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Ordinals
What are Ordinals?
Ordinals is a protocol built on the Bitcoin blockchain that allows for the creation of unique, non-fungible tokens (NFTs) on Bitcoin. It assigns a unique serial number to each satoshi (the smallest unit of Bitcoin), enabling the attachment of arbitrary data to these specific satoshis.
Key Characteristics
Bitcoin-Native: Built directly on the Bitcoin blockchain without requiring additional layers.
Non-Fungible: Allows for the creation of unique, distinguishable assets on Bitcoin.
Satoshi-Level Tracking: Assigns unique identifiers to individual satoshis.
Data Inscription: Enables attaching metadata or content directly to satoshis.
Scarcity: Leverages Bitcoin's fixed supply to create truly scarce digital assets.
How Ordinals Work
Serialization: Each satoshi is assigned a unique serial number based on the order of its creation.
Inscription: Data (like images or text) is attached to specific satoshis.
Transfer: Ordinals are transferred by sending the specific satoshis they're attached to.
Tracking: The Bitcoin blockchain tracks the movement and ownership of these inscribed satoshis.
Permanence: Inscriptions become a permanent part of the Bitcoin blockchain.
Use Cases
Digital Art: Creating and trading unique digital artworks on Bitcoin.
Collectibles: Issuing limited edition digital collectibles.
Domain Names: Implementing a domain name system on Bitcoin.
Authentication: Proving ownership or authenticity of digital or physical items.
Gaming Assets: Creating in-game items with real scarcity and ownership.
Advantages of Ordinals
Bitcoin Security: Leverages Bitcoin's robust security and network effect.
True Scarcity: Benefits from Bitcoin's fixed supply and immutability.
Simplicity: Doesn't require additional tokens or separate blockchains.
Permanence: Inscriptions are as permanent as the Bitcoin blockchain itself.
Interoperability: Potential for integration with existing Bitcoin infrastructure.
Ordinals vs. Other NFT Standards
Ethereum NFTs: Ordinals are on Bitcoin, while most NFTs are on Ethereum.
Layer-2 Solutions: Ordinals operate directly on the base layer, unlike some Layer-2 NFT solutions.
Colored Coins: An earlier, less sophisticated attempt at Bitcoin-based tokens.
Counterparty: Another protocol for creating assets on Bitcoin, but with different technical approaches.
Impact on Bitcoin Ecosystem
New Use Cases: Expands Bitcoin's utility beyond simple value transfer.
Community Debate: Has sparked discussions about Bitcoin's purpose and future.
Increased Activity: Potentially drives more transaction activity on the Bitcoin network.
Wallet Development: Encourages development of new types of Bitcoin wallets.
Similar Terms
NFT (Non-Fungible Token): The broader category of unique digital assets.
Satoshis: The smallest unit of Bitcoin, central to the Ordinals concept.
Digital Asset: A broader term that includes crypto assets.