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NFTs have brought popularity and possibility to new holdings of digital assets like digital arts, collectibles, and more, which were not easily possible before. While Ethereum is home to a majority of NFTs, Bitcoin was the world’s first and possibly the most famous cryptocurrency that now has recently ventured into Bitcoin Ordinals, which adds layer-2 networks on top of Bitcoin’s architecture and is different from other Bitcoin NFTs.
It is in its initial stage but has shifted drastically to bring together the scarcity and immutability of Bitcoin along with the creative potential of NFTs. The article deals with what Bitcoin Ordinals are, as well as their purpose, and their implications for blockchain and NFTs.
What are Bitcoin Ordinals?
Bitcoin Ordinals are a new class of NFTs based on the Bitcoin blockchain with its characteristics. Unlike normal NFTs that are primarily built on smart contracts, Bitcoin Ordinals use Bitcoin’s core platform. These are made using writing features on individual satoshi, the smallest unit of Bitcoin, equivalent to 0.00000001 BTC. Satoshis are assigned a serial number based on the order in which they were mined. The numbers imprinted on the satoshi are called the ordinals as they provide a track of where each satoshi is on the block and who owns it.
Due to the enabling features made available by the Bitcoin Taproot in 2021, the storage has enhanced efficiency and adaptability. When it comes to numbers Ordinals use Taproot as it enables larger data sizes of up to nearly 4 MB making it apt for NFTs and the Bitcoin mainnet Ordinals software was released in 2023. Bitcoin Ordinals are created by the inscription of data into individual satoshis on the Bitcoin blockchain, which can be bought, collected, and traded like usual NFTs.
The extra data inscribed are called inscriptions and can be videos, images, texts, or even audio. These are unique, one of a kind, and immutable just like any NFTs, but have the added benefit of the security and decentralization of Bitcoin’s blockchain. The inscribed data onto the satoshis cannot be easily altered and will be a part of the blockchain system.
Minting Bitcoin Ordinals
NFTs are recorded similarly to any transactions added to the blockchain. Bitcoin Ordinals are seen as a special type of transaction and are minted in the same manner into the blockchain technology. In order to mind a Bitcoin Ordinal in the easiest way, select a platform like the Magic Eden that supports Bitcoin transactions, then find the section for inscribing or creating an Ordinal. Files like images, videos, or text can be uploaded and then inscribed by clicking the inscribe button or equivalent button.
The Ordinal will be minted once it is confirmed on the blockchain, which includes the creator’s data in the form of a Bitcoin transaction. Bitcoin Ordinal NFTs can also be minted by running a full node to inscribe data onto satoshis using the Ordinal protocol. However, the first method is the easiest compared to the second as it requires technological knowledge. Bitcoin transactions take time to process and hence minting ordinals also requires time. Avoid using imported wallets for minting Bitcoin Ordinals.
Difference between Bitcoin Ordinals and NFTs
Bitcoin Ordinals and NFTs are both digital assets that are unique and can be brought, traded, or collected but differ in a few characteristics. Ordinals are inscribed directly onto the blockchain technology taking the benefits of the network’s security and adoption. Whereas most NFTs are supported by smart contracts and decentralized applications (dApps) with greater features and flexibility. NFTs are usually associated with smart contract technology associated with Ethereum, Solana, or Avalanche.
Ordinals have the added security of blockchain technology as they are inscribed directly onto individual satoshis and are immutable and permanent once inscribed. It is also highly tamper-proof and resistant to censoring as it uses the Proof-of-Work (PoW) security model. They are stored on-chain, whereas NFTs are stored off-chain with only a reference to the data stored of the digital asset on the blockchain through metadata. However, minting Ordinals requires more technical knowledge than minting Ethereum-based NFTs as it lacks smart contracts. Smart contracts make NFTs more versatile with features such as royalties or integration with DeFi protocols.
The storage of Ordinals can go up to 4MB, whereas NFTs’ storage depends on the blockchain and marketplace. Ordinal NFTs’ supply depends on the available space on the Bitcoin blockchain and NFTs are programmed with limited supply.
Here is a detailed comparison table between Ordinals and NFTs:
| Features | NFTs | Ordinals |
|---|---|---|
| Underlying Asset | Digital files (images, videos, audio, etc.) | Anything digital, including text, images, videos, and even software |
| Storage | On-chain and off-chain | on-chain |
| Blockchain | Smart contract blockchains | Bitcoin (does not have smart contracts) |
| Scarcity | NFTs can be programmed with a limited supply | Not inherently scarce, supply depends on available space on the Bitcoin blockchain |
| Size | Depends on the blockchain and marketplace | Ordinals can go as high as 4MB due to the same block limit |
| Standard | ERC-20 on Ethereum, SPL on Solana and others | BRC-20 token standard on Bitcoin |
| Market | Established, Market boom in 2021 | Emerging since 2023 |
| Accessibility | Relatively easy in the marketplaces | More technical knowledge is needed, or the need to use third-party platforms |
| Functionality | Ownership of digital assets | Data inscription |
| Flexibility | Limited (pre-defined standard) | Highly flexible (any data type) |
| Fundamentals | Scarcity, uniqueness | Permanence |
| Transaction fees | Can have high transaction fees as dependent on network congestion | Can be high depending on the network congestion and inscription size |
| Environmental impact | Transactions on Solana claims lower energy usage | Transactions on Bitcoin are energy-consuming. |
Advantages and Disadvantages of Bitcoin Ordinals
Bitcoin Ordinals have quite a few disadvantages even though they add the scope and usage of digital assets along with many other advantages. The table lists the major pros and cons of Bitcoin Ordinals that have to be taken into consideration.
| Pros | Cons |
|---|---|
| Simple, safe, and secure structure as it is built in Bitcoin’s blockchain technology. | High transaction fees: This can be caused by the increase in size and complexity of transactions and can lead to limiting the adoption. |
| More durable and guarantees long-term usability as they are directly inscribed onto the Blockchain. | Increasing the blockchain size: This can lead to longer sync times and increase storage requirements and protocols. |
| Immutable: These are safer as the inscriptions cannot be modified or deleted. | Impact node brandwidth requirements: This can reduce the overall efficiency and availability of the network. |
| Flexible: Supports content that web browsers can handle | Can be subject to volatile prices. |
| Increased rarity and value: Bitcoin’s limited supply and high value are directly proportional to the rarity and value of Ordinals. | |
| Does not cause confusion and difficulties with on-chain royalties like NFTs on other chains. |
Conclusion
The evolving digital era will be witnessing a major rise in the usage of digital assets with the rise of new crypto platforms and their adoption into usual payment systems. Along with unique assets like NFTs. The adaptability of NFT in the form of Bitcoin Ordinals incorporates NFTs into the existing blockchain technology with its unique advantages. And quite a few disadvantages as well which should be considered.
As the Bitcoin Ordinals market is less active compared to other NFT markets. It is advised to do thorough research before investing in the volatile market necessarily to avoid losses.
