What are Bitcoin Ordinals? A Beginner's Guide
Explore Bitcoin ordinal numbers, gain a deeper understanding of ordinal inscriptions related to Bitcoin, and find out the methods and places to purchase Bitcoin NFTs.
Through a new and controversial protocol called the Bitcoin Ordinals protocol, Bitcoin NFTs or Ordinals have been recently introduced to the largest crypto network by market capitalization.
Currently, there are more than 50,000 Bitcoin NFTs generated on the Bitcoin blockchain, with some selling for high prices, including the Ordinal Punks. Casey Rodarmor, a former Bitcoin Core Contributor, launched the protocol in January, causing excitement in the Web3 world.
However, despite the buzz, the popularity of the Bitcoin Ordinals project has resulted in a heated discussion within the Bitcoin community, as not everyone shares the same level of enthusiasm for the innovation.
The purpose of this article is to provide a comprehensive understanding of Ordinals Inscriptions or Bitcoin NFTs, including how they operate, where to purchase them, and the current debates surrounding them.
What are Bitcoin Ordinals?
Ordinals are NFTs that can be created on the Bitcoin blockchain. However, Ordinal Inscriptions differ from conventional Ethereum NFTs, as the latter rely on off-chain metadata that can be altered. In contrast, Ordinal Inscriptions are native to Bitcoin and do not necessitate a new side chain or token. Instead, Ordinal Inscriptions allow all data to be directly recorded on-chain.
What is an Ordinal Inscription?
An Ordinal Inscription refers to the creation of an NFT on Bitcoin, with the NFT referred to as a "digital artifact." Each file is inscribed to specific Satoshi’s, meaning that Ordinals cannot become worthless, as they are always tied to actual sats.
To create an NFT through inscribing on Bitcoin, there is a minimum cost of 10,000 Satoshi’s (0.0001 BTC) by default, as well as additional mining fees based on the size of the image.
Are Ordinals NFTs?
Bitcoin Ordinals are a type of NFT, but they possess distinctive features.
- Initially, each Ordinal Inscription is classified as a "digital artifact" because it is said to be immutable and permanently recorded on the Bitcoin blockchain. In contrast to other NFT ventures on platforms such as Binance Smart Chain (BSC), Ethereum (ETH), or Solana (SOL), Ordinals save the entire image or content on-chain, not only a link to a centralized database where metadata can be modified or deleted by the smart contract creator, particularly if the data is hosted on a centralized database.
- Secondly, Ordinal Inscriptions are linked to specific Satoshi’s, which are the smallest units of Bitcoin. Unlike Ethereum-based NFT projects that have their own token and require a sidechain or an additional token, there is no need for that in Ordinals. This creates a relationship between the NFT and the underlying asset, Bitcoin.
How to buy and trade Bitcoin Ordinals?
Previously, there wasn't a wallet interface that specifically served individuals who wanted to store and transfer their Ordinals collections, such as Trust Wallet or Metamask. However, the lack of Web3 infrastructure is no longer a significant issue since three wallets, namely Ordinals Wallet, Xverse, and Hiro Wallet, have recently introduced features that support Bitcoin Ordinals. These wallets are a great place to start if you want to avoid the inconvenience of creating a separate Bitcoin wallet.
If the previously mentioned options are not appealing, another alternative is to create a Bitcoin wallet like Sparrow that provides sufficient customization to receive Ordinal Inscriptions. To begin, visit the Sparrow Wallet website, download the app that is compatible with your device's operating system, and follow the on-screen instructions.
Set up your wallet
Sparrow wallet is a desktop application that needs to be configured to work with Ordinals. To set it up, follow the instructions in the GitHub tutorial provided after downloading Sparrow. It's important to note that this wallet is solely for receiving Ordinals and not for sending BTC, as sending BTC from this wallet could result in sending both BTC and the Ordinal(s).
Once you have set up an Ordinal-compatible wallet, there are three ways to obtain a Bitcoin Ordinal:
- Create your own by running a node and inscribing it.
- Purchase one directly from someone who already owns an Ordinal.
- Use a service to inscribe an Ordinal without having to run your own node.
For this guide, we will concentrate on the second and third options since there are currently no established Bitcoin Ordinals NFT marketplaces. It's important to exercise caution when purchasing and storing Ordinals since the market is still in its early stages and carries some degree of risk.
Rather than focusing on the first option, which involves running a node and inscribing an Ordinal oneself, the article will focus on the second and third options: buying directly from an Ordinal owner or using a service to inscribe an Ordinal without running a node. However, it is important to note that the Ordinals market is still in its early stages and carries some degree of risk. There are currently no established Bitcoin Ordinals NFT marketplaces, so it is necessary to exercise extra caution when buying and storing Ordinals.
Find available Ordinals to buy on Discord
Currently, the Ordinals market operates as a peer-to-peer over-the-counter (OTC) market. To find Ordinal NFT projects, you can join the Ordinals Discord channel and navigate to the "link-your-project" channel to explore available projects. Collection creators will share links to their Discords, where you can buy their Ordinals NFTs. However, it is important to exercise caution as you may need to connect with people on Discord and send money before receiving an Ordinal.
Use a service to inscribe Ordinals for you
Alternatively, you can use a service to inscribe Ordinals for you, which is useful if you do not want to operate a Bitcoin node. Some services, such as Ordinals Bot and Gamma's inscription service, can create Ordinals on your behalf after you provide a Bitcoin address and pay a fee.
The fee ranges from under $50 in BTC to hundreds of dollars, depending on the file size. It is crucial to conduct thorough research and use reputable services to ensure a smooth transaction. Note that receiving your Ordinal in your wallet may take several hours or days after sending the required Bitcoin.
Concerns Surrounding Bitcoin Ordinals
The community in the crypto and DeFi space is enthusiastic and actively involved in the latest developments, particularly those related to NFTs on the Bitcoin blockchain.
However, there is a difference of opinion on whether Bitcoin holders will adopt BTC Ordinal NFTs. Some supporters believe that this new development is in line with Satoshi's vision for Bitcoin, while others consider inscriptions to be a form of spam that clogs up the Bitcoin blockspace.
Conclusion
Bitcoin Ordinals are a new and exciting addition to the Web3 world, but they come with their own set of complexities and challenges. The potential for these NFTs is limitless, and it remains to be seen how much impact they will have and if they will attract the same level of NFT enthusiasm seen on other blockchains like Ethereum and Binance Smart Chain. For a better understanding of the concept, readers can refer to Rodamor's Ordinal Theory Handbook.
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Learn more about Bitcoin Ordinals, Ordinal Inscriptions, and where to buy Bitcoin NFTs.
