Unlocking the Potential of NAT and Digital Matter Theory
The emergence of NATs (Non-Arbitrary Tokens) represents a fundamental change in how we approach the tokenization of digital assets and decentralized content creation.
While ETH NFTs dominated in 2021, 2024 sees a shift towards NAT on BTC — with projects like Natcats leading this transition. Just recently, CryptoSlam data showed the sales of NFTs on the Bitcoin blockchain ranked first at $24.02m, while ETH NFTs only ranked second at $6.496m.
In this article, we will explore how NAT and DMT could revolutionize decentralization, while also examining the historical context leading to their emergence.
Bitcoin Blockchain: A History Lesson
Bitcoin’s blockchain, renowned for its simplicity and security in peer-to-peer transactions, faced limitations in building complex applications.
- Scripting language limitations: Bitcoin’s scripting language — while minimizing security risks — also hindered the creation of complex programs and smart contracts.
- Storage and data capacity limitations: Block size limits posed challenges in storing substantial data or complex logic.
- Variable transaction processing times: With an average block generation time of 10 minutes, real-time processing is unsuitable. For example, turn-based games that take 10 minutes per move, are impractical.
Bitcoin, optimized for peer-to-peer money transfers, had challenges accommodating complex applications due to scripting language constraints, storage limitations, and variable transaction processing times.
In contrast, Ethereum’s flexible blockchain structure addressed these effectively.
Ethereum: A Beacon of Flexibility
Ethereum tackled Bitcoin’s problems by introducing smart contracts, allowing users to execute complex logic directly on the blockchain, and ushering in the era of decentralized applications (DApps).
However, despite enabling a wide range of blockchain applications, Ethereum still had limitations.
The Dilemma of Centralization in Decentralized Systems
Ethereum’s smart contracts empowered users to execute complex logic and facilitated the development of DApps — from financial services to games to art — onto the blockchain. On the other hand, its limitations were also apparent.
One of these is that the front end of DApps remains dependent on centralized servers — not on the blockchain. Meaning, that if the server dies, BAYC and AZUKI will be reduced to mere strings.
In summary, several challenges persist:
- Security and reliability: Centralized servers pose significant security risks and vulnerability to data tampering or loss, contradicting the decentralized and immutable nature of blockchains.
- Loss of decentralization: Relying on centralized servers for critical aspects of applications undermines the decentralization benefits of blockchain technology. If a server goes down, the entire application may suffer.
- Ownership and access rights issues: Storing assets on external servers can render ownership meaningless if server access is lost.
Simply put, despite Ethereum’s advancements, certain aspects of decentralized applications like front-end interfaces and data storage remain centralized. This jeopardizes security, reliability, and ownership rights, therefore, the pursuit of solutions for decentralized application hosting and data storage continues.
Introducing Ordinals: Bridging the Gap
Ordinals emerged as a novel framework that enabled embedding data and digital assets directly into Bitcoin’s blockchain.
Unlike traditional Bitcoin transactions which primarily handle remittance information, Ordinals allow recording different data types, such as images and text (like NATs), into the blockchain.
This broadens the range of data that can be recorded, allowing developers to associate various types of data with Bitcoin transactions and expand its utility without compromising its fundamental properties.
The Potential of Digital Matter Theory
The Digital Matter Theory (DMT) posits that digital assets and data can possess unique attributes and characteristics.
This means that items and content in the digital realm are treated as unique entities, similar to physical matter, and that their uniqueness and rarity determine their value.
NATs (Non-Arbitrary Tokens) developed using DMT, illustrate the application of DMT principles, and offer a revolutionary approach to token creation and content generation on the blockchain.
NATs and Natcats: A Case Study
The Natcat project serves as a prime example of NAT principles by utilizing blockchain data to generate unique tokens based on specific blockchain properties.
In traditional NFTs, the team usually decides the token attributes and supply and then generates the output image in a centralized server.
NATs, on the other hand, follow a non-arbitrary generation process.
The data on the blockchain block dictates the NAT’s attribute and supply, and the information within the block also determines when a NAT will be generated. Tokens are only generated when the ‘trigger’ set by the project is found in a block.
In Natcat’s case, a Natcat is generated if the string ‘3b’ is located in the block.
Token properties are assigned to blocks to generate UNATs (Unique Non-Arbitrary Tokens). Data called ‘bits’ from UNATs are then converted from decimal to hexadecimal. If the output string contains ‘3b’, a Natcat token is generated.
Out of 835,734 Bitcoin blocks, only 8,064 have the pattern ‘3b’. This means that there are only 8,064 Natcats currently.
Let’s check the process.
Check the blockchain information for this Natcat with block number 43200 at blockchain.com.
The Bits above are 474,199,013 in decimal. Convert this to hexadecimal.
You can see that the string contains ‘3b’.
The digits in the string define various token attributes. For instance, the presence of ‘4’ in the hex indicates that the Natcat with block number ‘43200’ smokes cigarettes.
Currently, there are only 8,064 UNATs in Natcat — meaning that there have been 8,064 instances of ‘3b’ in past blocks, however, cats will continue to be generated in the future as long as the Bits of the newly generated blockchain blocks contain ‘3b’.
Conclusion: Embracing the Future of Tokenization
The blockchain landscape continues to evolve, and the emergence of NATs presents an opportunity that may redefine our understanding and interaction with digital assets. Tokens being generated non-arbitrarily, with token data and logic being completely decentralized, represents a huge step forward in the decentralized narrative that the blockchain offers, and could mark the beginning of an exciting new chapter in Web3.
