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Ordinals: Bitcoin NFTs Explained (Bitcoin NFT Ordinals Inscriptions: Key Takeaways)

Deen Newman

Deen Newman

February 17, 2023

7 min read

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Bitcoin Ordinals are taking over Web3 – or so it seems. The barrier for entering the crypto market has lifted immensely in recent years – nevertheless, Ordinals have managed to catch the attention of many crypto enthusiasts around the world. What makes them so special? How do they work? In this guide, we will give you an overview of the new trend that has brought NFTs to the Bitcoin blockchain.

What are Ordinals?

Ordinals are digital artifacts, also called inscriptions, where the actual image/content is fully replicated on the Bitcoin blockchain.

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First and foremost, it’s worth mentioning that the Taproot technical upgrade was the reason why Ordinals were brought to life. It played a huge role in encouraging the implementation of smart contracts on the Bitcoin network. The Segregated Witness (SegWit) modification was also a major helping asset.

So, what does Bitcoin Core look like in the first place? Each BTC is divided into 100,000,000 satoshis (sats). Each sat is numbered according to the order of when it was minted – starting with a zero. These are “ordinal numbers” – or “ordinals”-- that show the order of each sat in the total BTC supply.

First and foremost, it’s worth mentioning that the Taproot technical upgrade was the reason why Ordinals were brought to life. It played a huge role in encouraging the implementation of smart contracts on the Bitcoin network. The Segregated Witness (SegWit) modification was also a major helping asset.

So, what does Bitcoin Core look like in the first place? Each BTC is divided into 100,000,000 satoshis (sats). Each sat is numbered according to the order of when it was minted – starting with a zero. These are “ordinal numbers” – or “ordinals”-- that show the order of each sat in the total BTC supply.

Now that software engineer and ex-Bitcoin Core contributor Casey Rodarmor has launched the new Ordinals Protocol on January 21, it is also possible for Bitcoin node operators to inscribe each sat with information, such as smart contracts introduced by Taproot, which in turn enable Ordinals creation. We encourage you to check out Rodarmor’s Handbook – Ordinal Inscription Guide.

Building on Bitcoin is much easier with shared and dedicated nodes by GetBlock. Fuel your project with the disruptive power of first blockchain, register your account for free: https://account.getblock.io/sign-in

It is important to note that at the time of writing, not all BTC wallets are able to send or receive Ordinals – currently, experts are recommending Sparrow Wallet. You can hold only one Ordinal per wallet and if you spend a sat inscribed with Ordinals data, you can lose access to it. What’s more, there is currently no marketplace to buy or sell Ordinals.

But are Ordinals different from NFTs? Let’s take a look at how these two trends collide.

Ordinals vs NFTs

Images, audio, video, HTML, SVG, JS, CSS – anything can be an NFT. Non-fungible tokens, which came to life thanks to Ethereum’s smart contract technology, sometimes require metadata and quality updates, therefore they are often relying on off-chain data storage. For some, this is a major setback that makes NFTs incomplete.

Ordinals, on the other hand, are fully complete, as they are inscribed within the blockchain itself. Unlike NFTs, Ordinals do not allow for creator royalties. Some believe that we are now facing a new era of digital assets and a huge technical improvement. On the contrary, others think that these inscriptions could overload the Bitcoin blockchain and result in higher transaction costs (FYI: the fees seem to catch up with the news). Moreover, a potential drawback of inscriptions could be the fact that all content stored on the blockchain is permanent – including illicit content.

Related: How To Create An NFT Collection: 5 Easy Steps
Related: How To Start Trading NFTs: GetBlock’s 101

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What is special about Ordinals?

As of today, the Bitcoin network has relatively low transaction fees – due to this, creators are no longer trying to compress the size of their inscriptions, as they would do with NFTs. The controversy around Ordinals intensified after Luxor Technologies mined the largest block in the history of Bitcoin, containing a 3.94 megabyte transaction 0301e0480b374b32851a9462db29dc19fe830a7f7d7a88b81612b9d42099c0ae into a block of 774,628 – weighed 3.99 million units. Note that the Bitcoin protocol limits the block weight to 4 million units.

What did Luxor inscribe? A modified version of the iconic Bitcoin meme "Magic Internet Money: Bitcoin Wizard", which was initially created in 2013 by one of the Reddit users in Microsoft Paint.

Magic_Internet_Money_Meme

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Luxor Technologies believes that Ordinals are here to stay — the only question is how much of an impact they will have on the crypto community as a whole.

Another attention-grabbing inscription use case is the launch of the Ordinal Punks collection — a seemingly obvious hint at the popular CryptoPunks NFT collection. On February 9, 2023, one Ordinal Punks NFT, Punk 94, sold for 9.5 BTC, or roughly $214,000 – with the prices likely to reach new heights in the future.

punk94

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Other popular Ordinals collections include Taproot Wizards, Bitcoin Rocks, and Ordinal Loops.

How to get an Ordinal

So how do you create an Ordinal?

As we pointed out before, to receive Ordinal inscriptions, you must set up a Bitcoin wallet, such as Sparrow Wallet. Check out THIS tutorial for a step-by-step guide on how to make an Ordinal-compatible wallet.

Note that you can’t sell, transfer, or trade an Ordinal unless you are running a Bitcoin Node on your computer. You can create a BTC node yourself – the process of maintaining self-hosted nodes might be rather resource-inefficient – or use services like GetBlock to save time and money: https://account.getblock.io/sign-in

Related: Self-Hosted vs Dedicated Nodes: Benefits, Risks, and Difference Explained

Once you have your BTC node, you need to sync with the blockchain.

That said, here are three main options for receiving an Ordinal:

  • inscribe an Ordinal yourself by running the corresponding node;
  • purchase an Ordinal directly from an owner/ original creator;
  • inscribe an Ordinal without running your own node.

How to buy and trade Ordinals

At the time of writing, Ordinals can be bought exclusively via the peer-to-peer method. The first thing you should do is go to the official Discord channel for Ordinals to skim through different projects. Choose the one that you like and connect with the owner.

You can also check out third-party services such as Gamma and Satishibles’s Ordinals Bot that will inscribe Ordinals for you. These platforms will ask you to provide the BTC address where you’d like to receive your Ordinal. You’ll use the Sparrow address that you created earlier.

Important information: Bitcoin’s Ordinals are still a relatively new trend in Web3, therefore we strongly recommend you do your own research and only work with reliable services! Do not share your private keys and send BTC to unverified users!

The options list is likely to expand in the future, as the market opportunities for Ordinals are still being discovered and developed.

Final thoughts: out of the ordinary?

Are the new Bitcoin’s NFTs really so “out of the ordinary”? Time will tell if the popularity of these inscriptions will affect the Web3 world in general and the Bitcoin network in particular. Nevertheless, we can already tell that Ordinals open a new chapter in the cryptosphere – they provide possibilities for Bitcoin users that many developers in the past thought to be unattainable. We have yet to see if Ordinals will keep up with the market and become a real counterpart to NFTs.

Deen Newman

Deen Newman

February 17, 2023

7 min read

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