Monero (XMR) ended June 2023 with a record-breaking 13 successive days of finishing higher than the previous day. Everything seemed on track for Monero’s price to keep increasing. However, the release of Monero Ordinals or “Mordinals” upset the XMR community and had a negative effect on Monero’s value. Experts seem to feel this is a temporary blip, as Monero is one of the top recommendations for cryptocurrency investment in August 2023.
Mordinals followed Bitcoin Ordinals’ footsteps in providing a new way to attach special data, such as non-fungible tokens (NFTs), to transactions on the Monero blockchain. NFTs are becoming increasingly popular as they provide verifiable ownership and a different way to trade digital assets. While similar, Mordinals work in a slightly different way to Bitcoin Ordinals.
“The digital content is divided into small sections called pixels. Each pixel is assigned specific properties, and encoded as a series of transactions,” explains Nathalie Roy, founder and owner of XMRWallet.com. “These transactions include special data that represents the pixels, their positions, and other relevant information. Once the transactions are confirmed and added to the Monero blockchain, the Mordinals become permanent and publicly accessible records. The Mordinals protocol ensures the original content remains unaltered by linking the Mordinals to a cryptographic hash of the content. This hash serves as a unique identifier and allows anyone to verify the authenticity and integrity of the Mordinals.”
Privacy and decentralization have always been key components of Monero’s ethos, and the Mordinals protocol could potentially impact both. One of the ways Monero provides privacy is by 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 extremely easy to detect actual transactions from the dummy NFTs. There are also concerns that as block sizes expand, the storage demands on nodes will also increase, disincentivizing smaller nodes from staying online.
A recent BTC Peers article stated: “The Mordinals debate within the Monero community exemplifies the complex decisions that crypto communities face in the evolving landscape of blockchain technology. How we navigate this integration of NFTs into privacy-focused blockchains will shape the future of these networks. It’s a telling moment in the world of decentralized technology, pushing us to redefine what we value most.”
The Monero community has already taken steps to respond to the concerns raised by releasing a patch limiting Mordinals to make it much harder for someone to attack the network. The on-chain metrics are constantly being monitored, and more limits could be placed on Mordinals if needed.
This prompt response to the issues raised by the Mordinals protocol, combined with concerns about the global rollout of CBDC pilots and programs, has helped to make Monero very attractive to investors. Like many others, Bitcoinist.com has highlighted Monero as one of the “big five cryptos set to boom in 2023”. Monero’s ability to provide complete anonymity and its vibrant and responsive community means it is an attractive investment for anyone interested in investing in cryptocurrency.