Résumé
Each bitcoin is made up of 100,000,000 satoshis (sats). The Ordinals protocol allows each satoshi to be identified and transacted with additional data attached (through a process known as registration).
Ordinals have created another use case for Bitcoin, beyond just transferring value, by making Bitcoin NFTs a reality.
Introduction
Until recently, NFTs were primarily issued and used on blockchains like Ethereum, Solana, and BNB Smart Chain. However, the team behind Ordinals believes that non-fungible tokens also have their place on the Bitcoin blockchain. This is how the Ordinals project was born.
History has proven that it is extremely difficult to modify the code of Bitcoin. This problem is mainly caused by the decentralized network of nodes and developers who do not want to risk the security of the network. This is why Bitcoin NFTs have not generated much interest. Nevertheless, the growth of the crypto ecosystem has opened the doors to more innovative minds for whom the creation of Bitcoin NFTs is part of the future of Web3.
By February 2023, registrations using Ordinals exceeded 100,000 as users dumped images, video games, and other content onto the network. Let's see how it works.
What are Bitcoin Ordinals?
The Ordinals protocol is a satoshi numbering system, which assigns each satoshi a serial number and tracks it throughout transactions. In other words, ordinals allow users to make each satoshi unique by associating additional data with it. This process is called “registration.”
A satoshi, named after the pseudonym of Bitcoin creator Satoshi Nakamoto, is the smallest denomination of Bitcoin (BTC). A single BTC can be subdivided into 100,000,000 satoshis, meaning each satoshi is worth 0.00000001 BTC.
Satoshis are numbered based on the order in which they were mined and transferred. The numbering system is based on the order in which satoshis are mined, while the transfer system is based on the order in which transactions are entered and exited. Hence the name “ordinals”.
Although classic NFTs are similar to ordinals in some ways, there are a few key differences. NFTs have typically been made using smart contracts on blockchains such as Ethereum, Solana and the BNB Smart Chain, and sometimes the assets they represent are hosted elsewhere. Conversely, ordinals are written directly on individual satoshis, which are then included in the blocks of the Bitcoin blockchain. Ordinals reside entirely on the blockchain and do not require a parallel blockchain or separate token. In this sense, ordinal inscriptions inherit the simplicity, immutability, security and durability of Bitcoin itself.
Ordinal theory and inscriptions
In the context of Bitcoin, ordinal theory is a methodology proposed to identify each satoshi by means of a serial number and to track them in the supply of Bitcoin, from the first issuance until the end of their term. lifespan and their transactions. This process is called “registration.” So, ordinal inscriptions are digital assets, similar to NFTs, inscribed on a satoshi in the Bitcoin network. This process was made possible by the Taproot upgrade, launched on November 14, 2021. For this reason, ordinal registrations do not require a parallel blockchain or separate token.
As ordinal theory allows individual satoshis to be tracked and transferred, it provides the possibility of collecting them. Based on the total supply of bitcoins, the following ranks have been defined to indicate the scarcity of different satoshis:
Common: any sat other than the first sat in its block (total supply of 2.1 quadrillion).
Uncommon: the first sat of each block (total supply of 6,929,999).
Rare: the first sat of each difficulty adaptation period (total supply of 3437).
Epic: the first sat after each halving (total supply of 32).
Legendary: the first sat of each cycle* (total supply of 5).
Mythical: the first sat of the genesis block (total supply of 1).
*A cycle represents the period between conjunctions, which occur when a halving and a difficulty adjustment coincide. In theory, this conjunction occurs every six halvings, but the first has not yet occurred (it is expected to occur in 2032).
Advantages and disadvantages of ordinals
Ordinals have created another use case for the Bitcoin network than simple value transfers. However, the ordinals protocol has sparked controversy because it raises a fundamental question within the Bitcoin community. On the one hand, there are those who think that we must preserve the relative simplicity of bitcoin within its reserve and value transfer limits. On the other side, there are those who believe that Bitcoin should evolve to include new features and use cases.
Registered satoshis now compete with traditional BTC transactions for block space, increasing network fees. This has sparked some controversy in the Bitcoin community, but some Ordinals supporters argue that this could be positive, as fees are a crucial incentive for miners to secure the blockchain. In the future, as block rewards decrease over time, network fees will become the primary motivation for committing hashing power to Bitcoin. The crypto community seems divided on the subject, but the project has certainly brought innovation to the Bitcoin space.
Conclusion
Ordinals are changing the world of blockchain art by providing a completely new way to store information about Bitcoin transactions. They add additional utility and have increased the number of non-zero Bitcoin addresses to an all-time high. We are witnessing a unique moment in Bitcoin history, where innovation is driving network activity that goes beyond the usual use cases of investing and money transfer. Does this mean the Ordinals will continue to grow? Not necessarily. The future will tell.
More information
What is an NFT?
What is Taproot and how it will benefit Bitcoin
Countdown to Halving Bitcoin
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