Introducing Bitcoin Ordinals to Digitali
Over the last few weeks, several members of the Digitali community have asked us on separate occasions whether there are any plans to expand coverage to Bitcoin Ordinals, which for those who are not familiar with the term are digital assets inscribed on the Bitcoin blockchain - aka Bitcoin NFTs.
The short answer: Yes, most definitely.
Our team greatly appreciates the suggestions from our community and echoes the viewpoints of many of our community members that in order for Digitali to truly become the ultimate Web3 Wiki for NFTs, it needs to expand coverage to every possible blockchain where NFTs reside. This means covering assets beyond ERC-721 on Ethereum, with the first phase of this expansion of coverage being Bitcoin Ordinal collections.
Digitali’s NFT collection pages are not built overnight. Hours of research, contribution from the community (including members like you), and editing by our content teams go into every single collection page to ensure we adhere to our mission of building the definitive, objective Web3 Wiki for NFTs.
It’s an endeavor we are really excited about and one that will not be possible without the help of our community. If you have any insights or firsthand experience with Ordinal collections, we hope you’ll be the first to contribute content and earn Reward Points in the process!
In the meantime, here’s a high-level wiki on Bitcoin Ordinals - the story behind how they were developed, their functionality and use cases, and how they differ from the traditional ERC-721 NFTs.
Introduction to Ordinal NFTs
Ordinal NFTs, also known as Bitcoin Ordinals or Ordinal Inscriptions, were developed by a programmer and artist named Casey Rodarmor in 2022.[1] The Ordinal Theory, proposed by Rodarmor, enables the tracking and transfer of individual satoshis.[3] Bitcoin Ordinals allow Bitcoin holders to permanently inscribe satoshis with unique digital content of up to 4 megabytes.[1] This gives Bitcoin both fungible and non‑fungible properties. This direct inscription process, also known as on‑chain storage, allows the entire content of the NFT to be stored directly on the Bitcoin blockchain.[5][8] This contrasts with Ethereum's ERC‑721 standard, which typically holds metadata or a pointer to the digital asset, usually stored off‑chain.[6]
The process of generating Bitcoin Ordinals is more technically intricate compared to minting NFTs on the Ethereum blockchain, although user-friendly Ordinal mining applications like Gamma and the Ordinals Bot have emerged, aiming to simplify the process for users who may not possess advanced technical skills.[1]
Differences from Traditional NFTs
Unlike NFTs on the Ethereum blockchain that follow the ERC-721 standard, the Bitcoin protocol does not distinguish a satoshi with unique content from any other satoshi. This allows Bitcoin Ordinals to be exchanged freely like any other virtual currency, preserving the fungible aspect of Bitcoin. However, Bitcoin Ordinals can also act like NFTs, being bought or sold for their unique inscribed content.[2]
Another difference between ERC-721 NFTs and Bitcoin Ordinals is the way rarity is derived - and how they are priced. The attributes of the asset typically define the rarity of most Ethereum-based NFTs, and subsequently, the price. With Bitcoin Ordinals, however, rarity and the corresponding value of the Ordinal NFT corresponds to the supply and position of the respective satoshi on the Bitcoin block. Rarit is thus determined by when the Ordinal was inscribed. For example, during the launch of a new collection, key events such as the first 1,000 or 10,000 Ordinals inscribed might be worth more than other Ordinals in the block.[4]
Utility and Applications of Ordinal NFTs
For Creators
Ordinal NFTs offer creators a tool to design sequences with different themes or narratives, encouraging collectors to acquire multiple NFTs in a specific order to complete a sequence. For instance, a creator could design a series of Ordinal NFTs that tell a story or reveal a hidden message when collected in a specific order.[7]
For Collectors
For collectors, the value of the Ordinal positions can fluctuate based on factors like demand, rarity, or popularity, introducing an element of speculation and investment potential. Collectors can strategically acquire and trade Ordinal positions within a sequence to maximize their returns. [7] The launch of the BRC‑20 token standard allows individuals to mint and transfer any tokens they desire through the Bitcoin blockchain.[7]
Potential Use Cases
Ordinal NFTs have potential applications beyond the realm of digital art and collectibles. They could be used for asset tokenization, where each token or coin represents a specific real‑world asset or value.[6] This could include real estate, intellectual property rights, and more. The ability to link unique content to individual satoshis could lead to Ordinals being connected to unique security tokens or stablecoins. [6] The potential integration of Discreet Log Contracts (DLCs) with Bitcoin Ordinals could provide a programmable way to implement trustless trading and lending of Ordinals.[6]
Market Dynamics and Trading
Trading Platforms and Tools
Trading of Bitcoin Ordinals has primarily been over‑the‑counter, with collections like ‘Planetary Ordinals' and 'Bitcoin Punks' transacting outside traditional NFT marketplaces like OpenSea or Blur.[6] Several tools have been developed to buy and sell Bitcoin Ordinals. These include the Ordinals Wallet, Hiro, and Xverse, which allow users to purchase satoshis within the wallet using on‑ramp payment plugins and perform transactions to purchase and sell Ordinals.[4] Additionally, NFT marketplaces such as Swap Labs’ Ordinals Market, Binance NFT and Magic Eden have incorporated support for the trade and sale of Ordinal NFTs.[9]
Market Performance
As of May 10, 2023, over 5 million Bitcoin Ordinals have been minted, generating approximately 996.23 BTC (around $27.6 million) in transaction fees.[10] Six-figure sales include Ordinal Punk 94, which sold for 9.5 BTC in February 2023 (worth around $214,000 at the time).[11][12][13]
Select Projects and Entities
Several NFT studios have embraced Ordinals for their NFT projects. One of the earliest is the Ordinal Punks collection, which pays tribute to the original CryptoPunks project on the Ethereum blockchain. The collection consists of 100 NFTs minted within the first 650 inscriptions on the Bitcoin chain. The 192×192 pixel images were created using an open‑source algorithm from the pseudonymous Web3 creator FlowStay.[15] Another project is TwelveFold, launched by Yuga Labs, the creator of the Bored Ape Yacht Club. In addition, Dust Labs utilized Ordinal NFTs for their BTC DeGods project.[12][13][14]
Controversies
Opposition within the Bitcoin Community
According to Chainlink, some members of the Bitcoin community argue that Bitcoin should primarily be used for secure financial transactions and express concern that the rise of Ordinal NFTs could unnecessarily consume Bitcoin's block space and increase transaction fees.[16][7] They believe that incorporating an NFT element into the blockchain contradicts the original intentions of Bitcoin's pseudonymous creator, Satoshi Nakamoto.[18] With the introduction of Ordinal NFTs, the mean size of transactions has increased by over 100 percent, from 600 to 1100 bytes, according to data from Glassnode.[17] This increase in transaction size is due to the additional data inscribed onto individual satoshis.[18]
Intellectual Property and Copyright Issues
The emergence of Ordinal NFTs has also raised questions about intellectual property and copyright infringement. This is particularly relevant in cases where Ethereum NFT projects are copied onto the Bitcoin blockchain using Ordinals. For instance, a clone of CryptoPunks called Ordinal Punks appeared on the Bitcoin blockchain following the launch of Ordinals.[14]
Future Outlook
According to blockchain experts, the introduction of Ordinal NFTs could bring several benefits to the Bitcoin network. Firstly, it could increase the utility of the Bitcoin blockchain.[18] Secondly, Ordinals might broaden Bitcoin's appeal to those interested in NFTs and digital art, with the potential to increase Bitcoin demand and influence its price.[19] Lastly, the rise of Bitcoin Odinals could reinvigorate developer interest in the Bitcoin community.[20]
While the future of Ordinal NFTs is uncertain, the recent growth of this digital asset class has certainly opened up new opportunities and uses cases for the Bitcoin network and the future of NFTs - and we at Digitali are excited to offer more content on Bitcoin Ordinals in the coming weeks. So stay tuned. In the meantime, we encourage you to check out our existing NFT collection pages and continue to contribute content to earn Reward Points and build the Digitali community.
References
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1. "What Are Bitcoin Ordinals? A Full Guide", Mar 25, 2023.
2. "United States꞉ How Ordinals Make Bitcoin Both Fungible And Non‑Fungible", May 12, 2023.
3. "Bitcoin Ordinals꞉ Everything You Need to Know ‑ Trust Wallet", Mar 27, 2023.
4. "What are Bitcoin Ordinals? ‑ Cointelegraph", Mar 09, 2023.
5. "NFTs Are Bloating Bitcoin, Creating Risks And Opportunities For Investors", Feb 11, 2023.
6. "Exploring the Potential of Bitcoin Ordinals꞉ A Leap into the Era of On‑Chain NFTs ‑ Medium", Jun 12, 2023.
7. "NonFungibleX꞉ Making a Landmark in the NFT Space with OrdinalsX NFTs and NONX Tokens", May 29, 2023.
8. "Bitcoin NFTs on the Rise꞉ The Impact of Ordinals on the Bitcoin Network", Apr 24, 2023.
9. "Bitcoin Ordinals Cross 7 Million Mark, Indian Web3 Insiders Say NFTs are Here to Stay", May 17, 2023.
10. "NFT News Digest꞉ Tweet ti Elon Musk ṣe igbelaruge awọn tita Milady Maker", May 13, 2023.
11. "What Do New NFTs Mean for Bitcoin's Future Valuation? | The Motley Fool", Mar 06, 2023.
12. "NFT News Digest꞉ Les jouets Pudgy Penguin sont au sommet du marché Amazon", May 27, 2023.
13. "NFT News Digest꞉ Pudgy Penguin Toys wa ni oke ti Amazon Marketplace", May 27, 2023.
14. "Part II꞉ When You Jump Chains, Do NFTs Stay the Same? Ordinals on the Bitcoin Blockchain", Mar 31, 2023.
15. "Bitcoin NFTs꞉ The 20 Most Notable Ordinals Inscriptions ‑ NFT Now", Feb 10, 2023.
16. "What Are Ordinals? Bitcoin NFTs Explained ‑ Chainlink Blog", Mar 11, 2023.
17. "How Ordinals are affecting Bitcoin mempools & transaction size", Feb 18, 2023.
18. "What Are Bitcoin Ordinals and How Do They Differ From NFTs? ‑ MakeUseOf", Feb 27, 2023.
19. "Bitcoin Punks exceed 1,145 ETH in daily trading volume as Bitcoin Ordinals gain traction", Mar 01, 2023.
20. "Grayscale Reports Explosive Popularity of Ordinals, a New NFT on BTC", Apr 30, 2023.