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Bitcoin Ordinal NFT: Everything You Need to Know

2023.12.29

Key Takeaways:

  • Ordinals introduce a novel method for creating NFTs and meme tokens on the Bitcoin blockchain.
  • Controversy surrounds the launch of Ordinals due to concerns about potential similarities to spam email.
  • Unlike conventional NFTs, Ordinals store associated content directly on the Bitcoin blockchain.

 

Introduction

Bitcoin Ordinals have emerged as a groundbreaking feature on the Bitcoin blockchain, leading to a trend that is akin to non-fungible tokens (NFTs) sweeping across the crypto market a few years ago. You can consider Bitcoin Ordinals simply as utilizing satoshis, the smallest unit on the Bitcoin chain, and each satoshi is assigned a unique serial number known as an ordinal, facilitating enhanced tracking and ownership identification. This article delves into the intricacies of Bitcoin Ordinals, exploring their creation, functionality, controversy, and impact.

What Are Bitcoin Ordinals?

Bitcoin Ordinals revolutionize the concept of NFTs on the Bitcoin blockchain. Satoshis, each assigned a distinct ordinal based on the order of mining, enable the inscription of additional content. This process transforms satoshis into unique digital assets, offering the security and decentralization inherent in Bitcoin’s blockchain. The Ordinals protocol, introduced in January 2023, forms the foundation for this innovative approach.

How Do Bitcoin Ordinals Work?

The Ordinals protocol enhances satoshis by assigning them serial numbers, referred to as ordinals. These ordinals allow the inscription of additional data, creating a unique identifier for each satoshi. With Bitcoin’s structure of dividing a bitcoin into 100 million satoshis, each ordinal inscription becomes embedded directly into individual satoshis, stored within Bitcoin blocks. This ensures that Ordinals inherit the security, immutability, and durability of the Bitcoin blockchain.

How to Mine Bitcoin Ordinals?

Mining Bitcoin Ordinals follows a similar process to traditional Bitcoin transactions. However, distinctive features set it apart:

 

  • Ordinals point to data inscribed directly on the Bitcoin blockchain, contrasting with off-chain storage in other blockchains.
  • Bitcoin’s proof-of-work (PoW) mechanism distinguishes its mining process from blockchains associated with NFTs, which often employ proof-of-stake (PoS).

How to Buy, Sell, and Trade Bitcoin Ordinals?

Bitcoin Ordinals can be traded on various marketplaces like Ordinals Wallet and OKX. The process involves visiting the marketplace, creating a Bitcoin wallet, ensuring sufficient Bitcoin for trading, exploring collections, selecting an Ordinal for purchase, and using the connected Bitcoin wallet to complete the transaction. Wallets supporting Bitcoin Ordinals include Ordinals Wallet, Xverse, and UniSat, offering over-the-counter (OTC) and peer-to-peer (P2P) trading options.

Bitcoin Ordinals vs. NFTs

Distinguishing features set Bitcoin Ordinals apart from traditional NFTs:

 

  • Ordinals store data directly on the blockchain via inscriptions, enhancing decentralization and censorship resistance.
  • Rarity and value determination in Ordinals may extend beyond traditional factors, incorporating key moments in Bitcoin’s history.

Impact of Bitcoin Ordinals

Bitcoin Ordinals have sparked a divisive debate within the Bitcoin community. Advocates laud their innovative contributions to sustainability, security, and decentralization, attracting new developers and users. Critics, however, view Ordinals as a misuse of resources, potentially leading to increased fees and congestion. The impact of Ordinals on Bitcoin’s future remains uncertain.

Example of  Bitcoin Ordinals?

Illustrating Bitcoin Ordinals in action, the first NFT from the Taproot Wizard collection serves as a notable example. Minted during the largest Bitcoin transaction, this NFT exemplifies the unique possibilities Ordinals offer within the Bitcoin blockchain.

What Platform Are Bitcoin Ordinals On?

Bitcoin Ordinals are directly issued via the Bitcoin blockchain, with wrapped versions available on other networks such as Ethereum.

What Are Ordinals Wallet?

An Ordinals Wallet, exemplified by the platforms such as Ordinals Wallet, facilitates viewing, storing, buying, selling, and trading Bitcoin Ordinals. It supports the essential features of a Bitcoin wallet, including Taproot functionality.

How Do I Inscribe Bitcoin Ordinals?

Although initially complex, inscribing Bitcoin Ordinals has become more accessible through services like Gamma and OrdinalsBot. These platforms guide users through the inscription process, simplifying the creation of Bitcoin NFTs.

Is There an Index for Bitcoin Ordinals?

Several online indexes, including the Ordinals Explorer on Ordinals.com, track Bitcoin Ordinals. As of the latest update, no benchmark index for these assets has been established.

The Bottom Line

The Ordinals protocol introduces a novel approach to digital assets on the Bitcoin blockchain, sparking debates and controversies. Its impact on Bitcoin’s fees and broader adoption remains uncertain, making it a pivotal aspect to watch in the evolving landscape of blockchain technology.

 

 

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