On January 21, 2023, software engineer Casey Rodarmor launched the Ordinals protocol, enabling people to inscribe a wide variety of data types, such as images and videos, directly onto satoshis.
The crypto community fell in love immediately and started shifting their attention to Ordinal inscriptions instead of NFTs.
This new capability transformed regular satoshis into unique digital artifacts or Bitcoin NFTs (non-fungible tokens). Unlike traditional NFTs, which are typically associated with the Ethereum blockchain, these inscriptions are permanently etched onto the Bitcoin blockchain, offering a new way to ascribe value and ownership to digital content within the Bitcoin ecosystem.
You may have many questions on what are Ordinals or what makes them different than NFTs, etc.
Better understand what are Ordinal inscriptions.
Learn the differences and similarities between Ordinal inscriptions and NFTs.
See the difference in market cap between Ordinal inscriptions and NFTs.
What is NFTs?
Non-Fungible Tokens (NFTs) are unique digital identifiers recorded on a blockchain that certify ownership and authenticity of a digital asset. They are indivisible and cannot be copied or substituted, providing a way to sell and trade digital assets like art, music, or collectibles.
What are Ordinal Inscriptions?
Ordinal inscriptions are a cutting-edge concept in the world of digital assets, emerging as a unique form of blockchain-based technology. Essentially, they represent a method of embedding or 'inscribing' data directly onto individual satoshis, which are the smallest units of Bitcoin. Here's what makes them intriguing:
Direct Inscription on Bitcoin Blockchain: Unlike traditional NFTs (Non-Fungible Tokens) that are typically associated with blockchains like Ethereum, ordinal inscriptions utilize the Bitcoin blockchain. Each inscription is linked to a specific satoshi, making it a unique and verifiable digital asset.
Unique Digital Art and Collectibles: Ordinal inscriptions can be used to represent anything from digital artwork to text or even small programs. This opens up new avenues for artists and creators to explore Bitcoin's blockchain for their digital creations.
Immutable and Verifiable: Once inscribed, the data becomes an immutable part of the Bitcoin blockchain. This ensures the authenticity and permanence of the inscribed content, similar to how NFTs operate on other blockchains.
Emerging Technology: As a relatively new concept, ordinal inscriptions are still evolving. They represent a novel use of the Bitcoin blockchain, expanding its potential beyond just a cryptocurrency.
Accessibility and Trading: While still in the early stages of development, some platforms are beginning to support the trading and viewing of these inscriptions, indicating a growing interest in this type of digital asset.
Top 4 Differences Between Ordinal Inscriptions vs NFTs
We know that there are another type of images stored on Bitcoin, which is Stamps, but they are completely different than Ordinals. Here's the differences between ordinal inscriptions vs NFTs:
#1: Ordinal Inscriptions Are Stored on the Bitcoin blockchain
Ordinal inscriptions are immutable and exist only on-chain on the Bitcoin blockchain. This is achieved through a process where data is directly written into the individual satoshis, making it an integral part of the Bitcoin network.
Unlike traditional NFTs, which may exist on various blockchains and use external references for their data, ordinals ensure that all information is permanently embedded in the blockchain, enhancing security and permanence.
#2: Ordinal User Experience is Not the Same as NFT
Ordinals store metadata directly within the Bitcoin transaction, embedding all necessary information in the blockchain.
This contrasts with NFTs, where metadata is often stored off-chain in external servers or systems, leading to potential risks such as losing file references or the inability to access the digital asset if the external server is down.
#3: Bitcoin NFTs don't have Royalty Dilemma
Bitcoin ordinals do not support royalties due to the absence of smart contracts in the Bitcoin blockchain. This differs from NFTs on platforms like Ethereum, which utilize smart contracts to automatically provide ongoing royalties to creators.
The lack of smart contract functionality in Bitcoin means each transaction with ordinals is a simple transfer of ownership without additional layers of agreements or terms.
#4: Ordinal Inscriptions be Tokenized into BRC-20 Tokens
BRC-20 tokens are a theoretical concept in the Bitcoin ecosystem, inspired by Ethereum's ERC-20 standard. They involve embedding JSON data into satoshis through ordinal inscriptions, which could theoretically allow for the creation of fungible tokens on the Bitcoin blockchain.
This contrasts with ERC-20 tokens on Ethereum, which are standardized and widely used for creating fungible tokens through smart contracts. It's important to note that while BRC-20 is a proposed idea, it has not been widely adopted or implemented as of the current date.
Top 3 Similarities Between Ordinal Inscriptions vs NFTs in 2024
#1: Visual Similarity but Different Underlying Technology
Appearance: Both ordinal inscriptions and NFTs may appear as digital art or images, like digital paintings or animated graphics.
Underlying Technology: NFTs are typically based on Ethereum or similar blockchains with unique smart contract attributes, while ordinal inscriptions are inscribed on the Bitcoin blockchain.
Uniqueness and Verification: The uniqueness of NFTs is derived from smart contracts, whereas ordinal inscriptions' uniqueness comes from their position on the Bitcoin blockchain.
User Perception: To users, both can look identical as digital artworks or collectibles, although their technological foundations differ.
#2: Trading on Diverse Platforms Including Magic Eden
Trading Platforms Adaptation: Platforms like Magic Eden, initially focused on Ethereum-based NFTs, are expanding to include Bitcoin-based ordinal inscriptions.
Market Integration: This reflects a trend towards integrating various blockchain technologies in digital asset markets.
Diverse Asset Access: Users get a more diverse range of digital assets, promoting cross-blockchain interactions.
Emerging Market for Ordinal Inscriptions: The presence of ordinal inscriptions on trading platforms is growing, although still less prevalent compared to NFTs.
#3: Storage in Multi-Asset Wallets
Cross-Blockchain Wallets: Wallets like Metamask and Leather wallet are adapting to store assets across different blockchains.
Versatility in Asset Management: These wallets support a range of assets including Ethereum-based NFTs and Bitcoin-based ordinal inscriptions.
User-Friendly Solutions: The trend is towards unified platforms that manage a diverse portfolio, simplifying the user experience.
Interconnected Digital Asset Space: Reflects the growing interconnectedness of different blockchain ecosystems, allowing for efficient management of varied digital assets.