MicroStrategy unveils MicroStrategy Orange, a new decentralized identity protocol (DID) based on the Bitcoin blockchain. Barely announced, the project has already sparked criticism about the risks registrations could pose to the security and decentralization of the Bitcoin network.
A decentralized identity registered on Bitcoin
MicroStrategy, a US company specializing in business intelligence, is today best known for its significant investment in Bitcoin. For several years now, MicroStrategy has been the public company holding the most Bitcoins in the world, a total of 214,400 BTC, or nearly $13 billion.
Michael Saylor, the company’s CEO, is well known for taking a very pro-Bitcoin stance in the mainstream media, and for his strong views on altcoins. Earlier this week, he announced MicroStrategy’s additional $7.8 million acquisition of Bitcoin.
The company recently introduced its new project, MicroStrategy Orange, a decentralized identity protocol (DID) that relies on Bitcoin blockchain entries.
MSTR launches open source decentralized identity platform, Microstrategy Orange https://t.co/mhcmN47mFj pic.twitter.com/vE2IurPIkG
– Galoy (@GaloyMoney) May 1, 2024
The company has shared an unofficial preliminary specification of the project, featuring the following details:
“The Bitcoin Registration DID (did:btc) method exclusively uses the Bitcoin blockchain to store and retrieve DID information. UTXOs on the blockchain are used to control DIDs. Writing data into the transaction witness allows for greater scalability and verbosity when creating DID documents, while reducing fees and block space consumed. “
In short, MicroStrategy Orange DIDs will employ a mechanism similar to the Ordinals or Runes protocols.
What are the limitations of MicroStrategy DIDs?
Although MicroStrategy has not yet publicly communicated on this new project, it has already attracted a great deal of criticism, notably from Luke Dashjer.
Dashjer considers blockchain inscriptions to be a direct attack on the Bitcoin network. He argues that this use was not foreseen by the protocol and could compromise the network’s security and decentralization, not least because of the large amount of data required for this type of transaction.
Indeed, too great an increase in the size of the blockchain makes its validation more complex, requiring more storage space over time, penalizing the network’s new validators.
Moreover, like the Ordinals or Runes protocols, MicroStrategy’s DIDs depend on the scalability of the Bitcoin blockchain itself. It is therefore difficult to envisage extensive use of these DIDs without risking network congestion, as occurs during periods of high activity.
Since MicroStrategy’s first purchases of BTC, the community has expressed many questions about the company’s motives. Today we can be sure that, beyond the investment and store-of-value aspects of Bitcoin, the company may well develop several applications on the Bitcoin blockchain in the future, making their capital in BTC more useful.
