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What are Bitcoin Ordinals? Digital Artifacts: Explained

Read 6 min
Medium
Computer with text on screen
KEY TAKEAWAYS:
— The Ordinals protocol was created to make issuing tokens on the Bitcoin network much easier.

— Bitcoin Ordinals are similar to NFTs but they have key differences: they aren’t programmable and they aren’t attached to smart contracts.

— To manage your ordinals effectively, it’s important to understand how the Bitcoin network and UTXOs work. Here’s why.

If you’ve heard of Bitcoin Ordinals, you might think they sound a lot like NFTs, and you wouldn’t be the first. While they do have some similarities, Ordinals don’t use smart contracts. While blockchain apps on most blockchain networks use smart contracts to implement a wide range of future behaviors, Ordinals work a little differently.

Like an NFT, they can store data, but they cannot execute actions using smart contracts. And technically, ordinals aren’t even tokens. So what are they exactly?

What Are Bitcoin Ordinals?

Bitcoin Ordinals are much like the Bitcoin blockchain’s version of NFTs. Like NFTs, their value is dependent on the information they include. They may contain an image or some text, or perhaps they are created to act as tokens on the Bitcoin blockchain. 

However, Bitcoin ordinals are not exactly NFTs, as they are literal pieces of Bitcoin inscribed with rich data instead. To explain, an ordinal is always worth one Satoshi, a 1/100,000,000th of a Bitcoin (the smallest denomination possible). Being such a small fraction of a Bitcoin, a Satoshi isn’t worth much, but with an inscription, it’s a different story.

Think of an artist creating a piece of art on a dollar bill. While the bill itself is only worth a dollar, the art on it could potentially be priceless. This is essentially what a Bitcoin ordinal is: a Satoshi with its own unique value. Like an NFT, a bitcoin ordinal’s true value mainly depends on the contents of its inscription.

Technically that’s an oversimplification, but first, let’s dive into the history of Bitcoin Ordinals for some context.

Bitcoin Ordinals Protocol: The History of Ordinals

While attaching data to Bitcoin has always been possible through technical loopholes, the amount of data you could attach was limited. In 2021, Bitcoin underwent an upgrade named Taproot. The Taproot upgrade brought higher levels of privacy, security, and scalability to the Bitcoin network. But most importantly, it allowed transactions to contain up to 4Mbs of data, opening up the possibility to support images. 

Using this capability together with his fascination with the denominations of Bitcoin, Casey Rodarmor launched the Bitcoin Ordinals protocol in January 2023.  The new Ordinals protocol made it much easier for Bitcoin node operators to link data with each of these pieces of Bitcoin, thus creating Ordinals.

In doing so, he opened up a whole new world for Bitcoin users. Ordinals were an instant hit, with their popularity extending into the present.

Today, innovators are still building on and around the original protocol. For example, fellow Bitcoin developer Domo used the Ordinals protocol as the base of his code for a new fungible token protocol: BRC-20. After BRC-20 tokens became popular with memecoiners, Casey Rodarmor also launched his own streamlined fungible token protocol named Bitcoin Runes.

While not directly built on the ordinals protocol, the Bitcoin Stamps protocol was clearly inspired by Rodarmor’s work.

How do Bitcoin Ordinals Work? Rarity Explained

The Ordinals protocol makes use of something that already existed on the Bitcoin network: a sequential order of satoshis. To explain, each Satoshi has an assigned ordinal number between 0 and 2,100,000,000,000,000, based on the time it was mined. This numbering system means some satoshis are rarer than others.

To clarify, the Bitcoin network operates on a series of frequent events that can lead to rare occurrences, thus the sats mined during these significant periods can be deemed collectible. Sats mined in the first block( by Satoshi Nakamoto himself ) are just one instance of a rare occurrence. 

Since ordinals are inscribed directly on sats, they have an in-built rarity system. To learn more about other occurrences that create rare Sats,  make sure you check out Rodarmor’s documentation here.

Most Famous Bitcoin Ordinals So Far

To understand how the Ordinals ecosystem is developing, let’s take a look at a few of the collections that have emerged so far.

TwelveFold By Yuga Labs

By far the most famous Bitcoin Ordinal collection so far has to be ‘TwelveFold’ by Yuga Labs. The limited collection features 300 pieces of generative art, combining both 3D graphics and hand-drawn features. 

The idea behind the collection is to “Explore the relationship between time, mathematics, and the blockchain”, according to the Yuga Labs creative director.  To explain, 144 blocks of Bitcoin are mined a day, which could also be interpreted as 12×12. Each piece in the Yuga Labs collection is a 12×12 grid, naming the collection ‘TwelveFold’, referencing that fact.

The auction spanned for 24 hours, starting on March 6th, 2023. Of the 300-strong collection, 288 ordinals were available to bid on – and they were popular indeed. This single auction racked up a total of 3,246 bids, with the successful bidders spending between $50,000 to just over $150k for a single piece. 

Ordinal Punks

Ordinal Punks are a collection of 100 Bitcoin Ordinals paying tribute to the popular Ethereum NFT collection CryptoPunks. Ordinal Punks are using an open-source algorithm to generate the pfp which is 192×192 pixels.  However, it’s important to note that this collection is not the most easy to buy and sell, as bids and asks are handled on a Google Sheet by the project’s creator, acting as an escrow manager. All transactions are monitored and tracked via Discord.

Taproot Wizards

Taproot Wizards is an Ordinal collection created by independent Web3 developer Udi Wertheimer, and securely stored on the Bitcoin network. Starting from Inscription 652, each wizard in this collection is a unique NFT that has been hand-drawn by Udi himself. This special collection harnesses the immutability of the Bitcoin blockchain to securely store these one-of-a-kind digital artifacts.

All sales are handled through Taproot Wizards Discord. 

Ordinal Loops

ordinal loops

Ordinal Loops offering comes in the form of Object 0, an NFT that rotates and has a mathematical torus design. It’s one of seven similar animations and is part of the first series from the Ordinal Loops team. The current narrative chapter, “Do Not Fiat,” features Bitcoin ASCII fighting an army consisting of five main government currencies endlessly.

TimeChain Collectibles

Timechain Collectibles presents the Series 1 Timepieces, a highly limited collection of 21 Ordinals. They depict many different kinds of timepieces, including pocket watches, wristwatches, cyberpunk alarm clocks, and more. The collection launched on January 30th, 2023 and each piece carries its own consecutive Inscription number from 356 to 377. Inscription 364 sold for an impressive 3.08 BTC/43.59 ETH ($67000) in Jan 2023, showing how desirable these collectibles are! You can find TimeChain Collectibles auctions via the project’s Discord

NodeMonkes

NodeMonkes is the first collection of 10k inscriptions using the ordinals protocol. Featuring pixel art of web3’s favorite animal, NodeMonkes is currently one of the most popular Ordinals projects.  Much like traditional 10k NFT collections, this Bitcoin ordinals project uses a range of traits. Each NodeMonke features a different selection of the available traits, adding to the built-in rarity system offered by sats. This sets it apart from other ordinals, which tend to have smaller collections and less variety in traits.

While it originally launched as a free mint, a single NodeMonke will set you back 0.7BTC (at the time of writing). Since its launch in November 2023, the project has been well received, with many buyers believing it’s “up-only” from here. Only time will tell if that’s accurate, but for now, NodeMonkes is a project to watch.

How to Buy and Sell Bitcoin Ordinals

Bitcoin Ordinals are innovative assets only created in 2023, thus there isn’t a huge ecosystem that supports them currently. As such, the first Ordinals traders relied mainly on over-the-counter trades using new and un-battle-tested platforms. 

Avoid OTC Trades If You Can

Discord is popular for brokering over-the-counter (OTC) deals, with the official Ordinals Discord server offering a lot of users their first taste of the asset class. However, since a lot of these trades can be tricky to understand, buying Bitcoin Ordinals this way is not recommended. If you decide to engage in an OTC trade for a Bitcoin ordinal anyway, do so with caution as you could be walking into a trap.

A much safer way of buying and selling ordinals is using a trusted marketplace.

Use Bitcoin Ordinal Marketplaces

Currently, there aren’t a huge number of choices when it comes to Bitcoin Ordinals marketplaces. However, that’s not to say there aren’t any at all. Today, there are a few main places to buy ordinals. And as time goes by, more and more of these platforms support familiar means of connecting your wallet and buying assets.

Generative.xyz

Generative.xyz is a marketplace specifically for buying and selling Bitcoin Ordinals. It calls itself the “Art Blocks of Bitcoin Ordinals”, offering a platform primarily for generative art on the Bitcoin network. As the first marketplace of its kind, it has attracted some of the biggest artists in web3 today, including Twin Flames artist and Photographer Justin Aversano.

Generative.xyz also allows you to inscribe and store ordinals in its platform-specific wallet which is compatible with MetaMask. However, using this combination of wallets comes with a risk: revealing your private keys via your internet connection. That’s because software wallets store private keys on their host device, meaning they are vulnerable to online threats.

Magic Eden

Magic Eden, a popular NFT marketplace, has also launched support for Bitcoin Ordinals. To manage them via Magic Eden, you must set up a wallet specifically for managing these types of assets. Magic Eden currently supports Xverse, Leather (Hiro), Unisat, and OKX.  From there, you have access to a trusted platform with a simple interface. Buying a Bitcoin Ordinal using Magic Eden is just as simple as buying an NFT.

Wallets for Bitcoin Ordinals

To manage ordinals, you will need a wallet that supports these types of assets. Thus you need a bitcoin wallet.

Although they are Bitcoin assets, you wouldn’t want to mix your main BTC holdings with your Ordinals. This is due to how the Bitcoin network functions. Any time you receive BTC, it’s actually in the form of an Unspent Transaction Output (UTXO). While the whole explanation is a little more complicated, think of your UTXOs like unspent change. Each time you spend on the Bitcoin network you pay with an entire UTXO and receive the rest of your balance “back” via another UTXO. Accordingly, that’s also where you’ll find the data for Bitcoin Ordinals; in that pile of unspent change.

Due to this fact, sending Bitcoin from a wallet that holds ordinals will risk sending your Ordinal instead, thus you’ll need to have separate accounts for each asset type. The other thing you’ll need to bear in mind is its Taproot support. To manage ordinals, your wallet must be taproot compatible. 

So, with that in mind, let’s take a look at some of the most popular Bitcoin Ordinals wallets.

Leather (Hiro) Wallet

Leather, formerly known as Hiro, is a software wallet for Bitcoin and alternative assets like Ordinals, BRC-20 tokens, and Stamps. Like all software wallets, Leather comes with the risk of revealing your private keys via your internet connection. Luckily, if you plan to use Leather to manage your ordinals, you can use it in tandem with your Ledger device to keep your assets safe. 

Phantom Wallet

Phantom wallet is a cross-chain software wallet that also allows you to secure, manage and interact with bitcoin ordinals. Although it started as a Solana wallet, it now supports countless networks, including the Bitcoin network. Managing Ordinals with Phantom is as easy as any other NFT or alternative asset. It also supports BRC-20 tokens.

And of course, you can connect a Ledger Bitcoin account to Phantom to interact with Bitcoin Ordinals securely.

Sparrow Wallet

Sparrow is a software wallet for Bitcoin, not specifically for Bitcoin ordinals. That means you will need to change the settings specifically to unlock this functionality. If you’re a beginner, you may want to avoid this method and go for something easier. However, you can use sparrow with Ledger devices to keep your assets safe.

How To Secure Your Ordinals: Use Your Ledger

Whichever wallet you’re using, you should always generate a new address when receiving an ordinal. You can label your separate addresses in most wallets that support them and this will stop you from sending your Ordinal accidentally. 

The other most important piece of advice is: protect your ordinals with a hardware wallet!

Using any of the mentioned software wallets that support Bitcoin Ordinals alone will not keep your assets safe. Software wallets cannot keep your keys away from the internet, meaning they are not very secure. To ensure your security, connect your Leather, Sparrow, or Phantom wallet to a Ledger device. That way, you can guarantee your private keys—and thus your assets—are protected from online threats such as malware or spyware.

To secure your Ordinals using a Ledger device, you will need to follow these steps

  1. Make sure your device is up to date with the latest firmware
  2. If you haven’t already, install the Bitcoin app on your Ledger device via Ledger Live
  3. Open the app and create a new Bitcoin account, selecting Taproot as its type
  4. Your wallet will create a new Bitcoin Taproot account with a new address
  5. Now your account is ready to receive Ordinals

Once you have this account set up you can actually send Ordinals to it directly using the Ord wallet. This might get a little technical but if you understand the risk it entails, follow this tutorial.

A better option is connecting the new account to a wallet that supports Bitcoin Ordinals. Connecting your ledger device to the software wallet makes interacting with Bitcoin Ordinals easy and secure.

How to Inscribe a Bitcoin Ordinal

If you’re interested in inscribing your very own ordinal, your first option will have you running a Bitcoin node and syncing it to the Bitcoin blockchain before you even think about touching an ordinal. This process can get pretty technical. But the good news is that there’s a less complicated alternative: using a service instead. Today there are a few easy ways to inscribe ordinals but some of the most popular platforms include:

Gamma

Gamma is a no-code tool that allows users to inscribe an ordinal in minutes; and without having to download or run a fully synced Bitcoin node. The tool also offers affordable and customizable transaction fees, a great feature for creators. The platform is easy to navigate and use, offering a great option for beginners. However, it’s important to note you will have to pay a service fee on top of the BTC transaction fee.

Magic Eden

Magic Eden launched its Bitcoin Ordinals inscription service in April 2023. From that moment on, any Magic Eden user could easily create Bitcoin Ordinals directly within the platform. You can inscribe images or files onto sats to create unique ordinals. Alternatively, you can create fungible BRC-20 tokens with a fixed supply or even web3 domains. With the marketplace’s previous experience with NFTs, Magic Eden’s inscription tool successfully offers plenty of options paired with an easy-to-use interface.

Ordinals Bot

Ordinals bot is another no-code tool that allows you to inscribe all sorts of Ordinals with ease. You can create inscriptions with images or text. It also offers options for creating BRC-20 tokens

or TAP tokens. You can even easily create Bitcoin domains and .bitmap districts too. Ordinals bot has a huge selection of options for you and also offers them via a simple interface.

The Future of Bitcoin Ordinals Inscriptions 

Bitcoin Ordinals gained in popularity quickly, with 100,000 inscriptions in the protocol’s first four days. Since the Bitcoin network is slower and stores all information on-chain, Ordinals could stand to become just as important to web3 as NFTs. Put simply, they are collector’s items on the world’s largest blockchain. As a result, securing them is just as important as our other digital assets. 

As any enthusiast should know, it’s risky to use software wallets and new and untested crypto platforms. To ensure your crypto is safe, your only option is to keep your keys offline and understand transactions before you sign them. This is where Ledger Devices come in. While the ordinal ecosystem is still growing, engaging in it comes with risks. If you decide to do so, make sure to secure your private keys with a hardware wallet, such as that Ledger offers. Ledger Devices offer unparalleled security of your digital assets, and when securing digital artifacts such as Bitcoin Ordinals, it’s imperative to keep your keys safe and offline.

Knowledge is Power.


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