Nonfungible tokens (NFTs) have finally made their way to the famous privacy-focused Monero blockchain with the introduction of Mordinals (Monero Ordinals), but the move has raised concerns among some members of the Monero community. Mordinals enables anyone to include data alongside transactions stored on the Monero blockchain, through the use of the “tx_extra” field, which has existed within Monero since 2014, but until now was not supported. While Mordinals bears some resemblances to Bitcoin Ordinals, it has resulted in an additional focus on the potential impact on Monero’s privacy.
Members of the Monero community have voiced concerns that introducing NFTs on a network that strives to make its tokens as unremarkable as possible could reduce privacy on the network. For instance, Monero transactions are signed using “ring signatures,” which bundle a transaction with a set of fake ones. Thus, if an attacker with enough capital flooded Monero blocks with Mordinals, it would be straightforward to distinguish actual transactions from the dummy NFTs. Moreover, there are concerns that Mordinals’ potential impact on decentralization might be adverse as blocks grow larger and hence increase storage requirements for nodes.
Some people are arguing that Mordinals’ impact on privacy and decentralization may be overblown and that risks can be addressed with updates. For example, Cake Wallet vice president, Justin Ehrenhofer, suggests that the best course of action would be to limit the size of the tx_extra field within Monero transactions to 256 bytes to significantly increase the attack cost of flooding the network with dummy transactions while providing flexibility for future use cases.
Despite the privacy implications, some believe that Mordinals have enormous potential for privacy-conscious NFTs in protecting financial data while selling in-game assets. Additionally, Mordinals (and Ordinals) have introduced increased utility for NFTs by storing data on the blockchain instead of on the internet or InterPlanetary File System like most Ethereum-based NFTs.
However, the introduction of Mordinals has also raised the question of what to do with tx_extra. While tx_extra exists to ensure future interoperability with decentralized applications and other blockchains, some have proposed removing tx_extra and adding a specialized field that cannot be abused, which could hurt some projects in development, like the upcoming Serai DEX. Despite the debate surrounding the future of tx_extra, it is clear that it cannot be entirely prevented users from storing arbitrary data on blockchains.
In conclusion, the introduction of Mordinals on the Monero blockchain raises several concerns in the community, primarily related to privacy and decentralization. While some believe that the risks associated with Mordinals can be addressed with updates to the protocol, others feel that the introduction of NFTs on a network that values privacy above all else could threaten Monero’s broader ethos of anonymity and decentralization. Nevertheless, the ability to store data on the blockchain could introduce increased utility for NFTs, and the debate surrounding the use of tx_extra highlights the challenges of adding new functionalities to blockchains while maintaining their central values.
