Ordinals: An Overview of Bitcoin NFTs

The Orange coin has also NFTs — pretty much since 2015.

The Orange coin has also NFTs — pretty much since 2015.

Bitcoin NFTs are not a first.

NFTs have been part of the Bitcoin ecosystem since 2015 on Counterparty, a blockchain network that used Bitcoin’s OP_RETURN function to demarcate non-fungible assets. Counterparty was launched in November 2014 after the introduction of OP_RETURN in March of the same year.

Rare pepes in 2016, and Magic-the-gathering-sort-of cards (Spell of Genesis) are a few examples. For a directory of all Rare pepes, please refer to:

What Are Bitcoin Ordinals?

Ordinal NFTs (aka digital artifacts or inscriptions) allow users to mint non-fungible tokens onto Bitcoin’s blockchain — image and all.

The Ordinals protocol was launched in January 2023 and it enables users to explore, transfer, and receive individual satoshis — which may include unique inscribed data such as videos and images. It’s a new way to mint NFTs on Bitcoin, one that involves putting the actual content of the NFT completely on-chain.

In just a few days, Ordinals have had more than 15k inscriptions.

The creator of this standard, Casey Rodarmor, doesn’t want to call them NFTs. He thinks that the word is tainted, so instead, he’s calling them “digital artifacts.” Ordinal NFTs, — use ordinal theory to mark and track “inscriptions,” the data/content that is embedded in the blockchain:

an ordinal is any number that defines a position in a series (e.g, first, second, third). In the case of Bitcoin, the ordinal is a UTXO for a specific Satoshi, that contains an “inscription” with the content: e.g. a text, an image, or an MP3. Inscribed satoshis are set as special transactions so users can identify and track them.

This solution was already proposed in the bitcoin forum as early as 2012.

An interesting difference with other Bitcoin-based NFTs is that Ordinals don’t use bitcoin OP_RETURN field. This command allows users to submit arbitrary data on-chain.

Instead, Ordinals leverage two recent innovations:
1. They use the segregated transaction witness section of a Bitcoin block..

2. ..and tapscripts, the scripting function made possible by the Taproot update.

By doing so, Ordinals store the entire NFT image/content on-chain, not just a link/reference to it like most other NFT standards.

The main advantage of Ordinal NFTs compared to Counterparty NFTs is that they have no data limit besides the 4 MB data limit of the transaction witness field, compared to the 80 bytes of Counterparty NFTs

Putting data in the witness field of a SegWit transaction is cheaper than other data in a block, an effect known as the “witness discount”, which is key to making ordinal NFTs possible.

The other key is Taproot. Taproot loosened these requirements to remove the data limit entirely, so you could theoretically inscribe a 4 MB NFT that would take up an entire block’s dataspace.

This experiment was recently done at Luxor, where a block with 3.9 MB digital artifact was minted — the largest block ever!

Ordinal NFTs have several building blocks:

• Transaction witness field: where the NFT’s data and content live;

• Inscription: the actual content being minted onto the Bitcoin blockchain and of which the NFT represents ownership. Inscriptions are engraved on the transaction witness section of a UTXO and are ascribed to the first satoshi of the first output in a transaction;

• Envelope: inscriptions are stored in an “envelope” that consists primarily of the Opcodes ( the script-based bitcoin language) OP_IF and OP_FALSE. Like OP_RETURN, these operational codes are used to give instructions to the Bitcoin blockchain. In this case, OP_IF stores the file that is inscribed, while OP_FALSE makes sure that this data is never actually executed and pushed through the stack (full nodes don’t need to process and validate an inscription, just the UTXO set it is tied to).

• Ordinal numbers: used to distinguish individual satoshis as “digital artifacts”; ordinal sequencing marks a specific satoshi of the first output of a transaction as the NFT; once marked, this satoshi can change hands and be traded like any other NFT.

How to Buy and Sell?

Currently, buying and selling Ordinal NFTs is done through manual order books and OTC trading. Users will need a special wallet and block explorer (Ord Wallet) to index and track ordinal NFTs, but they can send and receive them with any Bitcoin address type.

Users will need to run a Bitcoin full node in order to be able to sell them. Since this is somewhat not doable for the majority of users due to hardware requirements — some light clients are currently been developed and will launch in the upcoming months.

Dingaling, one of the biggest NFT whales, recently shared on his Twitter that he bought 7 Ordinal Punks for a total of 15.2BTC, putting them under the spotlights. The Ordinal Punks is a collection of only 100 Ordinals.

Bitcoin punks, on the other hand, is a crypto punks derivative and the first 10k collection of Ordinal NFTs, the website can be checked at: 
https://bitcoinpunks.com

The only way to buy them at the moment is to join Discord and find a trade.

He also provides an overview of how you can set up Sparrow Wallet to receive Ordinals.

Some smart community members have also created a bot, helping with the minting process:

ordinals bot
We are currently making some updates to OrdinalsBot. Please come back and try again later. If you have any questions…ordinalsbot.com

Bitcoin Maximalism

Casey Rodarmor’s innovation is barely a month old, but it’s already become the most divisive topic of the year in Bitcoin circles.

Some in the Bitcoin maximalist camp see it as a trivial novelty at best or an attack on bitcoin at worst.

Dotta takes us around on a tour of the Grails in the first 1000 Ordinals inscriptions:

Sean discusses Bitcoin Punks:

Homepage of Ordinals Website:

Conclusion — Food for Thought

Ordinals are certainly an interesting development.

However, their selling proposition as“historical” NFTs is not completely right. They have only been created in January 2023; as such, it is much more adequate to refer to Counterparty and older OP_RETURN-based NFTs as historical, and to the Ordinals, as a cool and new development that can build a non-fungible-token layer on top of Bitcoin.

If we really need it... That’s another question.

The next couple of months will bring us a suite of infrastructural products, making Ordinals easier to buy, sell, and trade.

Will this lead to a Bitcoin NFT market?