Cointime

Download App
iOS & Android

A Guide to Ordinals, the NFTs Recorded Directly on the Bitcoin Blockchain

Ordinals unlock a new way to record images, text, and anything else on the Bitcoin blockchain – using satoshis, Bitcoin's base units. Here's what they are and how they work.

TL;DR

  • Ordinal Theory: Under Ordinal Theory, each individual satoshi can be ranked, ordered, inscribed, and individually transferred.
  • Inscriptions: Individual satoshis can be inscribed with unique, immutable data that is stored completely on the blockchain, rather than on external servers such as IPFS, as most other NFT data is stored.
  • Rarity: Satoshis do not need to be inscribed to have rarity, as the ranked order of satoshis (e.g. the first satoshi of a block) can assign unique values.
  • Secured on Bitcoin: Ordinals are immutably secured on the most time-tested, robust, and decentralized blockchain out there.

What is Ordinal Theory?

Under Ordinal Theory, individual satoshis (for every 1 bitcoin, there exist 100,000,000 satoshis) are kept track of based on the order that they’re mined. Hence, the name Ordinals.

However, to keep track of individual satoshis, you would need an Ordinal compatible wallet that allows you to control the specific order output of your satoshis when creating outgoing transactions. If you send out an Ordinal inscription from a wallet that does not allow individual sat control, your satoshi may be lost to the transaction fee.

Because Ordinal Theory considers each satoshi individually, there is an inherent rarity value built into each satoshi before any inscriptions are even created. Depending on the ordering placement of the mined satoshi (e.g. if a satoshi is the first-mined after a halving cycle), or even the significance of the number (e.g. if the number is a perfect square root), a rarity type is assigned. You can read more about Ordinal Theory from the handbook, where the author breaks down rarity levels and how to recognize them.

How do Ordinal inscriptions work?

You may remember the latest Bitcoin soft fork upgrade near the end of 2021, Taproot. In essence, Taproot brought functionality that enabled large and complex transactions that weren’t feasible before, while laying the groundwork for further developmental potential. This upgrade has made it a bit easier to store inscribed data directly on the Bitcoin blockchain via new Taproot spend scripts.

Coupled with Ordinal Theory which effectively assigns serial numbers to each satoshi, we can inscribe and transact these individual units just like we would transact Bitcoin normally. This is because Ordinal inscriptions don’t require a new blockchain, token, or scaling layer to work. As a result, Ordinal inscriptions are completely optional yet simultaneously permissionless.

How do I create an Ordinal inscription?

To create your own Ordinal, you must run a fully synced Bitcoin node and have an Ordinal-compatible wallet (that can create inscriptions and utilize sat control when sending out the inscription). Technically savvy users can follow the Ordinals handbook guide to run such an ord wallet.

If you’re not keen on setting up a full node and running the ord wallet in your terminal, there are a number of no-code services already available, such as the inscription creator from Gamma.

As mentioned above, it is imperative that inscriptions not be sent out from wallets that are not Ordinal-compatible, or that don’t have advanced sat control functionality. Instead, it is recommended that you create a new wallet with an unused Taproot receiving address, so that you can receive and hold your Ordinal inscription and later export your wallet to a user-friendly, Ordinal-compatible wallet.

While there is no marketplace available for transacting Ordinal inscriptions just yet, many have been transferring inscriptions peer-to-peer through the ord wallet.

Why are Bitcoin NFTs suddenly becoming popular?

Since NFTs first caught mainstream attention around 2017 with the Cryptopunks craze, most NFTs to date have been minted and popularized on the Ethereum blockchain. And while Bitcoin doesn’t allow for Ethereum’s level of programmability, NFTs are actually considered to have originated on Bitcoin through the introduction of Colored Coins back in 2012.

Since then, a number of sidechain projects (such as Blockstream’s Liquid) and Bitcoin scaling solutions (like Stacks or RGB) have enabled Bitcoin-secured NFTs in different ways. However, no project has been able to truly create popularized, on-chain Bitcoin NFTs — until now. Since the first Ordinal inscription on December 14, 2022, both the number of ordinals and the fees paid to inscribe them on the blockchain have skyrocketed:

The current process for inscribing satoshis, however, remains complex, technically demanding, and out of reach for many — including those who may be crypto-native. Despite these challenges, Bitcoin NFTs have been on an upwards trend.

Given that Bitcoin is the most robust and long-standing blockchain in existence, perhaps the idea of securing immutable, non-fungible assets on Bitcoin makes the most sense. In comparison to most other blockchains where NFTs are stored on IPFS or Arweave, Ordinal inscriptions are stored directly on the Bitcoin blockchain, making them truly immutable.

Comments

All Comments

Recommended for you

  • Spot gold continues to fall

    spot gold continues to decline, with the decline expanding to 2%, at $3315.49 per ounce.

  • BTC breaks through $93,500

    the market shows BTC has broken through $93,500, now trading at $93,506.58, with a 24-hour increase of 6.12%. The market is fluctuating greatly, please manage your risks.

  • U.S. strategic Bitcoin reserves may announce details in the coming weeks

    Trump signed an executive order in early March this year proposing to establish a national strategic reserve of Bitcoin and other tokens, and requested the Treasury Secretary to submit an evaluation report on the legality and feasibility of the plan within 60 days. With less than two weeks remaining until the 60-day deadline set by Trump's executive order, this means that more details about the US Bitcoin reserve will soon be disclosed. Market expectations for this may be one of the important catalysts for the recent rebound in cryptocurrency. In addition, any comments questioning the independence of the Federal Reserve have also had a positive spillover effect on Bitcoin.

  • Bitcoin's market share once rose to 64.67%, but now fell back to 64.30%

    On April 23rd, data, the Bitcoin dominance (BTC.D) briefly rose to 64.67% this morning, reaching a new high since February 2021, and is currently back at 64.30%. The high Bitcoin dominance indicates the quietness of the altcoin market, but it may also suggest that a bottom reversal is imminent. Based on historical data, when Bitcoin dominance surged above 60% in November last year, altcoins started a small bull market. In 2019 and 2021, Bitcoin dominance reached highs above 70%, followed by a broad and spectacular uptrend.

  • Spot gold breaks $3,500/ounce for the first time, setting a new record high

    spot gold soared, breaking through the $3500 per ounce integer mark for the first time, rising 2.14% intraday, and rising more than $870 year-to-date. 

  • BTC falls below $88,000

    market shows BTC has fallen below $88,000, now trading at $87,996.01, with a 24-hour increase of 0.68%. The market is fluctuating greatly, please be prepared for risk control.

  • Spot gold hits a new all-time high again, breaking through $3,450/ounce

    spot gold continued yesterday's upward trend, breaking through the $3450/ounce mark for the first time, rising 0.76% during the day, and accumulating over $820 in gains for the year. 

  • BTC breaks through $88,000

    market shows that BTC has broken through $88,000, now trading at $88,011.16, with a 24-hour increase of 1.23%. The market is volatile, please manage the risk.

  • BTC breaks through $88,000

    the market shows BTC breaking through $88,000, now reported at $88,059, a 24-hour increase of 4.25%, with significant market fluctuations, please manage risks.

  • BitradeX Partners with NVIDIA for Deep Collaboration, Leveraging GPU Power to Lead the AI Trading Revolution

    BitradeX has announced its partnership with NVIDIA through the NVIDIA Developer Program, entering into a deep collaboration to optimize its core AI trading model, ARK Trading Model, with NVIDIA’s A100 and H100 GPU clusters. This collaboration has significantly enhanced ARK's decision-making speed and precision, reducing decision latency from 2.1 milliseconds to just 0.07 milliseconds. This deep partnership marks a technological breakthrough for BitradeX, propelling the industry into the "AI Quantification 2.0 Era" and offering users a more efficient trading experience in the global financial market.