Ordinals
Ordinals are a protocol that enables individual satoshis (the smallest units of Bitcoin) to carry unique data like images, videos, or text, allowing NFTs on the Bitcoin blockchain without altering its core structure.
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What Are Ordinals in Crypto?
Ordinals are a protocol that allows users to assign extra data, like images, audio, or text, to individual satoshis (1 sat = 0.00000001 BTC), making them unique and traceable. This creates Bitcoin-native digital artifacts, which function similarly to NFTs (non-fungible tokens) but live entirely on the Bitcoin blockchain.
Unlike NFTs on Ethereum or Solana, which rely on smart contracts and often reference off-chain metadata, Bitcoin Ordinals store all data on-chain. This results in digital assets that are more permanent and resistant to censorship. Each inscribed Satoshi can be tracked using a unique ordinal number based on its mining order.
Software engineer Casey Rodarmor launched the protocol in January 2023 and quickly sparked both excitement and debate within the Bitcoin community.
How Did the Ordinals Protocol Come About?
The creation of Ordinals was made possible by two major Bitcoin upgrades:
- SegWit (2017): This upgrade allowed for more flexible data storage in Bitcoin transactions by introducing the concept of witness data.
- Taproot (2021): Taproot further optimized transaction data and allowed for complex scripts to be embedded more efficiently.
Together, these upgrades enabled larger, arbitrary data to be stored directly on-chain, without requiring a change to Bitcoin’s core consensus rules.
Ordinals use a numbering scheme to index every satoshi in existence, giving each one a unique serial number (or ordinal). Once inscribed with content, these satoshis become “digital artifacts” that can be bought, sold, and traded like NFTs.
What Can Ordinals Be Used For?
Ordinals enable a wide range of creative and functional uses on Bitcoin, including:
- Bitcoin-native NFTs: Digital artwork, memes, and collectibles can be stored entirely on-chain.
- Text-based messages or documents: Developers have inscribed manifestos, poems, and code snippets.
- Tokenization projects: Some developers have started building tokens on Bitcoin using Ordinals.
- Preserving historical or cultural content: Because data inscribed via Ordinals lives permanently on Bitcoin, it’s seen as immutable and censorship-resistant.
Platforms like Gamma, Magic Eden, and OKX now support Bitcoin Ordinals trading, helping create a growing ecosystem of collectors and builders.
How Do Ordinals Work?
Ordinals involve two key steps:
- Ordinal numbering: Every satoshi is assigned an ordinal number based on when it was mined and its order within a block.
- Inscription: Content (image, video, or HTML file) is embedded directly into the transaction’s witness data. This data is stored on-chain, turning the satoshi into a unique artifact.
Because all data is stored natively on Bitcoin, Ordinals don’t rely on centralized storage or external metadata. This differs from typical NFTs, which often point to files hosted off-chain (e.g., on IPFS or a web server).
Ordinals are typically created using special inscription tools and runes or custom wallets like Xverse or Unisat that support viewing and managing inscribed sats.
FAQ
Are Ordinals the same as NFTs?
Not exactly. While both Ordinals and NFTs create unique digital assets, Ordinals are native to Bitcoin and store all data on-chain. NFTs on Ethereum or Solana usually rely on smart contracts and may store metadata off-chain. This makes Ordinals more permanent but also more storage-intensive.
Can I buy and sell Ordinals?
Yes. Ordinals can be traded on marketplaces that support Bitcoin inscriptions, such as Magic Eden, OKX, and Gamma. You’ll need a wallet that supports Taproot and Ordinals (e.g., Xverse, Unisat) to manage and transfer them securely.
Do Ordinals slow down the Bitcoin network?
Some critics argue that storing large data files on Bitcoin increases block size and could lead to congestion or higher fees. However, supporters say it brings new utility and demand to the network. The debate is ongoing within the Bitcoin community.
Are there risks to using Ordinals?
Yes. Since all data is stored permanently on-chain, there’s no way to remove or censor inscriptions. This has raised concerns about illegal or harmful content being embedded into Bitcoin. Additionally, inscribing large files can be costly due to block space limits.
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