MicroStrategy Orange: Everything You Need to Know About Decentralized ID on Bitcoin

Following through on hints that MicroStrategy would get into Bitcoin software development as the Ordinals craze took off last summer, the company this week announced MicroStrategy Orange, a decentralized identity (DID) platform. The sprawling concept has applications for combating social media bots and spam, authenticating documents, and securing medical records.

As the proposed specification for Orange went public on GitHub, it received a mixed reaction from Crypto Twitter, in part due to its technical complexity of the plans. Here’s a basic primer on the proposed digital ID system, and how it ties into Bitcoin.

What is MicroStrategy Orange?

MicroStrategy Orange is a Bitcoin-based decentralized identity (DID) system that was introduced by MicroStrategy co-founder and Executive Chairman Michael Saylor, alongside Executive VP of Engineering Cezary Raczko, at the annual MicroStrategy World conference on May 1.

MicroStrategy Orange is an attempt to facilitate immutable, or permanently fixed, decentralized identities. These identifiers would then provide a way for individuals to control and verify their identity without relying on a central authority.

How would Orange be used in real life?

MicroStrategy said the potential of MicroStrategy Orange and decentralized identifiers on Bitcoin could also be used to verify users on social media applications, or authenticate text messages or medical records.

For example, a social media app could verify a user's DID on the Bitcoin blockchain and display an "orange check" to other users. Or a medical record's metadata—perhaps a hash of its contents at a fixed point in time—could be stored on Bitcoin and used to authenticate its owner and that it hasn't been modified. Public records like land and home deeds could also be inscribed on the Bitcoin blockchain.

What is DID:BTC, and how does Bitcoin fit into it?

By establishing a decentralized identity system on Bitcoin, dubbed DID:BTC, users can benefit from the robust security and global decentralized network of the Bitcoin blockchain.

According to MicroStrategy, DID:BTC uses a modified version of Ordinals inscriptions. Introduced in January 2023, Ordinals inscriptions are digital assets (images, text, music, videos) that are “inscribed” onto an individual Satoshi, the smallest denomination of a Bitcoin.

In the case of MicroStrategy Orange, the inscription space would be used to store DID-related data and updates. This identity, authentication, and verification information would be separate from other digital data—for example, images or documents—which would be stored elsewhere.

As a result, DID-authenticated files could be created and updated without hitting size or content restrictions, yet take advantage of the cost-saving mechanism introduced by the Segregated Witness (SegWit) protocol in the Bitcoin network.

SegWit, introduced in 2017, increases Bitcoin’s block capacity by separating signature data from transaction data, reducing transaction sizes and enhancing scalability.

What does the proposed DID:BTC specification tell us?

The preliminary draft of the Bitcoin Orange plan was published on GitHub, allowing public inspection, comment, and eventually in-line discussion and collaborative edits. While largely technical, it covers several major topics, including how data would be formatted in Bitcoin inscriptions and its privacy implications.

For example, the spec allows for updates to be made to DID:BTC identifiers on-chain. While the original DID identifier is immutable, the associated content and keys associated with it can be modified.

Updates to DID:BTC identifiers are made using JSON, a standard format for data exchange.

In cases where an identity needs to be removed, meanwhile, MicroStrategy said a DID:BTC identifier can be deactivated by “spending” it—setting a flag using residual UTXO (unspent transaction output).

What are critics saying about MicroStrategy Orange?

Reactions to MicroStrategy’s announcement were mixed on Crypto Twitter, with some Bitcoin enthusiasts saying DID data is not welcome on the world’s dominant blockchain. It's a similar reaction that we've seen to the rise of Ordinals inscriptions, along with Bitcoin meme coins via the BRC-20 and Runes token standards.

Taproot Wizards CEO Udi Wertheimer joked that "laser-eye maxis" who supported Saylor's sizable Bitcoin buys were "in absolute shambles as their lord and savior" brought "institutional-grade spam" to the blockchain.

“I don’t like shitcoins at all, but if I close my eyes this speech sounds like it coming from the US government,” one post said, with another calling Saylor “fed boy.”

“WTF is this dog vomit trash? No. Never. No,” another replied.

Saylor had honed in on the commercial implications of Ordinals inscriptions as soon as they emerged, Bitcoin proponent and venture capitalist Preston Pysh pointed out.

When will we be able to use Orange?

MicroStrategy did not say when the Orange protocol would come online, and noted that information published on GitHub is an unofficial early draft. Even when finalized, there’s no telling whether other Bitcoin projects, crypto platforms, or apps would make use of it.

Edited by Ryan Ozawa and Andrew Hayward