What are Bitcoin ordinals or NFTs?

Bitcoin NFTs, also known as Bitcoin ordinals or Digital Artifacts, allow digital content  recorded on the Bitcoin blockchain. The protocol for Bitcoin ordinals was launched in January 2023 by Casey Rodarmor, who wanted to create an on-chain presence for art, text, and videos. The first Bitcoin ordinal was a pixel art of a skull inscribed on December 14, 2022.

What makes them Unique ?

Bitcoin ordinals are based on “ordinal theory”, which assigns unique identities to satoshis or sats (the smallest Bitcoin denomination) and enables them to be tracked, transferred, and given meaning. The number of inscriptions in the Bitcoin blockchain to create ordinals doubled every week in the early stages, demonstrating the growing interest. The rise of Bitcoin ordinals has led to increased usage, fees, and storage space on the Bitcoin network.

How to Mine (Create) Ordinals ?

Mining or inscribing Bitcoin ordinals is a technically complex process that initially required running a Bitcoin node. However, there are now some user-friendly tools available, such as ‘Gamma’ and ‘Ordinals Bot’, which allow users to create their Bitcoin ordinals by uploading content for a small fee.

How to buy / trade ordinals ?

Trading Bitcoin ordinals has primarily occurred over-the-counter, but tools like Ordinals Wallet, Hiro, and Xverse enable users to buy and sell these digital artifacts. The trading process is still evolving, and as demand increases, the ecosystem and tooling are expected to improve.

Impacts of using the Bitcoin Blockchain for Ordinals

Bitcoin ordinals have been perceived as an innovative application on the Bitcoin blockchain, attracting developers and driving interest in the platform. However, there are concerns about the increased blockchain size and transaction costs due to the on-chain storage of content. Additionally, the concept of Satoshis’ fungibility may be affected by the introduction of ordinals.

How to they compare to “traditional” NFTs?

Compared to traditional NFTs (None Fungible Tokens), Bitcoin ordinals have unique design features. They store content on-chain, unlike most Ethereum-based NFTs that store metadata or pointers off-chain. Pricing for ordinals is influenced by key moments represented by Bitcoin blocks, adding rarity based on block position, adjustment periods, halving epochs, and rare events. This differentiation in rarity may set Bitcoin ordinals apart from traditional NFTs.

To conclude

Bitcoin ordinals are an emerging application on the Bitcoin blockchain, allowing for the inscription of digital content or Art. They are based on ordinal theory and use Bitcoin’s blockchain smallest denomination the satoshi (sats). While the ecosystem and tools are still developing, Bitcoin ordinals have generated hype and interest, and their impact on the Bitcoin ecosystem and future activity remains to be seen.

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