Why? The `data:` schema is already there and is well supported across platforms. All itty bitty does is take the base64 encoded fragment part of the URL and put it in an iframe, wrapping it in the `data:` scheme. No need to register anything new.
Only really that itty bitty's compressed in the URL, not in the transport (& could be extended to add encryption).
It's absolutely true that, that may be tackling the wrong area - if data: were extended with compression/encryption options (not that itty bitty has encryption, but it's an option with the JS layer there) then the itty bitty decoder has nothing to do.
BUT, experiments like itty bitty might spur on ideas & standards changes for things like data: which to me makes it worthwhile.
(Self-contained, standardised, compressed [, encryptable?] content objects [in this case URL] renderable via ubiquitous web technologies feels like a win, itty bitty or not)
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Also, if links are shared on html-based platforms, some block data: url's in links. Not sure of the justification, but reddit doesn't seem to render markdown formatted URLs with data: on them, as links. Not sure how to tackle that one - itty bitty sidesteps the restriction.