Software developer Casey Rodarmor developed the Bitcoin Ordinals protocol. He studied computer science at the University of California and announced the protocol in January 2023. Ordinals allow unique identifiers to be assigned to satoshis (SATs), the smallest denomination of Bitcoin. These inscriptions can contain text, images, and code.
Digital Assets
Digital assets are files that contain value and can be accessed, stored, integrated, organized, and retrieved via the Internet. They can be simple images, videos, or even cryptocurrencies. Digital assets can also be used to manage, track, and verify the ownership of intellectual property rights. Bitcoin ordinals are a new form of Digital Asset that uses the blockchain to inscribe non-financial data into satoshis. The protocol assigns a unique number to each satoshi, creating an identifier that can be tracked and traded. This data is inscribed within the witness of a Bitcoin transaction, a part of a cryptocurrency’s blockchain that contains additional information such as signatures and scripts. Ordinal inscriptions have yet to be widely available, and the technology still has limitations. The process of inscribing data requires running a full node of the Bitcoin network, which can be expensive and time-consuming.
Furthermore, the increased demand for Ordinals could lead to higher transaction fees and congestion on the Bitcoin blockchain. However, Ordinal inscriptions can potentially transform the Bitcoin ecosystem by allowing for the storage of more data and transactions. This would make the cryptocurrency more versatile for various use cases, including healthcare, where it could store immutable patient data records and clinical trials. It could also verify intellectual property rights like video games or artwork.
Form of Non-Fungible Tokens (NFTs)
Ordinals allow users to inscribe digital content on the Bitcoin blockchain by adding a particular type of transaction that uses the OP_RETURN function. The inscriptions are stored in the witness of a Bitcoin transaction, which is the part that contains additional information like signatures and scripts. This allows users to create unique, non-fungible tokens on the Bitcoin blockchain that are tamper-proof and permanent. The inscription process is similar to how a stamp or signature can be added to an otherwise identical document to create something with more value. The result is a piece of crypto art that is unique and highly valuable. Although the technology behind Bitcoin Ordinals is revolutionary, it does have its challenges. For example, it may require more disk space to store all of the extra data. In addition, it could increase the burden on full node operators who verify transactions and the chain. This can lead to higher fees for the average user. Despite these concerns, the development of Bitcoin Ordinals is a big step forward for NFTs and the blockchain. The new technology offers a range of use cases for investors and artists alike and can be used to represent a variety of unique digital assets. Although the technology is still young, many believe it has a bright future.
Digital Art
Ordinals are a form of digital art that uses the blockchain to create unique, tamper-proof tokens with digital data. They can be used for identity verification, supply chain management, and intellectual property rights protection. Creating an ordinal involves inscribing data on a specific Bitcoin satoshi, making it non-fungible and unique. The inscriptions can be anything from images to videos, PDFs, and games. The Segregated Witness (SegWit) upgrade made the process possible, enabling the ability to store more information in a Bitcoin transaction. Ordinal creators have taken advantage of this to inscribe data on a Bitcoin satoshi using a feature called OP_RETURN. To create an Ordinal, you must first send a satoshi with the desired inscription as part of a Bitcoin transaction. Then, choose a tamper-proof Taproot or ordinal-compatible wallet to receive the new token. You can also use tools that automate this process for you. Since their introduction, Bitcoin Ordinals have become a popular form of digital art. Artists have used them to sell their work, which can be displayed in virtual art galleries. Companies have also used them to market their products.
Digital Collectibles
Digital collectibles are a new type of asset that has quickly gained popularity in the crypto world. They replicate the properties that give traditional collectibles value but offer additional utility, like a community of other collectors and access to exclusive events. They are also backed by the blockchain, making them immutable. Inscriptions on the Bitcoin blockchain are a form of digital collectibles that have been pegged to Bitcoin, giving them the advantage of being accessible and easy to trade. Ordinal inscriptions are metadata added to individual satoshis on the Bitcoin blockchain. The inscription can be anything under 4MB, including images, video, and code snippets. They are created through two upgrades to the Bitcoin network: Segregated Witness (SegWit) and Taproot. SegWit increased the amount of data stored in a block from 1MB to 4MB, while Taproot allows multiple transactions to be combined into one inscription transaction. With the advent of Bitcoin ordinals, there has been an uptick in ICOs and NFT marketplaces that allow users to buy a piece of digital art or content. This increase in activity has been attributed to the fact that Bitcoin ordinals provide miners with an alternative source of revenue to validate and verify transactions. These fees are set to rise as the number of bitcoin ordinals in circulation increases, which is expected to keep NFT markets growing.