The Bitcoin Ordinals Protocol

Background

Casey Rodarmor, an accomplished software engineer, first envisioned Bitcoin Ordinals, an innovative concept that came to life with the introduction of Bitcoin's 'Segregated Witness' and 'Taproot' upgrades in 2017 and 2021, respectively.

In January 2023, Casey Rodarmor officially launched the Bitcoin Ordinals Protocol. This groundbreaking protocol enables the embedding of various forms of digital content, such as art, directly onto the Bitcoin blockchain. Contrasting with non-fungible tokens (NFTs) on Ethereum and other blockchain platforms, Rodarmor's intention was to establish an unchangeable on-chain presence for art pieces, textual content, or videos.

Ordinals represent individual satoshis, the tiniest unit of Bitcoin. Utilizing the principles of Ordinals Theory, these satoshis can be labeled and tracked, enabling users to observe when and in what sequence they were mined. This unique approach offers a fascinating perspective on the history of Bitcoin's supply, as well as the opportunity to assign rarity attributes to specific sats based on various factors.

How do they work?

Functioning as transaction units, sats can be inscribed with digital content, thereby transforming them into Bitcoin ordinals. As a result, they become unalterable digital collectibles that can be exchanged on the Bitcoin network using Bitcoin wallets. According to ordinal theory, sats can be connected to security tokens, accounts, or stablecoins by employing ordinal numbers as consistent identifiers.

To create inscriptions, content such as images, text, or HTML is incorporated into an inscription transaction's witness. Once mined, the inscription is permanently etched onto the first satoshi of the transaction's initial output. This process intimately links the inscription to human art and culture, leaving a lasting imprint on the digital realm.

Traditional NFTs vs Ordinals

Ordinals and traditional NFTs differ significantly in their technical design, offering unique features that influence their pricing. Bitcoin ordinals, unlike Ethereum's ERC-721 standard NFTs, uniquely identify sats and store content or art on-chain, whereas traditional NFTs typically hold metadata or pointers to off-chain art. Rarity in Bitcoin ordinals is determined by key moments in a Bitcoin block, such as the first sat of every new block or adjustment period, and even the first sat of each halving epoch. This contrasts with Ethereum-based NFTs, where rarity is defined by the art's attributes or limited supply. These distinctions between ordinals and traditional NFTs make the former's rarity truly random, and not influenced by founding teams or artists, setting them apart from conventional non-fungible token collections.

To sum up?

The Ordinals Protocol offers a fresh approach to digital collectibles, setting them apart from traditional NFTs. Combining art, culture, and the Bitcoin blockchain, ordinals provide a decentralized and truly random rarity system. As the Web3 landscape evolves, the Ordinals Protocol is set to leave a lasting impact on the digital world, shaping the future of digital art and collectibles.