata, inscribed into a satoshi that links back to previous inscriptions, effectively forming a traceable path through various transactions. 

Here’s what the process looks like:

1. Initial Inscription and Data Embedding

Recursive inscriptions begin with embedding metadata onto satoshis as the author creates a digital artwork and inscribes the initial required data. It can be any form of data required for the application.

2. Interlinking Data

By using references in subsequent inscriptions, recursive inscriptions interlink various data points, creating a chain that can be traversed to access complete data histories or structures, such as the buyer information or sale data of the digital artwork.

3. Executing Complex Tasks

Similar to smart contracts, recursive inscriptions are said to be capable of executing complex tasks by using interlinked data points. This functionality, while more limited than Ethereum’s smart contracts, allows for more diverse applications on the Bitcoin network.

Use Cases of Recursive Inscriptions

There are several potential use cases for recursive inscriptions on Bitcoin.

Digital Provenance

One of the use cases for recursive inscriptions is in digital provenance, where tracking the history and ownership of digital assets, such as art and collectibles, is crucial. Also, in supply chain management, recursive inscriptions can record each step in the supply chain process, from production to delivery. 

Decentralized Applications

Recursive inscriptions might enable the development of decentralized applications, or dApps, on the Bitcoin blockchain. These applications can use recursive inscriptions to manage identity verification processes, recording identity credentials and updates.

Financial Instruments

Recursive inscriptions can also be used to tokenize real-world assets, including fractional ownership and trading of assets like real estate, art, and commodities. Financial derivatives and contracts can also leverage recursive inscriptions to store their terms and conditions.

Pros and Cons of Recursive Inscriptions

Let’s compare the pros and cons of recursive inscriptions in more detail.

Pros

Cost-effective

Recursive inscriptions reduce the amount of data that needs to be inscribed by using already existing data. This decreases the overall size of inscriptions which ultimately leads to lower transaction fees.

Overcoming size limitations

Recursive inscriptions bypass Bitcoin’s 4MB block size limit, which allows for the storage and management of larger and more complex files such as videos, 3D files, games, and more on the blockchain.

Data packages

Recursive inscriptions help create code packages that can be accessed by developers globally, fostering new ways to collaborate and simplifying the creation of generative art.

Cons

Centralization risk

Recursive inscriptions rely on the Ordinal Theory – maintained by a specific group of developers. This centralization raises concerns about potential control over the protocol, which could lead to arbitrary changes or mismanagement.

Higher fees  

While recursive inscriptions can indeed make the process of inscribing a file cheaper compared to conventional methods, the popularity of this approach might raise the overall fee levels for all Bitcoin users. However, this downside could be seen as positive from the perspective of Bitcoin miners, as their fee revenues would increase, making the entire Bitcoin network more secure.

Possibility of malware

Another theoretical risk being discussed is related to the possibility of embedding malware into the blockchain. If an inscriber hides malicious code among several files that are later downloaded onto a user's computer, it could allow the malware to spread, potentially even stealing Bitcoin-powered assets or BTC itself.

Final Take

Recursive inscriptions are another experiment on Bitcoin that might not only help upload larger and more complex files onto the blockchain and encourage the creation of art innovations but also bring new use cases to the network, such as DeFi applications. 

This, in turn, could attract more users to the blockchain, increasing demand for BTC, as inscription fees are paid in satoshis. However, since Bitcoin block space is a scarce resource, the increased popularity of recursive inscriptions could lead to higher fees for all Bitcoin users. 

Additionally, addressing potential centralization concerns and mitigating malware risks will be crucial for the long-term success of recursive inscriptions. In either case, as with any innovation on Bitcoin, recursive inscriptions will still need to prove their worth.

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