Ordinals are a new way to store arbitrary data on the Bitcoin blockchain. They allow users to inscribe unique digital content on a satoshi on the Bitcoin blockchain. This creates a one-of-a-kind digital artifact that could be valuable to collectors.
Inscriptions
Ordinal inscriptions are unique pieces of digital art that can be added to the Bitcoin blockchain, creating an immutable record of ownership. These inscriptions can range from simple icons to full-fledged digital collectibles like planets or even Bitcoin punks. Ordinal inscriptions are possible thanks to the Segregated Witness (SegWit) and Taproot upgrades to Bitcoin that free up block space. While many critics argue that the rise of ordinals is needlessly filling up Bitcoin’s block space and increasing transaction fees, others believe it opens up a new use case for the oldest cryptocurrency. In addition, it can expand the scope of Bitcoin’s immutable decentralized database beyond financial transactions to include other types of data. Although NFTs on Ethereum point to off-chain data hosted on the Interplanetary File System (IPFS), ordinals store their metadata on the Bitcoin blockchain.
Transactions
Ordinal inscriptions allow users to associate arbitrary data with a particular satoshi in the Bitcoin blockchain. This data is treated like any other satoshi and can be exchanged or used to pay transaction fees on the Bitcoin network. A Bitcoin ordinal is a new way for creators and collectors to monetize their work on the Bitcoin blockchain. In addition, they can also add trackable authenticity and scarcity to digital artifacts. While Bitcoin Ordinals have received much attention from the crypto community, they are not without controversy. Some Bitcoin maximalists argue that they are unnecessary and lead to higher transaction fees. Others, however, are excited by the potential of Ordinal NFTs to bring new life to the Bitcoin blockchain and other proof-of-work networks. Ordinals are created by adding a Taproot script-path spend to a transaction that inscribes a satoshi with a unique piece of data. This process can be complex for those who have yet to learn of Bitcoin’s Unspent Transaction Output (UTXO) management, but tools are emerging to make this process easier for non-technical users.
Uses
As the Bitcoin ecosystem grows, so do its use cases. And one that’s been gaining traction recently is an ordinal inscription. The technology enables people to attach non-fungible tokens (NFTs) to a specific satoshi, the lowest denomination of Bitcoin. The NFTs then act as proof of digital content ownership, such as a picture or audio file. The inscription is recorded within the witness section of a Bitcoin transaction. However, unlike Ethereum-based NFTs, ordinals do not hold separate metadata files. This makes them more secure and faster to transfer.
Moreover, the ordinal numbers can be linked to critical events in Bitcoin’s history. For instance, an ordinal inscribed on a block that has reached its height of transaction fee or the first satoshi to be minted after an adjustment period can add another layer of rarity. Despite this, only some are sold on the concept. Among them are some Bitcoin maximalists who want to avoid inscribed content competing with the regular transactions that make up the blockchain.
Origins
Ordinal NFTs are a relatively new feature of the Bitcoin blockchain. They are created by attaching arbitrary data to a site using the Ord open-source software. This process is called inscribing, and the inscription content is stored in the witness data of a transaction. Once the inscription is recorded, it becomes part of the blockchain and can be viewed through a particular Ordinal wallet or online Ordinal viewer. While some people are skeptical of the technology, others see it as adding more utility to Bitcoin and other proof-of-work networks. In addition to increasing block sizes, ordinals allow adding more data to the Bitcoin blockchain. This is important because it allows more art and other non-fungible tokens to be created on the platform.
Future
Introducing the Ordinals protocol has ushered in a new era for Bitcoin, especially in non-fungible tokens (NFTs). It’s a watershed moment for those interested in building on the Bitcoin blockchain. Ordinals are also creating interest in the more comprehensive crypto and Web3 landscape. The NFT market is worth billions of dollars, and Ordinals allows developers to mint NFTs on the Bitcoin blockchain. These NFTs can create everything from digital art pieces to virtual collectibles. NFTs first found traction on Ethereum but are also becoming popular on the Bitcoin blockchain. The growth of this new technology could lead to more development on the Bitcoin blockchain and other proof-of-work networks. This would give these networks new utility, specifically in digital art.
Functions
Ordinals allow satoshis to be tagged, identified, and even inscribed with information–transforming them into non-fungible tokens (NFTs). NFTs are digital artifacts that can hold data such as an image, text, or other metadata. They live on the blockchain, and their value depends on the data they contain rather than the currency itself. Inscribed satoshis are held within the witness data of a Bitcoin transaction and are accessible through Ordinals-enabled wallets and online ordinal viewers. However, it is essential to note that inscriptions compete with regular Bitcoin transactions for block space, which may increase network fees. This has caused some controversy in the community, as some believe that Bitcoin should remain simple and focused on transferring value. Others, however, argue that adding new features and use cases can help drive development on the Bitcoin platform.