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

1. Bitcoin-Native: Built directly on the Bitcoin blockchain without requiring additional layers.

2. Non-Fungible: Allows for the creation of unique, distinguishable assets on Bitcoin.

3. Satoshi-Level Tracking: Assigns unique identifiers to individual satoshis.

4. Data Inscription: Enables attaching metadata or content directly to satoshis.

5. Scarcity: Leverages Bitcoin's fixed supply to create truly scarce digital assets.

How Ordinals Work

1. Serialization: Each satoshi is assigned a unique serial number based on the order of its creation.

2. Inscription: Data (like images or text) is attached to specific satoshis.

3. Transfer: Ordinals are transferred by sending the specific satoshis they're attached to.

4. Tracking: The Bitcoin blockchain tracks the movement and ownership of these inscribed satoshis.

5. Permanence: Inscriptions become a permanent part of the Bitcoin blockchain.

Use Cases

1. Digital Art: Creating and trading unique digital artworks on Bitcoin.

2. Collectibles: Issuing limited edition digital collectibles.

3. Domain Names: Implementing a domain name system on Bitcoin.

4. Authentication: Proving ownership or authenticity of digital or physical items.

5. Gaming Assets: Creating in-game items with real scarcity and ownership.

Advantages of Ordinals

1. Bitcoin Security: Leverages Bitcoin's robust security and network effect.

2. True Scarcity: Benefits from Bitcoin's fixed supply and immutability.

3. Simplicity: Doesn't require additional tokens or separate blockchains.

4. Permanence: Inscriptions are as permanent as the Bitcoin blockchain itself.

5. Interoperability: Potential for integration with existing Bitcoin infrastructure.

Ordinals vs. Other NFT Standards

1. Ethereum NFTs: Ordinals are on Bitcoin, while most NFTs are on Ethereum.

2. Layer-2 Solutions: Ordinals operate directly on the base layer, unlike some Layer-2 NFT solutions.

3. Colored Coins: An earlier, less sophisticated attempt at Bitcoin-based tokens.

4. Counterparty: Another protocol for creating assets on Bitcoin, but with different technical approaches.

Impact on Bitcoin Ecosystem

1. New Use Cases: Expands Bitcoin's utility beyond simple value transfer.

2. Community Debate: Has sparked discussions about Bitcoin's purpose and future.

3. Increased Activity: Potentially drives more transaction activity on the Bitcoin network.

4. 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.