The world’s most well-known digital assets are NFTs, or non-fungible tokens. Nevertheless, the majority of them have been developed and implemented on blockchain platforms as Solana, Ethereum, and BNB Smart Chain. Curiously, the Bitcoin Ordinals whitepaper laid the groundwork for implementing NFTs on the Bitcoin network, the oldest blockchain in the world. It is impossible to modify the code of Bitcoin applications due to Bitcoin’s technical nature.
A decentralized network of developers and nodes ensures the Bitcoin network’s security. So, no concrete project ever came out of the idea of Bitcoin NFTs. More and more options to create Bitcoin NFTs have arisen as a result of the growth of the crypto ecosystem. Learn more about Bitcoin Ordinals and their inner workings in the following discussion.
Understanding Bitcoin Ordinals
One of the most talked-about innovations in the web3 sphere recently is Bitcoin Ordinals. After Casey Rodarmor unveiled the project in January 2023, it sparked heated debate among cryptocurrency enthusiasts. Give me the rundown on the ordinals protocol and its salient features. Bitcoin Ordinals are the original, mint-state, one-of-a-kind bits of data that make up Bitcoin, often known as satoshis or sats.
Consequently, satoshis can acquire an identity similar to a fundamental non-fungible token and become truly unique. What are the options for adding digital assets such as text, photos, or videos using the most basic Bitcoin denomination? The solution reveals how the mechanism that allows inscription on Bitcoin functions.
The need for materials to understand Bitcoin’s technology and uses has been increasing exponentially. In the realms of crypto and Web3, Bitcoin Ordinals have emerged as the newest sensation. With increasing network activity, the record for daily inscriptions using Ordinals was broken four times in April 2023. Users uploaded overwhelming media, including photos and video games, to the network.
What is an Inscription?
Bitcoin Ordinals, when defined, shed light on a frequently-mentioned feature of the protocol. Ordinals are useful for encoding digital assets onto Bitcoin’s lowest denomination, Satoshi. You can also include smart contracts, which can help represent NFTs, in the data you can inscribe on Bitcoin.
Inscription thus makes the generation of Bitcoin NFTs possible. The question “How are Ordinals different from NFTs?” has legitimate responses that can be found in the inscription. In November 2021, the Bitcoin network implemented the Taproot upgrade, which greatly improved the Satoshi inscribing process.
The Bitcoin team has invested considerable time and effort in integrating NFTs into the Bitcoin network. At Counterparty in 2014 and Stacks in 2017, an early attempt was made to integrate Bitcoin with non-fungible tokens. Data saved in the witness of Bitcoin transactions can mainly be engraved during the inscription procedure. The witness functionality was introduced with the SegWit upgrade that the Bitcoin network introduced in 2017.
The rationale behind Creating Bitcoin Ordinals
Bitcoin Ordinals must also be the primary emphasis of the introductory guide. Note that Bitcoin Ordinals are based on long-standing debates within the Bitcoin community. Do you think learning Bitcoin is merely for financial transactions? Alternatively, you can store your data using Bitcoin’s decentralized and secure network.
Picture this: Bitcoin is the de facto reserve currency of the globe. Without room for experimental use cases like data inscribing in the block space, it would simply build a global financial network. Resolving Bitcoin’s security budget problem can be achieved by increasing the utilization of block capacity for storage.
In its early stages, Bitcoin’s OP_RETURN function was the only way to encode messages onto blocks, limiting the available capacity to about 80 bytes. You want to know about Ordinals NFTs, but that characteristic wasn’t enough to make them. The size limit was raised to 4 MB by introducing two significant hard fork upgrades, Taproot and SegWit, which brought about significant benefits. The improvements allowed for more efficient organization of transaction data by providing a one-of-a-kind method for measuring block sizes.
Working of Ordinals
There are four different factors linked to a satoshi’s location on the Bitcoin blockchain, according to developer Casey Rodarmor. The four parameters are a Satoshi index, a cycle number, the block index during the challenging adjustment phase, and the block index during the halving epoch. By finding the equilibrium between these factors, you can better understand how Bitcoin Ordinals work.
A satoshi’s position on the Bitcoin blockchain may be determined using these four factors; obviously, the first satoshi is rarer. Rare mints may be able to command a premium price from NFT collectors. Consequently, one way to confirm the rarity of a Bitcoin NFT is to use the ordinal ranking of sats.
One further way Bitcoin Ordinals function is by reusing the code, this time as envelopes for the data written on satoshis. The Ordinals protocol can assist in staking more significant data on satoshis when Bitcoin’s block size limit is increased. Users can mint CryptoPunk on Bitcoin using a satoshi, for instance.
Imagine two identical banknotes of the same denomination but with the signatures of Michael Jordan and LeBron James on one. That’s the idea behind the ordinals. Keep in mind that you can purchase the same item with both bills. Conversely, a bill featuring the signatures of well-known celebrities would have a different social status.
Unique Traits of Bitcoin Ordinals
One of the fundamental guidelines in an introduction to Ordinals is to avoid confusing Bitcoin Ordinals with non-fungible tokens. You need to be aware that there are several ways in which Ordinals differ from NFTs. ‘Ordinals NFT’ has been trending recently because of the possibility of imprinting Bitcoin network satoshi with one-of-a-kind data and smart contracts. Bitcoin Ordinals are distinct from NFTs in several ways, some of which are highlighted here.
On-chain Minting
The fact that the Bitcoin blockchain stores real raw file data is the primary argument in favour of Ordinals being considered apart from NFTs. Ethereum and other non-fungible token networks store the files as reference points, which can be hosted anywhere. For instance, NFTs can link to physical artworks that are being auctioned in a gallery.
Inscription vs. Tokenization
Bitcoin Ordinals differ most significantly from NFTs in that they have an inscription. Since Bitcoin Ordinals include distinct data like audio, video, and text files, some would think they are NFTs. On the other hand, Ordinals hold the file data with direct inscription on the Bitcoin blockchain, as you can see from the basics of an Ordinals wallet. The tokenisation process involves minting brand-new tokens on separate blockchain networks, resulting in non-fungible tokens.
Smart Contract Functionality
Another indicator that Bitcoin does not have smart contract functionality is the discrepancy between Bitcoin Ordinals and NFTs. Without decentralized exchanges, an effective user interface, and easily accessible wallets, trading Bitcoin Ordinals can be challenging. Consequently, the only way to trade Bitcoin Ordinals is by using the OTC trading paradigm.
Users are still flocking to the project despite the fact that the Ordinals NFTs are divided according to the smart contract functionality. The rapid influx of capital into their environment illustrates why it is imperative that you acquire knowledge about the Ordinals.
Concurrency Issues
Potential concurrent problems are another major focus of introductory Bitcoin Ordinals for beginners. Thanks to the inscription, the possibility of adding additional inscriptions to Satoshi units is now open. However, NFTs, or non-fungible tokens, are associated with a particular digital or physical asset. With Bitcoin Ordinals, the worries about multi-vector NFTs may become a reality.
Examples of Renowned Bitcoin NFT Collections
Understanding the project’s popular collection examples is also necessary for the introduction of Bitcoin Ordinals. In this article, we will examine the most well-known Bitcoin NFT collections introduced by Bitcoin Ordinals.
Ordinal Punks
Ordinal Punks would be the initial instance of Bitcoin Ordinals being applied to NFTs. It is a tribute to the CryptoPunks NFT collection, which has 100 Bitcoin Ordinals. Ordinal Punks stands out since its PFP generator is an open-source algorithm. The project author manages the Ordinal Punks’ bids and asking prices in a Google Sheet. Project developers can keep tabs on all transactions through Discord by pretending to be escrow managers.
TwelveFold 
Among Bitcoin Ordinals, TwelveFold by the same developers as Bored Ape Yacht Club (BAYC NFTs) is by far the most popular. Limited to 300 pieces, Yuga Labs’ Ordinals series features generative art. Generative art NFTs incorporate both computer-generated imagery and features created by human artists.
To grasp the concept of an Ordinals Wallet application, you need to be familiar with TwelveFold’s plans to investigate the interplay between blockchain technology, time, and mathematics. Over nearly twenty-four hours, 3,246 bids between $50,000 and $150,000 were received in the first TwelveFold auction.
Ordinal Loops
Bitcoin Ordinals collection continues with an example of an Ordinal Loop. Object 0 is a one-of-a-kind NFT that is featured in this popular offering. Along with its distinctive mathematical torus design, the NFT showcases dynamically generated art that spins. One of the initial series’ additions, Object 0, is the existing narrative named “Do Not Fiat.” The Ordinal Loops team created it.
Taproot Wizards
Taproot Wizards are also part of Ordinal’s NFT collection. The independent web3 creator Udi Wertheimer created this Ordinal collection on the Bitcoin network. With Inscription 652, the developers kicked off the Taproot Wizards collection, which features one unique NFT designed by Udi for each wizard. Using Bitcoin’s immutability, the Taproot Wizards collection may safely store one-of-a-kind digital artefacts.
In Summary
The introduction sketch to Bitcoin Ordinals outlined how non-fungible tokens can be added to the Bitcoin blockchain. Ethereum and similar blockchains have long been considered the best options for developing and deploying NFTs. But with all the new developments in crypto and Web3, there has been a huge uptick in people looking for ways to integrate NFTs into the Bitcoin network. The smallest unit of Bitcoin, the satoshi, can have its own unique data added to it using Bitcoin Ordinals’ special process, the inscription.
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FAQS
How do Bitcoin Ordinals differ from traditional NFTs?
Traditional NFTs on networks like Ethereum typically store metadata or reference links, while Bitcoin Ordinals directly inscribe data onto satoshis, making them fully on-chain. Additionally, Ordinals lack some smart contract functionalities found on other platforms, meaning trading them is less automated and often done over-the-counter (OTC).
What is the purpose of the Taproot upgrade for Bitcoin Ordinals?
The Taproot upgrade, introduced in 2021, made it easier to add complex data, like inscriptions, to the Bitcoin blockchain. This upgrade enhances privacy, efficiency, and scalability, allowing for the inscription process used by Bitcoin Ordinals to mark individual satoshis with unique data.
Can Bitcoin Ordinals be traded like Ethereum-based NFTs?
While Bitcoin Ordinals are similar to NFTs, they lack native trading features. Unlike Ethereum, where decentralized exchanges facilitate easy trading of NFTs, Bitcoin Ordinals are primarily traded via OTC channels. This difference is due to Bitcoin’s limited smart contract capabilities and the decentralized nature of its network.
What are some popular Bitcoin Ordinal collections?
Notable Bitcoin Ordinal collections include Ordinal Punks, which pay homage to the CryptoPunks series, TwelveFold by Yuga Labs, and Taproot Wizards by Udi Wertheimer. Each collection showcases the versatility and growing popularity of Bitcoin Ordinals as they expand the possibilities of Bitcoin beyond traditional financial transactions.
