Ordinals, the latest incarnation of NFTs on Bitcoin since Counterparty’s Rare Pepes and Operation Code Easter Eggs, have been catapulted into the industry. Although Ethereum still leads all other blockchains in terms of NFT transaction volume, Bitcoin has suddenly become the second most popular blockchain in the world for NFTs.
In the past 30 days, Ethereum has processed $390 million in on-chain NFT transactions, and Bitcoin is approaching half of that figure. During the same period, Bitcoin NFT transactions totaled $173 million, more than triple the $49 million on Solana.
Just a few months ago, no one would have predicted that Bitcoin would handle nearly half the number of NFT transactions than Ethereum. Since its inception, Ethereum has processed a staggering 38 million NFT transactions, eclipsing Bitcoin’s 320,000. Nevertheless, the explosive popularity of ordinals is reinventing the world’s oldest blockchain as a place to store art, movies, collectibles, tickets, and even video games.
Of course, NFTs on Bitcoin are nothing new. Satoshi Nakamoto first minted NFT in 2009, when they inscribed Ordinal #1 using opcode data on the genesis block: “The Times 03/Jan/2009 The Chancellor is on the brink of a second bailout for the banks.” For more than a decade, Bitcoiners have used plain text and hashes to inscribe memories on chain, including the Bitcoin whitepaper itself.
Ordinary Bitcoin NFT vs Listings
Casey Rodamor’s Ordinals protocol assigns serial numbers to individual satoshis – the smallest subdivision of a bitcoin – using non-Bitcoin Core wallet software. The former Bitcoin Core developer wrote and debugged custom “ordwallet” software as part of a year-long hobby project.
Its order numbers resemble the serial numbers of dollar bills. Although all dollar bills are worth at least $1, specialized serial numbers lend additional numismatic value to rare bills.
The Bitcoin protocol itself will always value a satoshi to a satoshi, but the Ordinals software allows collectors and NFT traders to pay extra to collect certain satoshis in their wallets.
Although ordinals generally only matter to curiosity seekers and NFT traders, they have resulted in huge transaction fees for miners.
- Rodamor intended the term “ordinal” to refer to the sequential number of each satoshi, but NFT traders co-opted the term.
- NFTs inscribed on an ordinal satoshi are now commonly called “ordinal”.
- Alternatively, some NFT traders use the “correct” terminology and refer to each NFT as a “registration”.
Registrations can use just about any type of data. Through Bitcoin’s Taproot upgrade, each registration can use up to 4MB of data each using Bitcoin’s SegWit cookie data reduction (Luxor extracted the first registration over 3.9MB and the dubbed “The Big Wizard”).
Because most inscriptions are NFT-like digital art, many refer to the inscriptions (or ordinals) as NFTs. Someone listed a clone of the video game Loss on a single registration.
Normal users might understand the inscriptions as similar to Star Trek fans drawing Spock’s face on Canadian $5 bills. Suddenly, anyone could see which tickets had been “Spocked” before they even scanned the serial number. The Bank of Canada called this practice “legal but inappropriate”.
BRC-20s use ordinals
Other listings are not NFTs at all, but rather traditional altcoins. Ordinals allow Bitcoin to use an experimental standard called BRC-20, which allows non-BTC tokens to be minted on the Bitcoin blockchain. Its proponents say it is similar to Ethereum’s popular ERC-20 standard. There are endless examples of ERC-20 tokens, including USDC, SHIB, BUSD, DAI, APE, and UNI. Today, the most popular BRC-20 token is the aptly named ORDI.
The BRC-20 standard allows token creators to attach them to ordinals by adding a JSON file defining the characteristics of the token. Activity on OrdinalsWallet shows attempts to create BRC-20 tokens by adding the JSON file. BRC-20 proponents claim the standard enables DeFi, tokenization, and experimentation with new features directly on Bitcoin.
Read more: Bitcoin ordinals set to topple Ethereum NFTs in daily volume
Using inscribed ordinals requires a wallet that can support them. Many wallets do not support them. Bitcoin Core does not recognize the standard by default, for example.
Purists say Satoshi Nakamoto meant Bitcoin was only for peer-to-peer transactions. However, past statements from Nakamoto indicate support for experimental features and applications like a theoretical BitDNS (later renamed Namecoin), a proposed registrar for DNS-like blockchain domain names. Nakamoto also came up with a way to handle BitDNS that looked like a Fusion Drivechain.
Big numbers lure NFT traders to Bitcoin
Registrations have increased the amount of data to be processed on the Bitcoin network. Ever since registered ordinals started to become popular, the number of pending transactions in the Bitcoin mempool has increased significantly. Transaction fees have reached $30 on some days this month.
Lured by the novelty and profit potential, traders flocked to Bitcoin ordinals. Unique Listings May Sell More 50 Bitcoin. ORDI, an ordinal-based BRC-20 token – non-existent a month ago – has its own market capitalization of $160 million.
Registered ordinals can increase transaction volume. A collection of inscriptions, Bitcoin Frogs, briefly pass the Ethereum-based Bored Ape Yacht Club by transaction volume. Three collections of ordinals briefly hit the top 10.
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