Ordinals are digital items that live directly on Bitcoin’s blockchain, launched in 2023 by Casey Rodarmor. They work by assigning unique numbers to individual satoshis (tiny bits of Bitcoin) and allow people to attach images, text, or videos to them. Unlike traditional NFTs on other blockchains, Ordinals store their data completely on Bitcoin’s network. They’ve sparked both excitement and debate in the crypto world, with many new tools making them easier to create and trade.
Quick Overview
- Ordinals are unique identifiers assigned to individual satoshis (Bitcoin’s smallest units) that enable creation of digital artifacts on Bitcoin’s blockchain.
- Launched in January 2023, Ordinals allow users to inscribe various data types like text, images, and videos directly onto Bitcoin.
- Unlike traditional NFTs, Ordinals store data completely on-chain, leveraging Bitcoin’s security and immutability features.
- They were made possible by Bitcoin’s SegWit and Taproot updates, which increased data capacity and improved network capabilities.
- Ordinals have transformed Bitcoin’s utility by enabling digital asset creation while maintaining the network’s decentralized nature.
Since their launch on Bitcoin’s mainnet in January 2023, Ordinals have transformed how digital assets work on the Bitcoin network. Created by Casey Rodarmor, Ordinals are unique identifiers assigned to individual satoshis, which are the smallest units of Bitcoin. They’re similar to traditional NFTs but work directly on Bitcoin’s blockchain rather than on separate platforms.
Ordinals became possible thanks to two major Bitcoin updates: SegWit in 2017 and Taproot in 2021. These updates added new features to Bitcoin transactions, including a “witness data” section and increased data capacity of up to 4 MB per transaction. This means users can now inscribe various types of data, like text, images, and videos, directly onto individual satoshis. Mining pools contribute significantly to the network’s ability to process these inscriptions.
The system uses ordinal theory to number satoshis based on the order they’re mined and transferred. This creates unique digital artifacts that are permanently recorded on Bitcoin’s blockchain. Unlike traditional NFTs, which often store their data off-chain, Ordinals keep everything right on Bitcoin’s network. This means they inherit Bitcoin’s security, immutability, and decentralization features. Similar to ERC20 tokens, Ordinals have established a standard for creating digital assets on their respective blockchain.
To create or manage Ordinals, users need to run a full Bitcoin node and use a Taproot-compatible wallet. However, new no-code minting applications are making it easier for people to create Ordinals without deep technical knowledge. Platforms like Magic Eden now offer Ordinal inscription services to help users mint their digital assets. The introduction of the Runes Protocol in April 2024 has further expanded the possibilities for token creation on Bitcoin.
Ordinals have sparked both excitement and controversy in the Bitcoin community. While some see them as a potential game-changer for data storage and network security, others worry about their impact on Bitcoin’s primary purpose as a currency. The technology has also caught the attention of institutional players, including Bitwise’s Bitcoin ETF wallet.
The Ordinals ecosystem has grown considerably since its launch. Besides creating unique digital artifacts, the technology can also be used for fungible assets through BRC-20 tokens. Unlike traditional NFTs, Ordinals don’t include built-in smart contract functionality or royalties, making them simpler but potentially less flexible for certain uses.
This innovation has opened up new possibilities for Bitcoin beyond its original role as a digital currency. As more platforms and tools develop around Ordinals, they’re becoming increasingly accessible to everyday users. However, they remain a relatively new technology that’s still evolving within the broader cryptocurrency landscape.
Frequently Asked Questions
How Do I Create and Sell My Own Bitcoin Ordinals?
Creating and selling Bitcoin ordinals starts with choosing a compatible wallet like Xverse or Hiro.
Users then select their digital content (image, text, or video) and use an inscription service like Gamma.io to mint it.
Once inscribed, the ordinal can be listed on marketplaces like Magic Eden or Ordinals Market.
Sellers connect their wallet, set a price, and complete the listing transaction.
The process typically requires Bitcoin for fees.
What Are the Risks of Investing in Ordinal NFTS?
Investing in Ordinal NFTs comes with several risks.
Network congestion can lead to high fees and slow transactions on Bitcoin’s blockchain. The market’s volatile nature means prices can change drastically, and it can be tough to find buyers.
There are also security risks, like scams and potential theft. The technology is new and untested, with limited user interfaces.
Legal concerns exist too, as there’s uncertainty about regulations and content control.
Which Wallets Support Bitcoin Ordinals Transactions?
Several popular wallets support Bitcoin Ordinals transactions.
Xverse is a Bitcoin-focused wallet that lets users manage their Ordinals.
Magic Eden combines a wallet with a marketplace for buying and selling.
Leather (formerly Hiro) works across multiple blockchains.
UniSat is specifically made for Ordinals and includes a marketplace.
OKX handles both Ordinals and BRC-20 tokens.
These wallets offer features like inscription viewing and secure storage.
Can Ordinals Work on Other Blockchain Networks Besides Bitcoin?
While Ordinals were specifically designed for Bitcoin, similar concepts can work on other blockchains. Each network would need its own version due to different technical structures.
Ethereum already has NFTs through ERC-721, and Cardano supports native tokens. Solana and Polkadot have their own NFT standards too.
However, direct Ordinals replication isn’t possible because the protocol relies on Bitcoin’s unique UTXO model and Taproot upgrade features.
Are Ordinals Negatively Affecting Bitcoin Network Fees and Performance?
Ordinals have considerably impacted Bitcoin’s network fees and performance.
They’ve caused fees to jump 25 times higher than last year, with average transaction costs hitting $34.08.
The network’s also seeing heavy congestion, with over 333,400 unconfirmed transactions at peak times.
While higher fees benefit miners and network security, they’re making everyday Bitcoin transactions more expensive and slower.
This has sparked ongoing debates within the Bitcoin community about network usage.
