The Bitcoin network has welcomed a new project named Ordinals which promises to bring a significant shift in the NFT market. The product developed by Casey Rodarmor was successfully launched on the Bitcoin mainnet on January 20, 2023.
This novel feature draws on the changes implemented by the Taproot upgrade and Segregated Witness technology to assign different types of data to individual satoshis, the smallest division of the Bitcoin currency, via a process known as inscribing, thus allowing NFTs to be created directly on the Bitcoin blockchain.
Ordinals are not the first attempt at creating Bitcoin-based NFTs. However, while earlier initiatives used layer-2 blockchains as a foundation for their development, Ordinals are underpinned by the Bitcoin mainnet itself. This characteristic also sets Ordinals apart from other NFTs which reside on a variety of different blockchains such as Solana, Ethereum, and Polygon.
The emergence of Bitcoin Ordinals
Since its inception in 2009, Bitcoin has mostly been used as a form of payment and an investment mechanism, with the latter use case prevailing over the former. Although the leading coin was meant to serve as an alternative to fiat, it was its investment potential that brought it to the public’s attention and fueled its growth so far.
Until not so long ago, these two use cases have been the main drivers of the Bitcoin machine. But in January 2023, Ordinals were introduced to the crypto scene, at the initiative of Casey Rodarmor, a prominent Bitcoin developer who used a numbering system known as the Ordinal Theory for the integration of this new feature. This added another wheel to the mechanism and led to the expansion of the Bitcoin ecosystem.
Ordinals represent Bitcoin’s take on non-fungible tokens (NFTs). The first NFTs were created back in 2014, but they didn’t gain mainstream attention until 2107 when Ethereum provided a more efficient venue for their development. During this period, Bitcoin kept its distance from the NFT hype, mainly because of its inherent structural limitations. Unlike Ethereum, Bitcoin is not a programable blockchain and at the time could not support NFTs.
However, the network underwent a series of upgrades in recent years, with the Segregated Witness (SegWit) update in 2017 and the 2021 Taproot update being among the most notable. These developments helped increase block capacity and made it possible to add all sorts of data onto the blockchain, laying the foundation for the launch of Bitcoin Ordinals.
By design, the Bitcoin system gives each satoshi – the smallest denomination of a Bitcoin – a serial number, in the order in which it was mined, with the purpose of identifying and keeping track of them across the blockchain. Following the above-mentioned upgrades, it became possible to include additional data to these numbers, also known as ordinal numbers or inscriptions.
Therefore, Ordinals are a novel use case for the Bitcoin blockchain which implies the creation of digital assets by attaching data such as text, images, videos, or GIFs, to satoshis and storing them on the blockchain.
According to Rodarmor, Ordinals have the potential to become “the first digital form of high art, and the most important form of digital art ever created” thanks to their longevity. The visionary developer also stated that the ability to create a new type of NFTs on the Bitcoin blockchain which are superior to their predecessors will benefit Bitcoin greatly as it can boost adoption and make the crypto more fun and appealing to the masses.
Bitcoin Ordinals can be traded in a similar manner to traditional NFTs. There are several NFT marketplaces such as Ordinals Magic Eden that offer extensive collections of Bitcoin Ordinals, giving users the possibility to explore, buy, sell, or trade a wide variety of digital artifacts with ease.
Ordinals vs traditional NFTs
Ordinals and conventional NFTs look similar in form and purpose, both representing digital assets that exist on a blockchain and cannot be altered or replicated. However, there are several key aspects that differentiate the two.
First of all, Ordinals are based on a numbering system unique to the Bitcoin blockchain that confers individual satoshis distinct identifiers. This makes it possible for them to be tracked and inscribed with different types of data such as images, videos, and more. In contrast, conventional NFTs are based on smart contracts and employ a token standard such as ERC-721 or Metaplex.
Since satoshis along with the data they are assigned are always stored on the Bitcoin blockchain, they benefit from the decentralization and security it provides. The majority of NFTs, on the other hand, only have a link stored on the blockchain which sends to the location where the content and metadata associated with them reside. They can also be altered by the conditions outlined in the smart contracts, so any changes in the network will inevitably impact them as well.
Another major difference between Ordinals and other NFTs is their level of liquidity. Given that Bitcoin is the most valuable and popular crypto in the market and Ordinals are tied to it by being hosted on the same blockchain, they also have high liquidity. The same cannot be said about NFTs supported by other blockchains such as Ethereum or Solana which are not as popular with crypto users and therefore don’t have the same liquidity level.
It’s also worth noting that Bitcoin Ordinals don’t operate on a royalty basis since they are not created via smart contracts but by adding immutable sequential identifiers. This means that creators don’t receive a percentage of the sale every time their digital assets are sold, as is the case with most traditional NFTs.
The launch of Bitcoin Ordinals in the NFT market introduced a different type of dynamic and a host of new use cases for the Bitcoin network, from enabling the development of a digital art market to data storage, intellectual property rights, and more. This innovation also underlines Bitcoin’s commitment to continuous development and progress, as well as its potential for expansion.
About Bitcoin
Bitcoin is the first and biggest cryptocurrency in existence, with a trading value of $62,974 and a market capitalization of $1,240.36B USD at press time. The Bitcoin whitepaper was originally published on the 31st of October, 2008 by an anonymous developer or group of developers under the pseudonym Satoshi Nakamoto. The same year, Nakamoto alongside Martti Malmi purchased the domain name bitcoin.org.
The project was launched in January 2009 when the first Bitcoin block, called Block 0, was mined. Since then, Bitcoin has experienced significant growth, becoming the most popular digital currency in the world and prompting the creation of many other similar crypto assets known as altcoins.
Bitcoin is based on blockchain technology which acts as a digital ledger of transactions distributed across a network of nodes, eliminating the need for third-party involvement and ensuring a secure and transparent way to process and record transfers.
Disclaimer: This press release is for general informational purposes only and does not constitute an endorsement of the Bitcoin project or any of the products and services it provides, nor does it represent an offer or solicitation to purchase or sell blockchain-based digital assets. The materials contained herein are not intended to provide any recommendation or legal advice related to Bitcoin or any other digital assets and should not be relied upon as the basis for making trading or investment choices. There is no guarantee of the accuracy, timeliness, or completeness of the content presented in this written communication.
Given the volatility and unpredictability of the crypto market, readers are advised to do their own research and consult a financial advisor to determine the relevancy and applicability of all information before making any financial decision. None of the parties connected with or involved in the issuing of this press release are responsible for readers’ use of the information it contains or the consequences stemming from its use. For further details or media inquiries related to this topic, please reference https://bitcoin.org/en/ or contact Bitcoin Core developers on IRC.
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