What’s the Difference and Why Ordinals Have Huge Importance as a Paradigm Shift in Scaling Blockchains.
EVM-based chains are dominating the smart contract space nowadays. There are numerous blockchains running Ethereum forks, several other large projects are making advances in EVM scaling. But even high-performant projects like Solana are very similar to the first version of Ethereum in one inherent aspect – miner validation of all smart contracts.
To validate the chain, and to apply blocks in these chains, miners are required to run all smart contracts called in the block in the right order, calculate and apply their state. Miners are also required to maintain a state of all smart contracts (global state) and have to maintain consensus over it.
While this paradigm offers ease of development (the global state model is convenient to access and operate) it is extremely difficult to scale – that’s the sad truth EVM gas fees and Solana crashes tell us about.
Ordinals revolution on Bitcoin let us recall the basics and rethink approaches to scaling blockchains and managing the state. In most real-world applications, consistent immediate access to the global state is redundant. A bakery in Paris shouldn’t care about the post-trade settlement of shares of institutional Swiss REIT between two family offices.
Thus – eureka! Miners don’t need to validate the global state of all smart contracts, only interested parties should. This is actually a fairly well-aged paradigm called Ricardian contracts. We call a Bitcoin Ricardian Contract a contract whose state is unambiguously determined at any point in time-based solely on the data of the Bitcoin blockchain. The contract is then encapsulated into an Ordinals inscription and is circulated on the BTC blockchain, available to PSBT DEX trading. Miners validate the Bitcoin chain in a predictable manner, and interested indexers validate the state of necessary contracts, such as BRC-20, BRC-20 Modules, Bitmap, ORC-CASH, and Ordinals:Goods.
BRC-20, back in March, was the very first and simple experiment of a Bitcoin Ricardian contract, surprisingly gaining multi-billion dollar traction and exchange listing. It showed us how even a very simple protocol can be easily extended and developed. As a result, the end users see no difference between EVM miner-validated contracts and Ordinals smart contracts. At present time, the ecosystem is thriving, with new protocols and DeFi instruments launching every day. However, we can surely say that the full potential and benefits of Ricardian contracts on Ordinals, such as p2p capabilities, are still yet to be unlocked.
Soon the Bitcoin world as we know it will drastically change and become filled with stablecoins, AMM swaps, and lending instruments. Ordinals: Goods, with their lightweight method of RWA tokenization of goods and services, are poised to take advantage of this ecosystem development, and to help Bitcoin serve those who need it the most.
by Ilia Obraztsov, CTO of Ordinals:Goods
