Bitcoin NFTs were virtually unheard of in web3. Although NFTs that originate from Bitcoin, such as the "Rare Pepe" collection that was minted in 2014, have been around for a long time, such collections are not true Bitcoin NFTs because they have been reconfigured to work on the Ethereum network. However, the Ordinals have made NFTs on Bitcoin a reality.

What are the Ordinals?

On January 21, 2023, software engineer Casey Rodarmor launched the Ordinals protocol, which allows users to mint their own NFTs on the Bitcoin network.

In the Bitcoin network, each Bitcoin is divided into 100,000,000 units called "satoshis." The Ordinals protocol then works by allowing users, those who run Bitcoin nodes, to individually mint each satoshi with data, which is not limited to JPEGs but even includes videos and audio files, and in doing so, create an Ordinal.

How are Ordinals different from typical NFTs?

On the Ethereum network, NFTs come from off-chain data in the interplanetary file system (IPFS), which is a decentralized file storage system that can be modified using dynamic metadata. If you are well-versed in NFTs, you have probably heard the term "refreshing the NFT metadata," especially if you have just minted a new NFT. Updating an NFT's metadata will update the cover image of your NFT and reveal which NFTs you have minted and how rare they are.

In contrast, Ordinals have their data directly stored on the chain, rather than the directory-like connections that conventional NFTs have with servers, making them true immutable digital artifacts interwoven into the Bitcoin network, which is why they are also called "inscriptions."

Additionally, typical NFTs that follow the ERC-721 token standard or its equivalent have their values defined by the rarity of the art based on its attributes, as well as its supply. However, Ordinals derive their rarity from the sats on which they are minted, where key events like halvings would likely add levels of rarity.

As such, the launch of the Ordinals protocol was quite monumental, but as the hype built up and more eyes were drawn to it, controversy followed.

Why are Ordinals controversial?

The birth of the Ordinals protocol has fractured the Bitcoin community, as the age-old question that has enveloped the entire Bitcoin network resurfaced: what is the true purpose of Bitcoin? Was Bitcoin created for processing financial transactions? If so, should it then be used for non-financial and superfluous purposes like minting NFTs? For many Bitcoin maxis, it's a question of what Bitcoin represents as the very first cryptocurrency; it serves as a rallying symbol of defiance against centralization, against banks and governments worldwide. For them, Bitcoin paved the way for unauthorized action in the financial world.

And so, when NFTs, which are taken less seriously in the space, were introduced into Bitcoin, the maxis felt that the historical value and symbolism of Bitcoin were apparently diminished, to the point that some even claimed that the Ordinals protocol was an attack on the Bitcoin network. One of the reasons for this is that Ordinals are fully stored on-chain, bypassing the limitation of non-financial data on the Bitcoin network (80 bytes), where an inscription broadcast could even take up an entire 4 MB block. Additionally, because the NFT is stored in witness data, a quirk of Taproot means that users enjoy a significant 75% discount when minting Ordinals.

There was also a growing concern.

#crypto2023 #BTC #ordinals

In a groundbreaking move for the cryptocurrency industry, the first-ever loan in Bitcoin Ordinal Punks history has been completed via Arcade. This marks a significant step forward for the burgeoning cryptocurrency ecosystem, as it opens up new possibilities for holders of Ordinal Punks tokens.

According to reports, the loan was made by 58 holders of Ordinal Punks tokens that were wrapped on the Ethereum blockchain. The borrowers were able to secure a loan of 32 ETH through Arcade, a platform that allows users to borrow and lend cryptocurrencies. The loan term was set at 30 days, with an annual percentage rate (APR) of 20%.

This development is notable for several reasons. Firstly, it demonstrates the increasing use cases for cryptocurrencies beyond simply being a speculative investment. With this loan, cryptocurrency holders were able to use their digital assets as collateral to secure a loan. This is an important step forward in the integration of cryptocurrencies into the wider financial system.

Secondly, it highlights the potential for blockchain technology to facilitate more efficient and transparent lending practices. By using Arcade, borrowers were able to access a loan with a relatively low APR, and the entire process was completed quickly and securely on the blockchain.

The news of this loan also comes on the back of reports that the cumulative fees paid for Ordinals Inscriptions minting have exceeded 100 BTC. This is a further indication of the growing interest in cryptocurrency collectibles, with Ordinal Punks tokens being highly sought after by collectors and investors alike.

Source: Dune Analytics

A recent report by Galaxy Research sheds light on the rise of a novel area in the Bitcoin realm: inscriptions. As of December 2022, more than 200,000 inscriptions have been created on Bitcoin, paving the way for a new ecosystem for NFTs with an estimated value of $4.5 billion by 2025. These inscriptions are unique files that can comprise images, text, audio, or applications, anchored to a single, exclusive Satoshi (sat), the smallest BTC unit.

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This article was republished from azcoinnews.com

Most NFTs are created and tracked through a smart contract. However, the assets that these smart contracts represent are often hosted elsewhere. For example, some NFT platforms use the decentralized storage system, IPFS, to store NFT artwork/audio/video files.

However, Ordinals are enrolled in satoshis and, therefore, these Bitcoin-NFTs are stored on the blockchain. They are validated in blocks along with other transactions and stored in the network's distributed ledger.

In addition, traditional NFTs often have metadata that allows creators to change the appearance and characteristics of an NFT. For example, some NFT projects will ask users to update their metadata in order to update their NFTs with higher resolution images. However, since Ordinals are stored in a chain, their data is immutable and cannot be changed. Furthermore, unlike NFTs, Ordinals do not provide creators with the option to receive royalties on subsequent sales.

Simply put, Ordinals are immutable and complete digital artifacts. Unlike traditional NFTs, they cannot be manipulated and reside entirely on the chain. For these reasons, Ordinals Protocol creator Casey Rodarmor believes these digital artifacts are "intended to mirror what NFTs should be."

#nftcommunity #NFT #ordinals

#bitcoin #NFT #ordinals #BTC #nftcommunity

The number of NFT Ordinals of Bitcoin has multiplied tenfold in just a few weeks, reaching a total of 500,000. The growth of this new protocol continues to feed interest in the technology, despite criticism and fears from many members of the bitcoiner community.

NFT Ordinals are a new way to store files on the Bitcoin network, digital inscriptions that store information in the blockchain, thanks to the improvements provided by SegWit and Taproot protocols.

At the end of January, there were only just over 100 NFT Ordinals of Bitcoin. However, with the creation of new tools to facilitate the creation and management of inscriptions, the number has grown rapidly.

Initially, creating and managing NFT Ordinals of Bitcoin was only possible through the native wallet developed by Casey Rodarmor, the creator of this protocol. However, using this tool required managing a full Bitcoin node locally. Additionally, executing functions in it required using code, which was not the most user-friendly format for most technology users.

Over time, different companies and teams of programmers have worked to facilitate the adoption of this technology by creating new products or adapting existing ones. Wallets like XVerse, Hiro, and Sparrow now allow their users to manage NFT Ordinals of Bitcoin.

Recently, UniSat Wallet also opened up the possibility for its users to manage NFT Ordinals, but with the added ability to create inscriptions. This feature gives it an advantage over many of its competitors.

While the number of inscriptions on the Bitcoin network continues to grow and gain the attention of more and more people, many members of the bitcoiner community oppose this use of technology. Important developers, such as Luke Dashjr and Adam Back, have spoken out against this modality of NFT in Bitcoin.

Detractors of NFT Ordinals of Bitcoin argue that this system represents a threat to network security, privacy, and efficiency. They believe that storing data such as images, audios, and even video games on the Bitcoin blockchain is a waste of space and increases transaction fees.

As a result, the Bitcoin network has already suffered congestion caused by Ordinals inscriptions. At the time of this writing, there are more than 50,000 transactions waiting to be confirmed. One of the main consequences of the appearance of NFT Ordinals in Bitcoin has been the growing accumulation of transactions in the network's mempool.

The debate over NFT Ordinals of Bitcoin continues, but the growth of this new protocol suggests that it will continue to be an important topic for discussion in the cryptocurrency world.