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Ethereum has a reputation for being one of the most flexible and innovative major blockchains, and its latest addition, Ethscriptions, has the whole crypto community buzzing. Will Ethscriptions become a valuable crypto investment, or will it be a minor fad that fades away after a few weeks? Explore this guide to learn more about how Ethscriptions work and see where they're likely to go in the future.
Key Takeaways:
Ethscriptions are on-chain digital artifacts within the Ethereum ecosystem. They’re created by using Ethereum calldata to store information directly on the blockchain. These Ethscriptions can then be traded, bought, sold or stored by Ethereum users.
Ethscriptions can essentially be thought of as a type of NFT. However, they're different from the many other NFT collections on the Ethereum network. Previous NFTs have essentially been smart contracts, managed through a blockchain, that allow you to transfer the right to own certain media to a specific owner.
With Ethscriptions, the blockchain itself becomes the NFT. Instead of being a separate item managed through an Ethereum smart contract, the blockchain data is its own defined NFT.
Bitcoin inscriptions are metadata that’s inscribed onto small units of Bitcoin currency. Often called Ordinals, these inscriptions can be used to attach images, text and a variety of other data to the Bitcoin network.
Though Ethscriptions are inspired by Bitcoin Ordinals, the two are not to be confused. Not only do they run on separate chains, but they also function differently.
Embedding Ethereum calldata with image information might seem complex, but Ethscriptions are actually very straightforward. All Ethscriptions can currently be managed through their official site at ethscriptions.com. The site can guide you through the process of making Ethscriptions, and also let you browse through ones that have already been created.
Making an Ethscription starts with selecting an image you’re interested in and converting it into a data URI format. Next, you take this data URI and convert it into a hexadecimal representation. Both of these tasks can be done in just moments with simple, free online tools.
Once you have your image in the correct format, you create an Ethscription by making a 0 ETH transaction. The image information is entered into the Hex data field when entering the details of the transaction, and an Ethscription is formed.
Every Ethscription must be unique. If another transaction has already included the hex data you want to use, your transaction will be ignored; but if your transaction is unique, you'll own a new Ethscription. You can then use the Ethscription ID either to prove ownership or transfer ownership to another user.
Since their creation, Ethscriptions have skyrocketed in popularity. Almost 30,000 Ethscriptions were created in just the first 18 hours. For several reasons, they’re currently one of the trendiest topics in the crypto community. Their journey to fame dates back to January 2023, when Casey Rodarmor first released the concept of Bitcoin Ordinal inscriptions in a bid to "make Bitcoin fun again." This concept brought NFTs to the Bitcoin ecosystem, creating a lot of excitement.
Ethereum enthusiasts quickly took note and decided to bring the idea to the Ethereum blockchain. Having inscriptions on the Ethereum network solves a lot of problems users had with the original Bitcoin Ordinals. Ethscriptions are more affordable to transfer, so people can trade them back and forth without incurring sky-high gas fees. They’re also trustless, so they're ideal for those who prioritize security.
In addition to mimicking an already popular concept, Ethscriptions are also gaining popularity with the Ethereum community because they bring new functionality to the Ethereum network. People can connect images directly to the blockchain, and then use these images for investing funds, collecting rare items or even playing games. Even those who’ve expressed no interest in Bitcoin Ordinals are starting to join in on the Ethscriptions craze because it’s a concept that’s simple to understand, easy to use — and entertaining to experiment with.
As mentioned, Ethscriptions were created in reaction to the popularity of Bitcoin Ordinals, so they share many similarities. Both protocols are a way to add non-financial data directly to a blockchain. People can use both Ethscriptions and Ordinals to trade collectibles, add information to transactions and more.
Despite these superficial similarities, Ethscriptions and Bitcoin Ordinals function very differently. While Ordinals are stored within the smart contract transaction data on the Bitcoin network, Ethscriptions use Ethereum's calldata. This tends to create a less centralized inscription that’s more cost-effective to process. Creators hope the calldata inscription method will prevent the high gas fees associated with Bitcoin Ordinals.
Finally, there are some practical differences in how the two protocols work. Ethscriptions must be unique images, which means that no Ethscription created previously within a block or the same transaction block can be the same, while Ordinals can be identical images on separate coins. Furthermore, Ethscriptions are limited to smaller amounts of data — under 96 kilobytes — while Ordinals can contain up to 4 megabytes. Unlike Ordinals, which can be text, video or even games, Ethscriptions can only be images. However, Ethscription creators do say they plan on eventually adding different file types.
As a relatively new form of NFT, Ethscriptons still aren’t supported on many platforms. Currently, the most popular place to trade Ethscriptions is OpenSea. A few other NFT marketplaces, such as Emblem Vault, also support Ethscription trades.
The only other way to trade them is through private sales, but it can be challenging to track down and contact the owners for individual Ethscriptions. Fortunately, Ethscriptions have proven to be so popular that more trading platforms are working to add these NFTs to their listings.
Though Ethscription trades have just started, the market is already picking up steam. Over 159,000 Ethscriptions have been made as of the time of this writing (June 21, 2023).
The most popular options right now are Ethscription versions of already famous NFTs. For example, most of the CryptoPunks collection has already been Ethscribed. Several of these high-ranking NFTs have already sold for high prices. Ethereum Punk #3100 sold for $6,300, and so far, there’s a total trading volume of over $447,000.
If you trade Ethscriptions on an NFT platform, the process is fairly simple. Just browse through available NFTs, select one, connect a crypto wallet, and follow the on-screen prompts to finalize your transaction. NFT trading platforms tend to have convenient interfaces that guide you through the process, making trading easier.
Behind the scenes, however, trading an Ethscription involves a few separate transactions on the Ethereum blockchain. Sending an Ethscription essentially conveys a 0 ETH transaction to the new owner, while the Ethscription ID is in the hex data field. You'll also need to use monetary transactions to receive or send payment. Many people use ETH for monetary transactions, but NFT platforms (such as OpenSea) also let you use some other popular cryptos like USDC, DAI or AVAX.
Ethscriptions are certainly an intriguing opportunity for investors, and right now, they're quite popular. Users who get in on the ground floor and purchase a desirable Ethscription for a low price can end up making an impressive profit. The new concept also holds a lot of promise for developers who want to make and market their own NFT collections.
The ability to add NFTs directly to the Ethereum blockchain has many potential applications for the crypto community. Though this probably isn't a crypto trend to put all of your money into, it might be a good way to diversify your portfolio with a few high-risk, high-reward investments. Ethscription trades are especially popular among short-term traders, who hold investments for 30 days or less.
However, keep in mind that the current market (with its $6,000 Ethscriptions) is mostly due to trends. The concept is new and exciting, so people are investing based on community hype. As with any other crypto fad, there’s a chance that this craze might not last. Since current Ethscriptions don't have any use outside of collectibility, their value could randomly drop.
Furthermore, Ethscriptions are a bit limited right now. They have the basic functionality of Bitcoin Ordinals, but can’t hold as much data or support as many different types of files. Unlike Ordinals, Ethscriptions can’t be used to identify pieces of cryptocurrency, so they also don't have as many opportunities for theft detection.
Whether or not Ethscriptions become a good long-term investment will depend on how well the Ethereum community develops them. If the concept expands to include more details, there’s a chance that the concept could take off. Potential use cases for Ethscriptions include things like creating assets for play-to-earn games or designing more on-chain storage for NFTs.
Instead of hoping that a single Ethscription is going to skyrocket in value, investors may be better off investing in the success of web3 projects that find creative uses for Ethscriptions. As always, you’re recommended to do your own research (DYOR) before making any investments.
Ethscriptions are a novel way of storing NFTs and images on the Ethereum blockchain. Since they're more secure, and more affordable to transfer than Bitcoin Ordinals, Ethscriptions are currently popular among both collectors and traders. In addition, some smart investors may be able to capitalize on these trends and make an impressive profit. Finally, this exciting new technology holds a lot of potential as well for both crypto games and other web3 products.
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