What are Bitcoin ordinals?

Bitcoin ordinals are emerging as a tool for streamlining cryptocurrency transactions, making them more efficient and secure. Whether you already have Bitcoin or other types of digital currency, or if this is your first time considering jumping into the world of cryptocurrencies, we are here to inform you on exactly what these new money-related ordinals offer. Our aim is to educate users on the ins and outs of buying, selling, securing and transferring cryptocurrencies with the use of blockchain technology–so read on to find out more!

What are Bitcoin NFTs?

Through Bitcoin NFTs — also known as Bitcoin ordinals and digital artifacts — you can now permanently preserve any type of digital content on the immutable Bitcoin blockchain.

On the 14th of December, 2022, Casey Rodarmor unveiled a ground-breaking Bitcoin ordinals protocol. This system allows for digital content such as art, text and video to be indelibly inscribed on the Bitcoin blockchain – far beyond traditional NFTs in Ethereum or other blockchains. To mark this momentous occasion, he inscribed his own pixelated skull onto the very first ‘genesis’ ordinal. And so began one of the most revolutionary protocols ever released in January 2023!

In 2021, as the NFT space powered by Ethereum’s ERC-721 became increasingly popular, Rodarmor–an artist and programmer–recognised he could create a distinct yet similar experience on Bitcoin’s network. He then brought ordinal theory to life through bitcoin ordinals in 2022.

Ordinal theory has revolutionised the way we think of satoshis, granting them individual identities that can be monitored and exchanged with intention. In February 2023, only six weeks after the genesis ordinal was established, hype around this groundbreaking concept really took off.

In a matter of weeks, the number of inscriptions saw tremendous growth – doubling each week. Nevertheless, had there been more extensive planning and execution for the infrastructure to buy and sell ordinals, this figure could have seen an even greater increase in numbers.

As evidenced by the chart above, Bitcoin ordinals have caused a remarkable boost in usage, fees and storage space of the Bitcoin network. This could be deemed as one of the most meaningful accomplishments for its application tier thus far, shifting its narrative from being merely a “store of value” to something more practical.

Bitcoin ordinals. What are they?

The application of ordinals theory has enabled satoshis (sats) to be thought of as the atomic units on the Bitcoin blockchain. Bitcoin ordinals, in a nutshell, are an enumeration system for sats that is essentially bringing life to them.

The backbone of Bitcoin ordinals is the concept of Ordinal Theory. Satoshis (sats) are known as the smallest unit that can be identified and exchanged on the Bitcoin network, with one BTC comprising 100 million sats. They are numbered based on when they were mined, giving each sat an individual numerical order—known as an ordinal number—that serves to identify it from other units in this cryptocurrency system.

By serving as a unit of transaction, sats can also store digital content that composes Bitcoin ordinals. Consequently, these become permanent digital relics that can be exchanged over the Bitcoin network with conventional wallets. Furthermore, through Ordinal theory, sats may connect to security tokens or stable-coins by means of ordinal numbers for more reliable identification.

Rodarmor is hesitant to regard Bitcoin ordinals as merely NFTs due to the multitude of applications they can support. While it’s true that ordinals are frequently used for numbering a JPEG-attached sat on the Bitcoin blockchain, their versatility extends far beyond creating nonfungible tokens. The market has found many more ways to leverage the power and flexibility of these ordinals than just producing NFTs; this indicates how invaluable an asset they have become within our digital world today.

How to mine Bitcoin ordinals?

When it comes to creating Bitcoin ordinals, the terms that are used are mining, minting or inscribing. In comparison to generating NFTs on Ethereum’s blockchain (which is a more experienced process), mining for Bitcoin ordinals is an intricate procedure and doesn’t have user-friendly resources available.

In the early days of Bitcoin ordinals, only tech-savvy users who ran a Bitcoin node were able to mine them. When utilising the ord app and command line wallet with their nodes, miners could begin loading up their wallets with sats in order to pay for gas fees and then finally commence inscribing processes on their own ordinals.

Luckily, no-code ordinal mining applications such as Gamma and the Ordinals Bot give users an opportunity to easily upload desired content to generate Bitcoin ordinals. The accessible process involves scanning a QR code for payment, making it straightforward even for those not particularly tech savvy.

The tools around Bitcoin ordinals are still at a very early stage. It has only been a few months since the genesis ordinals were inscribed. As demand from ordinary users and followers increases, the ecosystem and the tooling should start maturing with more user-friendly journeys.

How to buy, sell and trade ordinals

Similar to the process of creating Bitcoin ordinals, trading these digital assets hasn’t had a great selection of tools available. However, there are some helpful resources for those looking to trade in this space.

With Bitcoin ordinals rapidly gaining traction, most transactions were traditionally via over-the-counter methods. Collections, such as Planetary Ordinals and Bitcoin Punks which are among the first 1,000 inscriptions mainly relied upon non NFT marketplace channels like OpenSea or Blur.

Fortunately, the Ordinals Wallet, Hiro and Xverse give users access to purchase and sell Bitcoin ordinals. These tools enable easy transactions; all a user has to do is buy some sats through integrated payment plugins. With these wallets, buying and selling an ordinal can be completed within minutes!

How have ordinals been perceived by the broader Bitcoin ecosystem?

Bitcoin ordinals are a revolutionary innovation that accentuates the various applications exclusive to the chain, propelling developers to join in and build tools required by users.

The enthusiasm for Bitcoin ordinals reached a zenith in February 2023, which is evident from the transaction data. Still, the exhilaration surrounding applications on the Bitcoin blockchain is just beginning!

For example, the price of Stacks (STX) has risen since its arrival. It’s still early days in the Bitcoin ecosystem, but if developers adopt this platform, then network effects between developers and users could be on their way as we enter into a new crypto cycle.

Unfortunately, the current design of ordinals presents its own issues. Due to all the inscribed content being stored on-chain with ordinals instead of off-chain like most Ethereum based NFTs, this will cause blockchain size to expand significantly as new applications arise and transaction utilisation intensifies. Ultimately leading to a rise in transaction costs over time.

Bitcoin ordinals could potentially alter the fungibility of sats, which currently possess uniform values. With various applications of ordinals in the future, a sat with an inscribed Bitcoin Punk might be priced differently from any other sat. It will surely be exciting to witness this story unfold as we move through the months and years ahead!

Ordinals vs. traditional NFTs

Ordinals stand apart from regular Non-Fungible Tokens (NFTs) in terms of their specialised design. There are a number of factors that set the pricing for ordinals on a different level altogether.

Bitcoin ordinals allow for secure identification of sats, as well as the ability to store content or art directly on-chain. Ethereum’s ERC-721 standard is used in Non-Fungible Tokens (NFTs) and usually holds metadata or a link to artwork stored off chain. However, some NFTs are attempting to pioneer increased storage capacity by keeping it all on chain; this remains an anomaly at present.

A major distinction between Bitcoin ordinals and other NFTs is the approach to rarity as well as how pricing for these tokens will be determined. With regular Ethereum-based nonfungible tokens, it’s usually attributes of the art that decide its scarcity, which then affects its market value. This can be observed with Ethereum Name Service (ENS) NFTs where limited availability is what drives their worth.

Ordinals of Bitcoin, underpinned by crucial moments in the blockchain would determine its price. The first 1,000 or 10,000 ordinals inscribed could be viewed as collector’s items. You wouldn’t be shocked if within a couple of years that the original Bitcoin ordinal is sold for millions! However some sats will inherently have more value than others due to their limited availability and exclusivity.

According to Bitcoin ordinals’ founders, a straightforward system has been presented in which key events determine the rarity of each sat and its inscribed ordinal. The first sat from every new block is more exclusive than the rest; similarly, the first one at an adjustment period (which happens about every two weeks) even rarer. It only gets better when we consider that with the upcoming halving event of 2024, there will be yet another level of scarcity for sats during this epoch!

Finally, the first set of adjustments that happens once every six halvings’ (roughly 24 years) would be a remarkable level of rarity. According to the creators behind this incredible invention, it could distinguish Bitcoin ordinals from NFTs and make their scarcity truly random instead of controlled by founding teams or artists in non-fungible token collections.

With this insight, we can comprehend why Bitcoin-related action has already reached its climax in the short term. It will be captivating to witness how activity accelerates as we approach 2024’s Bitcoin halving!

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