What Is a Bitcoin Ordinal?
Bitcoin Ordinals (loosely known as Bitcoin NFTs or Ordinal NFTs) are digital content, such as audio, video, and images, on the Bitcoin network.
Non-fungible tokens (NFTs) are mostly created and used on smart contract-enabled blockchains like Ethereum, BNB Chain, and Solana. Over the years, Bitcoin developers have tried introducing NFTs to the network, including Counterparty in 2014 and Stacks in 2017. Since smart contract functionality is limited in the Bitcoin network, these projects developed alternative solutions – they used native tokens for the contract piece but settled the transactions on the network. However, Bitcoin Ordinals debuted on the Bitcoin blockchain in January 2023, with the aim of putting NFTs directly on the network.
The ordinals are minted by inscribing data on the smallest denomination of Bitcoin called Satoshi (sats). This was made possible by two major upgrades on the Bitcoin network, the Taproot upgrade in November 2022 and Segregated Witness (SegWit) in 2017.
How Do Bitcoin Ordinals Work?
Ordinals are similar to NFTs, with a few differences. While both live on the blockchain, NFTs often feature dynamic metadata associated with off-chain assets. On the other hand, ordinals’ data are directly written on individual satoshis that are added to the Bitcoin blockchain. This allows them to inherit Bitcoin’s durability, security, simplicity, and immutability.
Ordinals are a numbering system used to track and transfer individual satoshis. They allow users to attach extra information on individual satoshis to make them unique. The inscribed data may also feature smart contracts to allow the satoshis to perform NFT-like functions.
The concept was introduced by Casey Rodarmor based on ordinals theory, which focuses on individual satoshis. The ordinal theory treats satoshis as atomic units of Bitcoin that can be identified and exchanged individually. A single Bitcoin is equivalent to 100 million satoshis.
Numbering satoshis typically follow a numbering system and a transfer scheme. The ordinals numbering system is based on the order in which the satoshis were mined, while the transfer scheme depends on their transaction order. The ordinal numbers serve as stable identifiers for the information attached on satoshis. For instance, ordinal number 0 denotes the first satoshi in the first block, and ordinal number 1 represents the second satoshi.