Monero community lashes out against ‘Mordinals’ amid privacy concerns

Nonfungible tokens (NFTs) have finally made their way to the most well-known privacy-oriented blockchain, but not everyone is pleased with this development. Mordinals, which are similar to Bitcoin Ordinals, permit anyone to attach data to transactions that are stored on the Monero blockchain.

The Monero community is discussing many apprehensions, ranging from diminished privacy on the network to holding illicit material in an unerasable database – but is there genuinely anything to be concerned about?

What are Mordinals?

In January, Casey Rodarmor unveiled the Bitcoin Ordinals protocol, which gives people the ability to include any kind of data with Bitcoin transactions. This lets users associate data with a single satoshi. The Ordinals protocol tracks these satoshis, the associated data, and their distinct identifiers, thus making it possible to have non-interchangeable tokens on the network.

Mordinals are an altered version of Ordinals that are implemented on the Monero blockchain. Ordinals necessitate that data be kept in the “witness” segment of a Bitcoin transaction, while Mordinals take advantage of the “tx_extra” area that is present in each Monero transaction. Although this has been feasible on Monero since 2014, until now, no assistance has been available for it.

Criticisms of Mordinals are similar to those directed at Bitcoin, but with extra emphasis on how it might affect the privacy of Monero. Privacy is of utmost importance to the Monero community, and introducing NFTs on a network which seeks to make its tokens as inconspicuous as possible has been a challenge.

To safeguard user privacy, Monero transactions are authenticated using “ring signatures,” which combine a transaction with a group of false ones. If an adversary with sufficient funds inundated Monero blocks with Mordinals, it would be simple to differentiate real transactions from the bogus NFTs. This is a real worry for Monero.

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The United States Internal Revenue Service offered a reward of $625,000 in 2020 for anyone who could help them trace Monero transactions, demonstrating that there is a demand for such activities.

Critics of Mordinals often cite the potential effect it might have on decentralization. As block sizes grow, the storage requirements for nodes become more demanding, making it less attractive for smaller nodes to remain active.

The protocol could certainly be improved to permit nodes to delete these transactions. Nevertheless, a blockchain depends on its nodes concurring on the system’s status, and eliminating certain blocks or transactions could be perceived as censorship.

Are Mordinals really that bad?

Monero, unlike Bitcoin, has a variable block size, and the possibility that Mordinals could lead to an abnormal expansion of the blockchain is a valid worry in the Monero community. However, if one looks at on-chain metrics, it doesn’t appear that blocks are increasing at an excessive rate.

Some assert that the dangers posed by Mordinals can be rectified with updates, though its effect on privacy should not be underestimated.

In a Twitter thread about Mordinals, Justin Ehrenhofer, Vice President of Cake Wallet, suggested that Monero should implement measures to prevent certain behaviors, similar to what it has done in order to protect privacy and fungibility. He tweeted, “The Monero network is strong because the privacy, security, and efficiency of XMR is the top priority. Everything else needs to comply with that goal.”

He feels that, due to the privacy considerations, the most prudent choice is to reduce the tx_extra field of Monero transactions to a maximum of 256 bytes. This would significantly raise the cost of flooding the network with false transactions while still granting room for potential future applications.

“According to Apollo Greed, CEO of QGlobe Games, a gaming merchant service firm, some Monero holders perceive Non-Fungible Tokens (NFTs) as a challenge to their privacy, while others recognize its potential value and maintain that it is possible to retain privacy.”

Greed believes that privacy-focused NFTs can have great potential in safeguarding financial information while selling virtual items.

It is possible to use Monero to store and sell illicit materials. As a blockchain that cannot be censored and is focused on privacy, this could have serious repercussions. However, this has always been feasible on Monero, though before Mordinals, it would have taken someone with technical knowledge to do so through the Monero command-line interface.

No doubt, NFTs have attracted a great deal of attention. Since the introduction of Ordinals, Bitcoin (BTC) has nearly doubled in value, though there are other elements which have affected its price, the activity on the network has been significantly increased by Ordinals. By storing data on the blockchain instead of on the web or InterPlanetary File System, as is the case with most Ethereum-based NFTs, Mordinals (and Ordinals) could be a catalyst for increased utility of NFTs.

What’s next for Mordinals

Ehrenhofer stated in the Twitter thread that Mordinals had always been a potential option but had been reinforced by the success of Ordinals on Bitcoin and Litecoin.

The discussion regarding what should be done with tx_extra has been going on for years, and the community appears to have come to an agreement with Ehrenhofer’s suggestion, merging a patch to reduce tx_extra’s size to 1,060 bytes. Although this is still four times larger than what Ehrenhofer proposed, it still makes it much more difficult to attack the network.

On the one hand, tx_extra is present to guarantee future compatibility with decentralized applications and other blockchains. On the other hand, taking away tx_extra and introducing a special field that cannot be misused could impede certain projects in progress, such as the upcoming Serai DEX.

No one is aware of the individual who developed the Mordinals software, and there is a speculation that the entire project could be a trick set up by someone in the Monero community to advocate for the elimination of tx_extra. During an episode of the Monero Talk podcast, Ofrnxmr, a community member, mentioned a post he had seen on the Monero Research Lab (MRL) forums authored by a user called “Tx_extra” in late 2022.

The user proposed taking out the tx_extra field from Monero transactions, but when nothing was done, they started posting MRL logs to Monero in a manner similar to Mordinals. When asked to stop, they brought up the subject of eliminating the tx_extra field once more.

Although this theory may be true, it is impossible to completely stop users from storing any type of data on blockchains.

A 2017 study, funded by the German Federal Ministry of Education and Research, has revealed that Bitcoin has been used to store illicit content and disseminate malicious code since before Ordinals were even created.

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When Ordinals debuted, Rodarmor highlighted two essential elements that were necessary for NFTs to be successful on Bitcoin: provenance and markets. Provenance is the capacity to ascertain who owns a particular inscription, and markets are necessary spaces for NFTs to be purchased and sold.

These features are at odds with Monero’s overall principles of anonymity and decentralization. While some individuals in the Monero community would like to see the network rival Bitcoin and Ethereum, it is improbable that Mordinals will become widely accepted without providing significant utility, given the discrepancy between Monero’s values and the way NFTs are valued.