Bitcoin Stamps Meaning

What Are Bitcoin Stamps?

Initially designed as a straightforward store of value, Bitcoin has since transcended its basic functionalities to allow a range of use cases. One such function is the embedding of additional data in Bitcoin transactions. And the STAMPS protocol –  is a new way of doing just that, though it isn’t the first. 

Launched in January 2023, the Ordinals protocol allowed for the creation of Bitcoin Ordinals. To put it simply, these are small pieces of Bitcoin that have data inscribed on them. So if Ordinals already offer a way to embed data on the Bitcoin blockchain, why the need for another approach? 

Well, Ordinals heavily rely on the discretion of individual nodes. This implies that the nodes can prune or modify data to optimize their efficiency or performance – potentially leading to a loss of information over time. 

Enter the Bitcoin STAMPS Protocol, which stands for “secure, tradeable art maintained securely”. In contrast to Ordinals, Bitcoin Stamps directly etch and store data in Bitcoin’s transaction outputs – specifically unspent transaction outputs (UTXOs) — making the data immutable. In other words, the data becomes impossible to remove or alter. 

The STAMPS protocol involves converting image data (jpg, png, gif, or webP) into a base64 string format, which depicts the image as a sequence of characters. These image strings are then incorporated into a Bitcoin transaction’s description key and sorted by timestamps.

Stamps vs Ordinals

Stamps record data directly on Bitcoin’s UTXO, ensuring data permanence and immutability. Since this consumes minimal space, its effect on network performance is negligible. On the contrary, Ordinals write data in the Witness Field of a Bitcoin block (the part of the Block that confirms the validity of a transaction). This approach risks full node pruning (i.e. removal) while potentially resulting in increased block size and low transaction throughput.

Due to their immutability, stamps are well-suited for applications and use cases that rely on long-term data authenticity and integrity, such as certificates, historical records, and legal documents. Ordinals lack the same level of reliability due to their impermanence.

Bitcoin Stamps Protocols

The common Stamps protocols are:

• SRC-20 tokens: The token standard influenced by the BRC-20 standard and built on the Counterparty protocol. The standard is characterized by housing the arbitrary data within the spendable data transactions rather than in the witness data segment. 
• SRC-721: Refers to the specification aimed at enabling efficient and cost-effective creation of high-resolution, composable NFTs. It uses the STAMPS protocol for layered storage, reduced file sizes, and compact JSON files, and Counterparty asset IDs for stability.