The Impressive Rise of Bitcoin Ordinals Explained

If you’re thinking the Bitcoin blockchain is solely for payments, you are almost correct, as that is a major part of its purpose. However, for years, it’s been doing more than that, like storing documents and various data. Now, with the introduction of Bitcoin Ordinals, you can even store NFT data on the Bitcoin blockchain.

Since its launch in January 2023, Bitcoin Ordinals has greatly impacted the crypto world. This article will discuss the impressive rise of Bitcoin Ordinals along with an explanation of their major uses and types.

What are Bitcoin Ordinals?

NFTs have become popular digital assets worldwide. Usually, you find them on blockchains like Ethereum, Solana, and the BNB Smart Chain. However, there has been a deep requirement to bring NFTs to the oldest blockchain, Bitcoin. And, Bitcoin Ordinals showed this could be a possibility.

Bitcoin Ordinals have been a new way to add digital data to individual satoshis (SATs) on the Bitcoin blockchain.

The concept of Bitcoin NFTs didn’t become a reality initially because Bitcoin’s design makes it impossible to tweak its code, which greatly depends on a decentralized network of developers and nodes prioritizing network security. However, with the crypto ecosystem growing, there are now more chances for creating Bitcoin NFTs.

Besides, you don’t need to think too much about where to buy Bitcoin Ordinals. Numerous specialized marketplaces have been introduced since the first Ordinal was minted.

The Impressive Rise of Bitcoin Ordinals

Ordinal theory was created by Casey Rodarmor and was officially launched in late 2022. However, the real buzz started in February 2023 when Yuga Labs revealed their first Bitcoin NFT collection using Ordinal inscriptions.

Bitcoin transactions and Ordinal inscriptions both soared. By the start of June 2023, over 11 million Ordinals were inscribed on Bitcoin. Thus, like many new projects in crypto, Ordinals saw a big jump in interest and excitement. The highest point in inscription volume happened around mid-May, but the interest didn’t completely fade.

However, while the initial buzz lessened, it didn’t completely go away. Then, BRC-20 and BRC-721 tokens came into play, keeping the fascination alive. As crypto lovers caught on to the possibilities these new developments brought to the Bitcoin blockchain, ideas started flowing.

How do Bitcoin Ordinals work?

Casey Rodarmor, the developer, explained that the position of a satoshi on the Bitcoin blockchain relies on four parameters: satoshi index in the block, cycle number, block index in the difficulty adjustment period, and block index in the halving epoch. Understanding these parameters is important to understand how Bitcoin Ordinals work.

These four parameters help determine the position of a satoshi. In the world of NFTs, the earlier satoshis are rare, and the rarity of mints can significantly increase their value among collectors.

With the increased block size limit on Bitcoin, the Ordinals protocol allows for the inscription of larger data on satoshis. For example, you can mint your CryptoPunk or any data by inscribing on a satoshi.

3 core components of Bitcoin Ordinals

Ordinal Theory

Ordinal theory is a system of giving a special number to each Bitcoin satoshi. There are now 20 million Bitcoins and each Bitcoin is made up of 100 million satoshi units.

Each satoshi gets its very own ordinal number. They’re numbered based on when they were first mined and entered circulation. The process follows a format known as “integer notation” in ordinal theory.

The official ordinal theory document suggests other ways to represent Bitcoin ordinals:

• Decimal Format: The block height number is followed by the satoshi’s number within the block.
• Degree Format: Rate the rarity of a satoshi based on its inherent values.
• Percentile Format: Express the satoshi’s position in Bitcoin’s supply as a percentage.
• Naming: Encode the ordinal number using the characters a through z.

Each satoshi has its own uniqueness. For example, if a satoshi is the first in its block after a difficulty adjustment or after a Bitcoin halving cycle, it’s considered rarer and may be more desirable than other satoshis.

Ordinal theory has its own satoshi rarity ranking system, which lets you link arbitrary data to specific satoshi units. Plus, because the order in which each satoshi entered the blockchain is set permanently, it’s tough to manipulate their numbers.

Ord Software

To add data to Bitcoin satoshis, start by downloading and running a Bitcoin full node using Bitcoin Core. This involves syncing with the Bitcoin blockchain. When you download Bitcoin Core, you’ll also get a Bitcoin wallet. To make Bitcoin satoshis non-fungible, download Ord software.

Note that, when you use ordinals, Bitcoin NFTs are called “digital artifacts.” Despite the different name, Bitcoin digital artifacts act similarly to other on-chain NFT digital assets.

After getting Ord software, you can inscribe any data onto individual satoshi units. This process, known as “inscribing,” turns satoshi units into “inscriptions.” Use the Ord Explorer to discover millions of satoshi units that have already been inscribed by members of the Bitcoin community.

Ordinal Inscriptions

Ordinal inscriptions are stored directly on the blockchain within the script of a taproot transaction. And, this is different from many popular NFT collections on Ethereum, Polygon, Solana, and other blockchains. Typically, these blockchains only keep a record of the NFT on-chain, while the associated media file is stored elsewhere on the internet.

However, certain collections like CryptoPunks and CrypToadz store both the media and the NFT directly on-chain.

Initially, inscribers could add up to 4 megabytes (MB) of data to each satoshi, whether it’s an audio file or an image. However, inscriptions can now pull data from other existing inscriptions, as recursive inscriptions were introduced in 2023.

This breakthrough significantly expands the potential amount of data linked to each satoshi. It has opened the door for exciting innovations, including the incorporation of video games and on-chain software applications directly on the Bitcoin blockchain. You can now explore a whole new realm of possibilities with these advancements.

Wrapping Up

Bitcoin Ordinals showed crypto users how non-fungible tokens can now be created on the Bitcoin blockchain. Usually, you could only use platforms like Ethereum for NFTs, but with the progress in crypto and Web3, there’s a trend to bring NFTs to Bitcoin.

Bitcoin Ordinals stands out by using a special method called “inscription” to add unique data to the smallest unit of Bitcoin, the satoshi. Jump into the world of Bitcoin Ordinals and begin making and trading your collection today.