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Understanding Ordinals: A Beginner's Introduction to Bitcoin NFTs

Updated: Feb 29

The Bitcoin community is abuzz with excitement about Ordinal Inscriptions, but what's the latest trend sweeping through Crypto Twitter?

Bitcoin Ordinals

Image by macrovector on Freepik

Definition of Bitcoin Ordinals

Bitcoin Ordinals, a prominent feature in the current web3 landscape, was introduced by Casey Rodarmor in January 2023, sparking varied opinions within the crypto community. This protocol revolves around the fundamental units of Bitcoin, namely satoshis or sats, which are minted and paired with distinctive pieces of information.

By integrating unique information, satoshis gain individuality, effectively functioning as basic non-fungible tokens. This transformation allows the addition of text, images, or other digital assets to the smallest denomination of Bitcoin. The protocol's essence lies in facilitating inscriptions on Bitcoin.

As the demand for resources to comprehend Bitcoin applications and their underlying technology continues to surge, Bitcoin Ordinals have emerged as a significant development in the crypto and web3 realms. Notably, in April 2023, daily inscriptions utilizing Ordinals set new records, experiencing a fourfold increase in network activity. Users enthusiastically contributed video games, images, and various content types to the network during this period.

What is an Ordinal Inscription?

The concept of Bitcoin Ordinals sheds light on a key aspect of the protocol, offering a means to inscribe a digital asset onto the smallest Bitcoin denomination, the Satoshi. This inscription can encompass various data types, including smart contracts that have the potential to represent NFTs.

Consequently, the act of inscription serves as the foundation for creating Bitcoin NFTs. To understand the distinction between Ordinals and NFTs, one can explore the intricacies of the inscription process. The November 2021 Taproot upgrade in the Bitcoin network presented a significant advantage for inscribing on satoshis.

Bitcoin developers have diligently worked towards integrating NFTs into the Bitcoin network. Early endeavors in this direction include Counterparty in 2014 and Stacks in 2017. The inscription process primarily involves embedding data from the content stored in the witness of Bitcoin transactions. The Bitcoin network introduced the SegWit upgrade in 2017, introducing the witness feature to facilitate this inscription process.

What's Next For Ordinals?

A competitive drive is underway to enhance the processes of inscription on Bitcoin and the development of wallets that facilitate easy viewing of created Bitcoin NFTs.

In the pursuit of establishing a user-friendly method for collectors to generate Ordinal Inscriptions, Gamma, a Bitcoin NFT marketplace on Stacks, has initiated a paid service. This service enables users to inscribe both images and text seamlessly.

Notably, other initiatives offering a similar service include Oridalsbot, a creation of the Satoshibles NFT collection founders.


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