What Are Bitcoin Ordinals?
Bitcoin Ordinals, also known as “digital artifacts,” rely on a protocol on the Bitcoin blockchain that allows for the unique identification and on-chain storage of digital content, similar to NFTs but directly linked to satoshis. Sounds a bit complicated at first glance, but it’s quite simple and interesting, in fact.
Launched in January 2023 by Casey Rodarmor – a software engineer and creator of various projects that use the Bitcoin network, this protocol allows users to inscribe various forms of digital content, like art, text, and video, directly onto the Bitcoin blockchain. Unlike the widely recognized NFTs on Ethereum, Rodarmor’s vision was to provide an immutable on-chain presence for pieces of digital art (and other assets), allowing them to exist and transact within the vast ecosystem of the Bitcoin blockchain.
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The Underlying Science – Ordinal Theory
So, what are ordinals, really? Let’s get a bit technical now. It all started with an idea that later developed into a theory. The ordinal theory is at the core of Bitcoin ordinals. This theory is primarily concerned with assigning unique identities to satoshis. Satoshis, often referred to as “sats,” are atomic units on the Bitcoin blockchain, with 100 million sats equating to 1 Bitcoin. This theory allows these satoshis to be tracked, transferred, and, most importantly, imbued with meaning, do you see where this is going?
Satoshis are numbered based on their sequence of mining and transaction. The ordinal method depends on the sequence in which satoshis are mined, whereas the transfer approach is contingent on the sequence of transaction inputs and outputs, giving rise to the term “ordinals.”
The “genesis ordinal,” an intriguing pixel art of a skull, marked the beginning of this digital revolution on Dec. 14, 2022. As the popularity of NFTs based on Ethereum’s ERC-721 standard soared in 2021, Rodarmor, a blend of a programmer and an artist, recognized the potential to craft a unique experience within the Bitcoin blockchain. Thus, Bitcoin ordinals, inspired by ordinal theory, were born.
image source: https://ordinals.com/inscription/6fb976ab49dcec017f1e201e84395983204ae1a7c2abf7ced0a85d692e442799i0
The real excitement around ordinals began six weeks after the creation of the genesis ordinal, witnessing a rapid doubling in the number of inscriptions each week. This unprecedented growth could’ve been even more substantial if the infrastructure for inscribing and trading these ordinals had been better developed.
The Difference Between Bitcoin Ordinals and Traditional NFTs
Wow, we call NFTs “traditional” now. It was like yesterday that we called them “new technology.” How time flies!
While at first glance, ordinals might seem like Bitcoin’s answer to Ethereum’s NFTs, they’re fundamentally distinct. Ethereum’s ERC-721, the standard for NFT creation, generally holds metadata off-chain, pointing to where the actual art is stored. However, Bitcoin ordinals embrace the concept of on-chain storage. The rarity and pricing of traditional Ethereum-based NFTs depend largely on the attributes of the art. In contrast, Bitcoin ordinals derive their value from significant moments that a Bitcoin block signifies.
Rodarmor prefers not to equate Bitcoin ordinals solely with NFTs. While the market fit is similar, ordinals are more versatile. They can be attached to security tokens, accounts, or stablecoins, marking them as more than mere non-fungible tokens on the Bitcoin blockchain.
The value proposition of ordinals extends far beyond just acting as non-fungible tokens. While ordinals can certainly number a satoshi inscribed with a JPEG to be termed as an NFT, they encompass a broader scope. This inherent flexibility and multifaceted nature of ordinals make them a much-anticipated future of Bitcoin ordinals.
“Mining” Bitcoin Ordinals – The Way to Create a Bitcoin Ordinal
For those intrigued by the potential of Bitcoin ordinals, the way to create a Bitcoin ordinal involves a process termed inscribing. Contrary to the mature process of minting NFTs on Ethereum, inscribing Bitcoin ordinals demands technical prowess. Early adopters relied on running a Bitcoin node and using a command-line wallet for this purpose. However, recent innovations, such as the Gamma application and Ordinals Bot, have simplified the process, enabling even the less tech-savvy users to inscribe content effortlessly. The goal here is to enable the mainstream adoption of ordinals swiftly.
Trading Ordinals
Trading Bitcoin ordinals remains a developing segment, with several tools emerging to facilitate transactions. Initially, Ordx and Ordswap were pioneering marketplaces. However, since January, this roster has expanded to feature the ordinals market, among others.
For instance, Gamma has unveiled a decentralized Bitcoin Ordinals platform aiming to offer an exceptional “Web3-centric user experience.” This blends a public marketplace, tools for creators, and collaborations with safe external wallet plugins. On Gamma, users can purchase, exchange, and even craft Ordinals inscriptions. Adding to the list, Magic Eden has recently introduced its Bitcoin NFT Marketplace. But keep an eye on here for more developments.
The Future of Bitcoin Ordinals
With Bitcoin’s halving slated for 2024 and various levels of rarity defined by key events, Bitcoin ordinals are poised to capture collectors’ interest for years to come.
The rise of ordinals may be signifying more than just a new form of digital art, the blockchain space has enough of it, don’t you think? Instead, it highlights the diverse applications that the Bitcoin blockchain can support. While the initial hype around ordinals might have peaked, the anticipation for its potential applications is just warming up. With tools and infrastructure continually evolving, the narrative of Bitcoin transitioning from merely being a “store of value” to a more utilitarian asset is gaining momentum. Watch new use cases emerge as more people turn their heads toward Ordinals.
So, while sharing some commonalities with traditional NFTs, Bitcoin ordinals have carved a unique niche for themselves. As the ecosystem around them continues to grow, these digital artifacts hold the potential to reshape the landscape of digital art and blockchain utility.
