Bitcoin Stamps is a new NFT protocol that has emerged, enabling images to be stored on the Bitcoin network uniquely compared to Ordinals. While Ordinals inscribe arbitrary data onto the Bitcoin blockchain using the witness portion of a transaction, Bitcoin Stamps embeds image data into transaction outputs (UTXOs). This method guarantees permanence for the images, as UTXOs cannot be pruned by node operators, unlike witness data and OP_RETURN data.
Images are first converted into a text format using Base64 encoding to store them on-chain. The Counterparty protocol divides the data into several UTXOs and broadcasts them across the network. Finally, the image can be decoded directly from the original Bitcoin transaction.
Since Bitcoin Stamps do not benefit from the fee discount offered to Ordinal inscriptions through witness data, they are more expensive, making the protocol ideal for pixelated art. As such, using a 24×24 pixel, 8-color-depth PNG or GIF format for Bitcoin Stamps is recommended, making them an excellent choice for NFTs akin to Bitcoin Punks.
Bitcoin Stamps have experienced a surge in popularity, with over 10,000 Stamps created in just 31 days. This growth rate has outpaced that of Ordinals Inscriptions, further highlighting the rapid innovation that has been taking place on Bitcoin recently.
