Bitcoin Non-Fungible Tokens (NFTs) have quickly become a hot topic in the world of cryptocurrency, offering new possibilities for blockchain and digital art enthusiasts. While NFTs have predominantly been minted and traded on Ethereum-based platforms, a new protocol called Ordinals has been launched on Bitcoin to enable on-chain Bitcoin-native NFTs.
Ordinals was developed by Casey Rodarmor, a former Bitcoin Core contributor, who leveraged the Bitcoin Taproot upgrade in 2021 to enhance the capabilities of the cryptocurrency and enable the creation of Bitcoin NFTs. Taproot allows for more efficient and flexible transactions on the Bitcoin blockchain, including the use of smart contracts and decentralized finance (DeFi) applications.
Yuga Labs, the largest issuer of NFTs in the world, announced the creation of TwelveFold, a new NFT collection issued on Bitcoin, further endorsing the success of Bitcoin NFTs.
So, what exactly are Ordinals? Ordinals are serial numbers assigned to individual satoshis, the smallest unit of Bitcoin, based on the order in which they are mined. These serial numbers are imprinted on the satoshis through the ordinal theory, and they allow for the tracking, transfer, and embedding of meaningful data, such as pictures or videos, within Bitcoin transactions. This data can be viewed through Ordinals-compatible wallets and online explorers.
Inscriptions, the process of assigning assets to individual satoshis, are digital artifacts that exist on the Bitcoin blockchain. Unlike traditional NFTs that rely on off-chain content stored on platforms like IPFS, inscriptions benefit from Bitcoin’s immutability and security. They are fully on-chain and do not require a sidechain or separate token.
Creating Bitcoin NFTs using the Ordinals ecosystem can be done through two primary methods. The first method requires technical skills and involves running a full Bitcoin node and installing the Ordinals protocol. This allows for inscribing satoshis into an Ordinals wallet and creating Bitcoin NFTs. The second method is more straightforward and involves using a no-code tool like Gamma or Ordinalsbot.com to inscribe your ordinal NFT.
Trading Bitcoin Ordinals currently takes place peer-to-peer over-the-counter (OTC) in dedicated Discord servers, with the help of escrows as intermediaries. Infrastructure and marketplaces for trading Bitcoin Ordinals are still being developed. Compared to Ethereum-based NFTs, Bitcoin Ordinals trading may seem outdated, but it has not diminished people’s interest in Bitcoin NFTs.
When it comes to buying Bitcoin NFTs, Taproot-compatible wallets like the Ordinals wallet, Xverse, and Hiro wallets must be used. These wallets allow for the purchase and storage of Bitcoin Ordinals.
Selling Bitcoin NFTs follows a similar process to buying them. A Taproot-compatible wallet must be used to upload the inscription onto the blockchain. Peer-to-peer OTC markets, like the Bitcoin Ordinals Discord server, are used to sell the inscriptions.
There are a few key differences between Ordinals and traditional Ethereum-based NFTs. Ordinals are always immutable and have on-chain content, making them more secure and less prone to loss. In contrast, Ethereum-based NFTs can be changed or deleted by the contract owner and may rely on off-chain content. Additionally, Ordinals have sparked a debate within the NFT community, questioning whether Bitcoin should expand its functionality beyond being a medium of exchange.
While there are concerns about the efficiency and costs of the Bitcoin blockchain and its full nodes due to the larger block sizes created by Ordinals, the debate will continue as the Ordinals market evolves. In the end, Bitcoin’s true value lies in its ability to adapt to the desires of its users.