What Are Bitcoin Ordinals: NFTs on the OG Blockchain
Imagine scribbling your name on the Mona Lisa — not exactly something you’d do to the original, right? But what if you could do something similar on the Bitcoin blockchain, the granddaddy of them all?
That’s what Bitcoin Ordinals are about — NFTs (Non-Fungible Tokens) living on the Bitcoin network itself, instead of Ethereum (which is where many of the NFTs are housed).
What are Bitcoin Ordinals?
Bitcoin Ordinals are essentially inscriptions of data (text, images, music) onto individual satoshis, the smallest units of Bitcoin. It’s like carving your initials on a grain of sand on a vast digital beach.
Why is this a big deal? Each ordinal inscription has a unique number, forever etched on the Bitcoin blockchain. No more than one inscription can exist for a specific satoshi, making them truly scarce and potentially valuable.
In addition, Ordinals open up a whole new world of creativity on Bitcoin–think digital art galleries, music albums, or even in-game items existing directly on the blockchain.
Decoded: Bitcoin Ordinals, BRC20 and Inscriptions
Bitcoin Ordinals, BRC20 tokens and Inscriptions are all related, yet each refers to a specific concept. Let’s break it down:
Ordinals are the NFTs (Non-Fungible Tokens) living on the Bitcoin blockchain itself. Inscription, on the other hand, is the underlying method used to embed data onto Bitcoin satoshis, enabling both Ordinals and BRC20 tokens. BRC20 is the standard of inscribing an Ordinal onto Bitcoin. Examples of these BRC20 tokens include: ORDI/USDT, RATS/USDT, SATS/USDT, TURT/USDT, MICE/USDT and VMPX/USDT.
In a nutshell:
- Ordinals are unique inscriptions of data, like NFTs, on individual satoshis.
- Inscriptions are the underlying method for permanently attaching data to satoshis (enabling both Ordinals and BRC20 tokens).
- BRC20 leverages Ordinals to create fungible tokens on the Bitcoin blockchain with additional functionalities such as those mentioned above.
Some of the biggest Ordinals projects include Bitcoin Frogs, a collection of 10,000 unique frog collectibles that ranks as (currently) the most traded Ordinal NFT project, capturing the largest overall market share.
Next is Ordinal Punks, a 100-punk collection inspired by CryptoPunks. Ordinal Punks holds the record for the highest individual sale at 11.5 BTC ($495,000 at the time).
And then, there’s Taproot Wizards featuring “magic internet JPEGs” which gained attention for its large transaction size and raised $7.5 million in funding.
Step-by-Step Guide to Buying Bitcoin Ordinals
- Set up a suitable Bitcoin wallet: Standard Bitcoin wallets won’t work with Ordinals. You need a wallet that supports the Ordinals protocol, such as:
- Xverse: Popular choice with user-friendly interface.
- UniSat: Offers advanced features and customization.
- Hiro Wallet: Also known as “Leather Wallet,” gaining traction.
- Gamma.io: Marketplace wallet with built-in functionality.
2. Fund your wallet with Bitcoin (BTC): You’ll need BTC to cover the cost of the Ordinal itself and transaction fees. You can purchase BTC on cryptocurrency exchanges like CoinW.
3. Choose a marketplace: Several marketplaces facilitate Ordinal trading, each with its own features and communities. Popular options include:
- Gamma.io: Integrates with Xverse wallet, offers auctions and fixed-price listings.
- Magic Eden: Established NFT marketplace now supporting Ordinals.
- OrdSwap: Decentralized marketplace built on the Bitcoin blockchain.
- NFT marketplaces with Ordinals support: Some existing NFT platforms like LooksRare and OpenSea are also exploring Ordinals integration.
4. Explore and select your desired Ordinal: Browse the marketplace listings, considering factors like price, creator, collection, rarity, and your own interests. Research the project and seller before committing.
5. Connect your wallet and complete the purchase: Follow the marketplace’s instructions to connect your wallet and finalize the purchase. This usually involves approving a transaction with your wallet app.
Getting Started With Bitcoin Ordinals
- Get a compatible wallet: Not all wallets support ordinals yet. Some popular options include Electrum, Sparrow, and Bitcoin Core.
- Understand the risks: Ordinals are still in their early stages, and the market is quite volatile. Do your research and be prepared for potential scams or technical issues.
- Explore the Ordinals community: Join online forums, Discord servers, and Telegram groups to learn from others and stay updated on the latest developments.
- Start small: Don’t dive in headfirst with your life savings. Try inscribing some test data or purchasing a low-cost ordinal to get a feel for the process.
Key Arguments Surrounding Ordinals
Bitcoin Ordinals are a controversial topic, generating heated debates within the Bitcoin community. Here are the main points of contention:
Impact on the network:
- Transaction fees: Inscribing data using Ordinals requires high transaction fees, clogging the network and potentially hindering its core functionality as a payment system. Some argue this prioritizes NFT speculation over everyday payments.
- Block size concerns: Some fear Ordinals could lead to an arms race of data inscription, exceeding the block size limit and straining the network’s scalability.
- Spam and abuse: Critics worry about spamming the blockchain with irrelevant data, increasing storage requirements and harming decentralization.
Philosophical disagreements:
- Original purpose: Some believe Ordinals deviate from Bitcoin’s intended purpose as a peer-to-peer payment system, introducing complexities and diverting resources from its core functionality.
- Decentralization vs. functionality: The debate centers on balancing decentralization with adding new features like NFTs. Adding functionalities comes with trade-offs, and some fear compromising Bitcoin’s core principles.
Ultimately, the debate boils down to balancing innovation with preserving Bitcoin’s core values and maintaining the network’s stability and sustainability. The future of Ordinals on Bitcoin is both promising and uncertain, and the ongoing discussion will likely shape their evolution and potential integration into the wider Bitcoin ecosystem.
It’s important to note that there are also supporters of Bitcoin Ordinals who argue their benefits outweigh the risks. They see them as a positive development, bringing new use cases and revenue streams to the network. However, the concerns mentioned above are valid and require careful consideration as the technology develops.
