Introduction
The Bitcoin Ordinals protocol represents a groundbreaking innovation in the cryptocurrency space, enabling the creation of native digital artifacts (similar to NFTs) directly on the Bitcoin blockchain. Developed by Casey Rodarmor in early 2023, this protocol leverages Bitcoin's smallest unit—the satoshi (sat)—to store unique data like images, text, or videos through a process called "inscription."
This guide explores the technical foundations, key concepts, and implications of Ordinals, along with its potential impact on the Bitcoin ecosystem.
Core Concepts
1. Satoshis and UTXO Model
- Bitcoin operates on a UTXO (Unspent Transaction Output) model, where each UTXO is unique and traceable.
- 1 BTC = 100,000,000 satoshis (sats), the smallest divisible unit.
2. Ordinals Theory
- Ordinals assign a sequential number to each satoshi based on its mining order (e.g., the first satoshi in the genesis block is numbered
0). - These numbered sats can be "inscribed" with arbitrary data (e.g., art, code), making them non-fungible.
3. Inscriptions
- Inscription: The process of attaching data (called "inscriptions") to a specific satoshi.
- Storage: Data is embedded directly on-chain, unlike Ethereum NFTs that often rely on off-chain storage.
Technical Prerequisites
1. Segregated Witness (SegWit, 2017)
- Introduced "witness data" to bypass block size limits.
- Enabled arbitrary data storage in transactions, paving the way for Ordinals.
2. Taproot Upgrade (2021)
- Enhanced privacy, scalability, and smart contract capabilities.
- Relaxed data limits, allowing up to 4MB of media per block.
- Critical for storing inscription data in Taproot scripts.
How Ordinals Work
1. Satoshi Numbering Rules
- Integer notation:
2099994106992659(sequential mining order). - Decimal notation:
3891094.16797(block height + offset). Rarity tiers:
- Common (99.9% of sats).
- Mythic (genesis block’s first satoshi).
2. "First-In-First-Out" (FIFO) Principle
- Sats are transferred in the order they appear in transaction outputs.
- Example: If Address A sends 5 sats to Address B, the first 4 sats inherit the original ordinal numbers.
3. Inscription Process
Uses a two-phase commit/reveal mechanism:
- Commit: Create a Taproot output committing to the inscription data.
- Reveal: Spend the output to publish the data on-chain.
Ordinals Ecosystem
1. Key Tools
- Ordinals Wallet: Manages inscribed sats (GitHub).
- Block Explorer: Tracks inscriptions (Ordinals.com).
2. Use Cases
- Digital Art: Permanently store artwork on Bitcoin’s immutable ledger.
- BRC-20 Tokens: Experimental token standard for fungible assets.
- Collectibles: Rare sats (e.g., "mythic" genesis sat) traded as valuables.
Implications for Bitcoin
Pros
- New Utility: Expands Bitcoin’s use cases beyond finance.
- Miners Benefit: Increased transaction fees from inscription demand.
- Chain-Preserved Art: Ensures long-term data permanence.
Cons
- Controversy: Purists argue it deviates from Bitcoin’s monetary focus.
- Blockchain Bloat: Large media files may strain network resources.
FAQs
Q1: How is Ordinals different from Ethereum NFTs?
Ordinals store data on-chain (Bitcoin), whereas Ethereum NFTs often use off-chain links (e.g., IPFS). This makes Bitcoin NFTs more durable but less flexible in size.
Q2: Can I mine inscribed sats?
No. Inscriptions are created by users, not miners. Miners only process the transactions.
Q3: What’s the smallest inscription size?
546 satoshis (due to Bitcoin’s dust limit). Larger files require splitting into multiple inscriptions.
Q4: Are Ordinals secure?
Yes—they inherit Bitcoin’s security model. However, scams (e.g., fake inscriptions) exist, so verify data via trusted explorers.
Conclusion
The Ordinals protocol unlocks unprecedented creativity on Bitcoin, blending decentralized finance with digital ownership. While debates about its long-term impact persist, its innovation is undeniable—ushering in a new era for Bitcoin as a cultural and artistic ledger.
👉 Explore Bitcoin NFTs on OKX
👉 Join the Ordinals community
References
Note: All links are for educational purposes only.