Ordinals is the new Bitcoin protocol that has turned the cryptocurrency world upside down. We mainly associate NFTs with Ethereum. However, the Ordinals protocol has changed this situation.
Within a short time of the protocol’s emergence, users have created more than 100,000 records for satoshi, the smallest Bitcoin denomination. So, what is Bitcoin Ordinals, and why has there been so much hype about it? We explain!
Bitcoin Ordinals – what’s it all about?
Actually, Rare Pepes were the first NFTs on the Bitcoin blockchain. Ordinals, however, take an entirely different approach to non-exchangeable tokens. They use the Taproot update to create unique assets like Ordinals.
The Ordinals protocol allows users to generate data directly on the Bitcoin blockchain. It went ‘live’ in January 2023 and was developed by Casey Rodarmor. NFTs on Ethereum store files on a server and have corresponding directories. Ordinals are the complete opposite – they map data directly to each satoshi and smart contract within a Bitcoin transaction. This is how NFT Ordinals are created.
What else is so special about Bitcoin Ordinals? Most non-exchangeable tokens rely on off-chain solutions to store their data. Off-chain means that the transfer of the value of a particular NFT takes place outside the blockchain registry. This approach has been heavily criticized, mainly because of its incompleteness and dependence on external sources.
The Ordinals protocol also solves this problem. How? It writes the data directly to the blockchain. For this reason, NFT Ordinals are converted into virtual artworks. This also makes them more authentic than traditional NFTs.
Overnight, Ordinals have gained huge popularity on the Bitcoin blockchain. So much so that they have also appeared on Litecoin!
Structure of Ordinals NFT
There is no doubt that it is different from traditional NFTs.
Let us take a look at it:
- The transaction witness field. This is where the data and content of the NFT is stored.
- Inscriptions – the actual content that is minted on the Bitcoin blockchain and whose ownership is the NFT. The content is generated in the transaction’s witness field and then assigned to the first Satoshi to emerge from the transaction.
- Envelope. The content thus generated is stored in an ‘envelope’ consisting of opc codes. These are used to issue instructions to the bitcoin blockchain.
- Serial numbers. These are used to distinguish individual satoshi, as ‘digital artefacts’. Consecutive ordinal numbers identify the specific satoshi that is the first to emerge from a transaction as an NFT. After this designation, the NFT in question can change hands and be traded like any other non-exchangeable token.
Have you noticed how Bitcoin Ordinals differ from ‘classic’ NFTs? We can confidently say that NFTs on Bitcoin represent a cultural shift in the world of cryptocurrencies. At the same time, they are a technical improvement of non-convertible tokens.
Of course, there is also criticism of NFT ordinals. Especially when it comes to the overuse of the Bitcoin network. However, no one will consider that Taproot allows all parties to a transaction to cooperate and does not overburden the Bitcoin ecosystem at all. In addition, there are Schnorr signatures that combine public keys and create a new signature. This increases privacy and lowers the cost of the transaction while reducing the amount of data required to complete the transaction.
The future of NFT Ordinals
It depends on a number of factors. These include the projects that Bitcoin will have alongside it. At the moment, there is a lot of hype around Ordinals from March 2023, but we must remember that this is a market that is just developing. So, it is very likely that more people will opt for Ordinals in the near future.
NFT Ordinals is predestined to become really ‘big’ and even global. A growing number of users are moving their NFTs from Ethereum to Bitcoin. This was the case with Bored Ape Yacht Club, for example.
Interesting fact: To perform such an NFT migration, use a tool called Teleburn. It allows NFT owners to transfer an NFT that already exists on another network to a Bitcoin blockchain. At the same time, it is taken out of circulation on the original network.
It is estimated that the market for NFT Ordinals could reach a value of around $4.5 billion by 2025. According to Dune Analytics, there were more than 300,000 registrations of NFT Ordinals on the Bitcoin blockchain by the end of January 2023. Analysts also predict that the Ordinals market will become a significant competitor to Ethereum while offering new use cases.
Bitcoin NFT Ordinals worth a look
Ordinals are often interesting and fascinating collections. They achieve impressive sales, with some artworks reaching hundreds of thousands of dollars.
One of the most remarkable collections is Ordinal Punks. In a way, it is a tribute to CryptoPunks. It is a collection of 100 Bitcoin NFTs that were minted first.
Another notable project is Taproot Wizards. Of course, as the Ordinals market develops, we expect new collections to emerge that are equally innovative. At this stage, our interests include:
- Bitcoin Rocks.
- Timechain Collectibles.
- Ordinal Loops.
- Ripcache’s Power Source.
- Bitcoin Shrooms.
- The Shadow Hats.
- The Dan Files.
Summary
Bitcoin Ordinals is another interesting experience in the world of cryptocurrencies. Especially in the ‘faction’ of collectors. As the number of NFT Ordinals continues to grow, so does the surrounding community.
Although the market for Ordinals is still in its infancy, we are already seeing some interesting collections at amazing prices.
Many artists and creators are still experimenting with the possibilities that Bitcoin Ordinals offer. So, it is possible that we will soon see new and innovative collections inscribed on the Bitcoin chain.