Hello Lions,
In today's world, no matter if anyone is into crypto or not, he must have heard about the terms like Cryptocurrency, Blockchain, bitcoin or NFTs etc. Bitcoin, the first-ever digital currency in the world of cryptocurrencies started the revolutionary path of peer-2-peer swap and recently also has expanded its wings into the realm of Non-Fungible Tokens (NFTs). NFTs have already gained insane popularity as unique and non-decaying tokens which are representing digital assets like art and collectibles and provide proof of ownership that is verifiable on a certain blockchain. While Ethereum initially dominated the vast NFT space and produced many successful projects and NFTs, with more surprise Bitcoin has now joined the fray with the introduction of the Ordinals protocol into its blockchain. This protocol enables BTC to create Bitcoin NFTs by tracking and recognizing individual units of Bitcoin called satoshis aka SAT. With its robust infrastructure and widespread global adoption, Bitcoin's entry into the world of NFTs brings a new wave of possibilities for artists, collectors, gamers and of course real-world asset owners.
We already know that Bitcoin consists of smaller units known as satoshis or SATs which is named after its creator Satoshi Nakamoto. There are a total of 100 million sats in a single bitcoin and thus each sat is valued at 0.00000001 BTC. As these satoshis are of equal value and are also interchangeable and not to mention that they are categorized as fungible assets. For example, similar principles also are applied to other blockchain-based tokens like ETH and DOT along with their smaller subdivisions.
Ordinals protocol
In order to enable the creation of Bitcoin-based NFTs, the Ordinals protocol was created and launched recently in January 2023. This protocol has the power to identify and monitor individual satoshis, which serves as a core foundation for Bitcoin NFTs. Whenever a new block of Bitcoin is mined and fresh bitcoins are generated as mining rewards, the Ordinals protocol assigns or applies a unique number to each satoshi based on its mining time where the lower numbers indicate older sats and vice versa and numerical identifier helps to create NFTS. When a transaction takes place, the Ordinals protocol carefully tracks the movement of each satoshi in a FIFO (first in, first out) manner. These particular assigned id numbers are actually known as Ordinals and they got this name from the fact that both tracking and identification operations in this protocol mainly rely on the chronological order of creation and transactions.
Normal and Ordinal NFTs
Unlike normal NFTs, Ordinal NFTs represent a different form of NFTs (Non-Fungible Tokens) that generally symbolize a sequential or ordinal number. Where existing traditional NFTs usually represent only single items like digital art or collectibles, these new Ordinal NFTs point towards a specific spot in a number series. For example, imagine a collection of Ordinal NFTs representing a series from 1 to 10 and each NFT in this collection would possess a corresponding ordinal number - such as 1st, 2nd, 3rd up to 10th. Each of these Ordinal NFTs will remain unique and can be owned by only one individual.
The functionality of Ordinal NFTs is specific and varies which depends on the project. In some cases, Ordinal NFTs may permit certain statuses or privileges within a community and provide exclusive access to particular events or restricted content. In other instances, Ordinal NFTs can serve as collectibles in their own right with their value from their ordinal position within the series. It's also important to remember that each Ordinal NFT project can have its own set of rules and special features. Therefore, when engaging with Ordinal NFTs, understanding the specifics and thorough research of each collection and its function within that particular ecosystem are essential. Bitcoin NFTs are such non-fungible tokens that are built on the Bitcoin blockchain. These NFTs are created using the Ordinals protocol, which imparts a serial number or ordinal to each satoshi.
The creation of Bitcoin NFTs was made possible through various blockchain upgrades - including SegWit, Taproot and Layer 2 payment channels. These enhancements create a standardized environment for the handling of complex transactions and expanded the blockchain's capabilities while reducing the total transaction size in the process.
The launch of the Ordinals protocol was held back in January 2023 and designed the initial path for Bitcoin NFTs. Please note that shortly after this event, Yuga Labs announced their Bitcoin NFT collection named TwelveFold. Bitcoin NFTs are also known by alternative terms such as Bitcoin Ordinals and Ordinal NFTs.
The primary objective of introducing the Ordinals system was to enable the existence of NFTs on the Bitcoin blockchain. NFTs gained immense popularity on smart contract platforms like Ethereum in 2021. Consequently, the Bitcoin community yearned for a Bitcoin-based project that could offer similar functionalities. In January 2023, Casey Rodarmor introduced
Ordinal's significance and utility
Digital assets or artifacts are immutable assets based on ownership and they feature different characteristics such as no need for permission, self-contained nature, incontestability and independence of off-chain information. These digital items which are also known as inscriptions are responsible to change each related satoshi into a unique NFT by making one a special kind of inscription. Please note here that a bitcoin is made of 100 million satoshis and the Ordinals protocol executes the individual transfer of these sats and enables data attachment which may include images, texts, videos etc. These particular data attachments are called inscriptions.
Creating Ordinals is an accessible task for the node operators in Bitcoin and the protocol here simply does it by assigning a numerical identifier to each of the satoshi based on the sequence of their mining and thus earned the name "Ordinals." After the launch, various collections which are mainly inspired by popular Crypto Punks on the Ethereum chain have also now emerged on the Bitcoin network and one great example is the Ordinals Punks. Though NFTs are generally available on multiple platforms, wallets or exchanges, Ordinals currently have found their home on Discord, Telegram and some selected markets instead. Within a short amount of time, the Bitcoin Ordinals have gained insane popularity with around 200,000 inscribed by February 28, 2023 and expanding to over 663,000 by the end of March 2023.
Bitcoin NFTs and other NFTs
When a Bitcoin NFT is inscribed, the related content data is recorded in an authentic signature within a specific Bitcoin transaction. This authentication signature is known as a "witness" here and it became possible through the SegWit upgrade back in 2017. Unlike most of the other NFTs out there that reside "off-chain", the inscriptions on Bitcoin NFTs are recorded on the blockchain which helps it utilize the Ordinals protocol. As I already mentioned, Each NFT here is assigned a unique serial number, further enhancing its individuality.
These newly created Bitcoin NFTs are different from other NFTs (Ethereum NFTs) through several crucial aspects. Bitcoin NFTs are digital assets or artifacts registered on the blockchain which offer authenticity and uniqueness. The inscriptions on Bitcoin NFTs remain immutable and unchangeable and all thanks go to the Ordinals protocol for making it possible. Adding even more, the complete data file of Bitcoin NFTs is stored on the same blockchain which helps set them apart from Ethereum NFTs that stay generally off-chain, hence less protected and susceptible to alteration or deletion. Ethereum NFTs usually include metadata that contains a link to the original file, rather than storing the file in itself and hence, Auditing becomes necessary to achieve immutability for Ethereum NFTs.
In addition to that, these Bitcoin NFT fees are determined by the particular file size that helps ensure that the included content remains intact and cannot be lost. On the other hand, Ethereum NFTs are stored off-chain and stored on IPFS and hence face the risk of content loss. Another important distinction is that Bitcoin NFTs can be exchanged without relying on a third party, thanks to the PSBT (partially signed Bitcoin transaction) feature. In contrast, whereas the Ethereum NFTs are bound to use any type of platform for exchange purposes.
Various Use Cases of Bitcoin NFTs: Exploring New Frontiers
Bitcoin NFTs have constructed the way for innovative applications across different domains. Let's dive into some of the important use cases that demonstrate the potential of these digital assets..
Digital Art and MusicBitcoin NFTs provide an amazing platform for artists and musicians to transform their artworks and audio creations into unique digital tokens. By tokenizing their creations and granting exclusive ownership on the blockchain, it enables them to monetize and showcase their talent.CollectiblesBitcoin NFTs further extend the concept of collectibles into the digital universe. Digital items with inherent value, scarcity or utility can be transformed into NFTs that represent an affiliation with a Bitcoin DAO (Decentralized Autonomous Organization).GamingBitcoin NFTs can bring revolution in the gaming industry by allowing in-game items to be converted into player-owned assets. This opens up new possibilities for gamers to truly own and monetize their virtual possessions in "play-to-earn" games where players can earn rewards and trade valuable in-game assets.Virtual PropertyAs the metaverse continuous to evolve, Bitcoin NFTs will tend to play a vital role in the realm of virtual property. Unique tokens representing virtual land, buildings and other digital assets can be owned, traded, and utilized within the metaverse.IdentityBitcoin NFTs can be employed easily as decentralized unique identities and domain names. NFTs serve as a means of establishing and verifying digital identities and provide their users with greater control over their personal information.Real-World OwnershipBy representing ownership of physical assets like real estate, cars and physical art on the BTC blockchain, NFTs bring authenticity, traceability, and verifiability to real-world assets while eliminating middlemen and enhancing the transfer of ownership.
Resources I used to gather information
I hope you liked reading my post about Ordinal protocol and Bitcoin NFTs and if you have learned something new today, I will be very happy to acknowledge it. Let me know your thoughts and feeling in the comment below and I will be seeing you all in my next post!