Bitcoin Ordinals, also known as “sats,” have emerged as a unique way to inscribe and make Bitcoin‘s smallest unit, the satoshi, into a one-of-a-kind digital artifact. In this comprehensive guide, we will explore what Bitcoin Ordinals are, how they work, and their key distinctions from traditional NFTs.
What Are Bitcoin Ordinals?
Bitcoin Ordinals, often referred to as “sats,” are individual satoshis inscribed with unique information, transforming them into a de-facto form of non-fungible tokens (NFTs). To put it simply, sats are the smallest units of Bitcoin, each valued at 0.00000001 BTC. This inscribed information can be text or images, making the satoshi distinct and highly valuable, similar to a collectible coin.
Bitcoin Ordinals have their roots in the ongoing debate within the Bitcoin community about whether Bitcoin should solely serve as a financial transaction network or also as a secure and decentralized data storage platform. As Bitcoin aims to become a global reserve currency, it faces the challenge of accommodating experimental use cases, like inscribing data onto its blockchain.
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Initially, Bitcoin only allowed short text messages of up to 80 bytes to be encoded into its blocks through a function called OP_RETURN. However, with significant hard fork updates, such as Taproot and Segwit, the block size limit was increased to 4MB, enabling more efficient organization of transaction data.
How Bitcoin Ordinals Work
Bitcoin Ordinals are identified based on four parameters:
- The Index of Sat in the Block
- The Index of the Block in the Difficulty Adjustment Period
- The Index of Block in Halving Epoch
- The Cycle Number
This unique identification system allows sats to be ranked ordinally. At the protocol level, sats remain fungible, but at the social level, each inscribed sat becomes a unique digital artifact due to its additional information.
Ordinal Inscriptions: How They Work
Creating Ordinals involves a two-step process. First, you create a taproot output with the inscription content, and then you spend the output, revealing the inscription content on the blockchain. This inscription content is wrapped in an “envelope” that doesn’t affect the script but allows for tracking, transferring, buying, selling, or recovering.
How Ordinals Differ from NFTs
Bitcoin Ordinals are similar to NFTs in some ways, but they have distinct characteristics:
- On-chain Nature: Ordinals contain raw file data directly written into the Bitcoin blockchain, unlike NFTs that may reference files hosted on other platforms.
- Block Size Limit: Bitcoin’s 4MB block size limit could constrain the number of “Bitcoin NFT mints.”
- Concurrency: Sats can potentially carry multiple inscriptions, creating multi-vector NFTs.
- Lack of Smart Contract Functionality: Bitcoin lacks the infrastructure for decentralized exchanges and user-friendly wallets, leading to OTC trading.
- Lost Inscriptions: Sats with inscriptions can be accidentally spent, leading to the potential loss of these digital artifacts.
- Content Moderation: Bitcoin’s permissionless nature means inscriptions cannot be censored, raising concerns about illicit or copyrighted content.
How to Buy and Create Bitcoin Ordinals
To interact with Bitcoin Ordinals, you’ll need specific wallets:
Sparrow Wallet: For receiving Ordinals. It doesn’t required to run a full Bitcoin node.
Ord Wallet: For creating inscriptions. Requires a full Bitcoin node and ample storage space.
Read about top 9 crypto wallets in October 2023.
Bitcoin NFT Collections
- Collection Overview: Ordinal Punks is a collection of 100 NFTs that were minted within the first 650 inscriptions on the Bitcoin blockchain.
- Key Details: The highest-ranked inscription in the collection holds spot #642.
- Market Values: The lowest bid for Ordinal Punks starts at 3.7 BTC, while the highest asking price soars to an impressive 50 BTC.
- Collection Overview: Taproot Wizards is an Ordinal collection featuring hand-drawn NFT wizards, thoughtfully created by Udi Wertheimer.
- Rarity: As of now, there are only a limited number of Taproot Wizards inscribed on the Bitcoin blockchain.
- Collection Overview: Timechain Collectibles is an exclusive set comprising just 21 Ordinals, each depicting various forms of timepieces.
- Minting Date: The entire collection was minted into a single block on January 30, 2023.
- Rarity Levels: The collection boasts a diverse range of timepieces, including Pocket Watches, Ancient Sundials, Wristwatches, Wall Clocks, Cyberpunk Alarm Clocks, Clock Towers, Monolith, and Grandfather Clock.
In the scorching world of Bitcoin NFTs, these collections offer a glimpse into the unique and creative possibilities emerging within the space. Remember to exercise caution and conduct thorough research before delving into this exhilarating market.
How to Mint Your Own Bitcoin NFTs
Minting your own Bitcoin NFT can be a rewarding venture. In this step-by-step guide, we’ll walk you through the process, highlighting essential details and prerequisites.
Before diving into the minting process, make sure you have the following:
- Gamma.io: You’ll be using a no-code inscription tool called Gamma.io.
- $50 worth of Bitcoins: You’ll need this to pay for the inscription fee.
- Taproot-Compatible Wallet: Your wallet must support Taproot addresses. Examples include Muun, Sparrow, and Spectre wallets.
- Exclusion of Coinbase and Binance: Note that Coinbase and Binance do not support Taproot addresses.
Step 1: Visit Gamma.io
Go to the official Gamma website: Gamma.io/Ordinals.
Step 2: Select Inscription Type
Choose the type of inscription that matches what you want to embed on your Bitcoin satoshi.
Step 3: Choose Your Fee Plan
After selecting the inscription type, pick a fee plan that aligns with your preferences.
Step 4: Obtain Your Ordinals Recipient Address
It’s recommended to use a Sparrow wallet from the list of compatible wallets mentioned earlier. Once you have your Sparrow wallet address, enter it into the “Recipient bitcoin address” field.
Step 5: Add Taproot Address Prefix
Taproot wallet addresses start with “bc1p.” Ensure your wallet address follows this format.
Step 6: Proceed with Payment
Send the chosen transaction fee plan to the provided wallet address, making sure it starts with the “bc1p” prefix. Some advise sending the Bitcoin from a different wallet than the one receiving your Ordinal NFT to avoid any complications.
Step 7: View Your Ordinal
Depending on the fee plan you selected, you may need to wait for a few days. You’ll receive an email link for tracking your Ordinal. Once the waiting period is over, you can view your freshly minted Bitcoin NFT in an Ordinal viewer.
And there you have it – you’ve successfully minted your very own Bitcoin NFT!
Bitcoin Ordinals represent a unique and experimental approach to adding value to individual sats within the Bitcoin network. As the crypto space evolves, Ordinals continue to spark discussions about the future of data storage and value on the blockchain, and their potential impact on the world of digital collectibles.
Questions and Answers
Q1: What Are Bitcoin Ordinals?
Answer: Bitcoin Ordinals, often referred to as “sats,” are the smallest units of Bitcoin, equivalent to 0.00000001 BTC. They become unique by inscribing them with specific information, similar to signing a dollar bill by notable personalities, effectively making them NFT-like assets.
Q2: How Have Bitcoin Ordinals Evolved Alongside Bitcoin?
Answer: Bitcoin Ordinals have evolved alongside Bitcoin’s growth. Originally designed for financial transactions, Bitcoin has adapted to accommodate data storage with updates like Taproot and Segwit, which expanded the block size limit to 4MB.
Q3: What Parameters Define Bitcoin Ordinals?
Answer: Bitcoin Ordinals are identified through a unique set of parameters, including the index of the sat in the block, the index of the block in the Difficulty Adjustment Period, the index of the block in the Halving Epoch, and the cycle number. These parameters allow sats to be ranked ordinally.
Q4: How Do Ordinal Inscriptions Work?
Answer: Ordinal inscriptions are akin to digital artifacts stored in taproot script-path spend scripts. Creating an inscription involves a two-step process: first, creating a taproot output with the inscription content, and second, spending the output to reveal the inscription on the blockchain.
Q5: What Sets Bitcoin Ordinals Apart from NFTs?
Answer: Bitcoin Ordinals differ from traditional NFTs in several ways. They are “on-chain,” meaning they contain the actual raw file data directly written into the Bitcoin blockchain. The 4MB block size limit of Bitcoin could potentially cap the number of “Bitcoin NFT mints.” Additionally, sats can carry multiple inscriptions, potentially creating multi-vector NFTs.
Q6: How Can One Buy and Create Bitcoin Ordinals?
Answer: To interact with Bitcoin Ordinals, two types of wallets are available. Sparrow wallets are ideal for receiving Ordinals and do not require a full Bitcoin node. For creating inscriptions, Ord wallets are used, but they necessitate a full Bitcoin node and substantial storage.
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