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Bitcoin NFTs — What You Need to Know About "Ordinals"
It’s been only six months since Bitcoin NFTs were first launched, but they have already made quite a few headlines. When Ordinals were released in early 2023, they became an immediate trend. A couple of months later, however, they caused one of the biggest overloads in the history of the Bitcoin blockchain, which raised a debate on whether we need Bitcoin NFTs in the first place. So, what makes Ordinals so “un-ordinary”?
What are Bitcoin NFTs?
The Ordinals protocol introduced two innovations that make it possible to create a Bitcoin-based analogue of NFT.
Every bitcoin consists of 100,000,000 satoshis (sats). Firstly, this new technology allows users to attach additional data (text, image, video) to a single sat. Secondly, each satoshi is given a unique ordinal number that helps to identify and track it through the Bitcoin network. This extra data and an ordinal number make “inscribed” satoshi a one-of-a-kind "digital artefact", similar to Ethereum NFT.
Ordinals have a lot in common with Ethereum NFTs, but they are not the same. Ordinals store attached data on-chain, do not use smart contracts, and can be used like any other Bitcoin, as a means of payment.
What’s on the cards for Ordinals?
Currently, there are two polar opposite opinions regarding Bitcoin NFTs. Some consider Bitcoin as more of a monetary network for its native currency and stand in support of block space being reserved for sending BTC rather than storing data or anything else.
Others claim that the high demand for Ordinals may be seen as a benefit for long-term sustainability and drive the blockchain in the direction of further development. As a matter of fact, the reaction to Bitcoin NFTs led to the creation of a new token standard — BRC-20 — which can be used for minting fungible and nonfungible tokens on the Bitcoin blockchain. Although the same token standard was responsible for the temporary hold of BTC transaction processing on the network in early May.
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