Bitcoin Ordinals are among the trendiest and most revolutionary innovations in the current Web3 landscape. Since their introduction in January 2023, the crypto world has been abuzz with discussions for and against these additions to the Bitcoin ecosystem.
Read on to learn what Bitcoin Ordinals are, how they work, and why they’re becoming so popular.
What Are Bitcoin Ordinals?
Bitcoin Ordinals are digital assets native to the Bitcoin network. Also known as Ordinal inscriptions, they are created by inscribing data to individual satoshis, the smallest unit on the Bitcoin blockchain.
You could think of them as non-fungible tokens on Bitcoin.
The Ordinals protocol allows you to add images, text, video, and other digital assets on satoshis. You can also inscribe data featuring smart contracts, which can represent NFTs. This capability opens up Bitcoin Ordinals to a wide range of use cases, as we’ll soon uncover.
How Do Bitcoin Ordinals Work?
Bitcoin Ordinals use a special mechanism, inscription, to add unique data to satoshis once mined. Inscriptions made on satoshis follow the order in which they are mined, creating unique inscribed sats, which are then stored in the Bitcoin blockchain’s blocks.
Consequently, Bitcoin Ordinals benefit from the security, durability, and immutability of Bitcoin itself. This marks the key difference between Bitcoin Ordinals and traditional NFTs. With traditional NFTs, data related to the token is kept off-chain, which places it at risk of unauthorized access.
Information is kept in the witness section of a Bitcoin transaction during inscription. The witness section was launched during the 2017 Segregated Witness upgrade (SegWit upgrade), which split the Bitcoin transaction data structure into two portions, i.e., transaction and witness. The move increased transaction data efficiency.
The inscription technique resulted from the Taproot upgrade introduced into the Bitcoin network in November 2021. Meanwhile, the Ordinals protocol launched by developer Casey Rodarmor relies on the Ordinal Theory, a numbering system that permits the protocol to identify, track, and trade inscribed satoshis. You can also transfer inscriptions to standard Bitcoin addresses.
Benefits of Bitcoin Ordinals
Bitcoin Ordinals present a revolutionary way to store data. This aside, they offer several other benefits, including:
- Verification: Satoshi’s ordinal ranking can assist in authenticating the rarity of a specific Bitcoin NFT.
- Security: Ordinal inscriptions are plausibly the most secure NFTs yet. Because Bitcoin Ordinals are inscribed directly on the Bitcoin blockchain, a decentralized network, they are immutable, highly secure, and may help elevate the security of the Bitcoin network.
- Increased utility: The Ordinals protocol facilitates asset issuance on Bitcoin, expanding the utility and attracting new developers and users without making changes to the Bitcoin network. This unique ability is thanks to the Taproot and SegWit upgrades.
Potential Use Cases of Bitcoin Ordinals
Bitcoin Ordinals have become increasingly popular as they provide new and unique use cases for the Bitcoin network. Here are some excellent examples.
- Digital art: Artists can now inscribe satoshi with digital artwork, creating unique, secure, and unalterable inscriptions. Moreover, Ordinals marketplaces present them with a new and thriving market to sell their digital artifacts.
- Data storage: Bitcoin Ordinals record diverse data types on-chain, offering security and immutability. This provides excellent storage for sensitive data such as financial transactions, scientific information, and professional certificates. The information is also open to verification since it’s publicly available.
- Storage of intellectual property rights: Since they make it easy to track ownership history, Bitcoin Ordinals can minimize or help settle disputes arising from copyright ownership.
- Bitcoin collectibles: Bitcoin collectors ascribe value to certain inscribed satoshis based on important events in Bitcoin’s history (like during a halving) or the associated transactions. These inscribed satoshis are considered rare and exotic and could attract new users to the network as they fetch higher prices.
- On-chain token issuance: Bitcoin Ordinals enable projects to issue on-chain fungible tokens via the BRC-20 token standard. This entails minting an inscription that facilitates the minting of a BRC-20 token.
Identify a reputable Ordinal wallet, such as the Xverse Bitcoin Inscriptions Wallet, to securely manage your Ordinal inscriptions. It features a user-friendly interface, seamless sending and receiving of Bitcoin Ordinals, and wallet connection to Ordinals marketplaces, enabling you to buy and sell Bitcoin Ordinals.
Final Word
With Bitcoin Ordinals, users can inscribe different types of data onto the Bitcoin blockchain, creating a new market for on-chain Bitcoin NFTs, meme-inspired Bitcoin NFT collections, and other digital assets.