What Are Ordinals? A Guide to NFT Inscriptions on Bitcoin

Bitcoin Ordinals are the latest innovation to come out of the Bitcoin ecosystem, enabling anyone to inscribe various kinds of data onto the Bitcoin blockchain. This has led to the emergence of a new market for on-chain Bitcoin NFTs.  

Read on to learn what Ordinals are, how Ordinal inscriptions work, and how you can inscribe your own Bitcoin Ordinals. You will also discover a list of the most popular Ordinal NFT  projects in the market.

What Are Ordinals?

Ordinals are numbers given to Satoshis (sats), the smallest bitcoin units that can be recorded on the blockchain. Each sat represents a 100 millionth of a bitcoin. 

Ordinals assign numbers to sats in the order in which they’re mined and “transferred from transaction inputs to transaction outputs in first-in-first-out order.” This sats numbering scheme permits the tracking and transferring of individual sats.  

With the ability to inscribe data onto individual sats, Ordinals enable the creation of verifiably unique digital assets, commonly referred to as NFTs, directly on the Bitcoin blockchain without making any new changes to the protocol. 

To gain a better understanding of Ordinals, let’s take a look at Ordinal Theory and how inscriptions work. 

What is Ordinal Theory?

Created by Software engineer Casey Rodarmor, Ordinal Theory is a proposed methodology for individually identifying and tracking individual sats throughout Bitcoin’s outstanding supply and inscribing them with data. 

According to the Ordinal Theory, each sat is serially numbered using ordinal numbers, starting from 0. This numbering system enables the easy tracking of satoshis from the moment they are mined and throughout the entire transaction lifespan.

Ordinal Theory, as the name suggests, is simply a theoretical concept. That means satoshis aren’t actually serialized at the protocol level, and there’s no on-chain footprint. 

Rodarmor proposed the scheme for giving sats serial numbers to provide Bitcoin with stable identifiers that could be used by various Bitcoin applications, such as Bitcoin NFTs. 

That's where inscriptions come into play. 

What Are Ordinal Inscriptions & How Do They Work?

Ordinal inscriptions are digital artifacts native to the Bitcoin blockchain that are created by inscribing sats with content. 

The content could be text, images, or videos, for example. Images and text are currently the most common type of content inscribed to sats.  

Digital Artifacts vs. NFTs

Rodarmor prefers the word digital artifacts to NFTs because he doesn’t believe they’re the same. In a blog post, he writes: “Digital artifacts are NFTs, but not all NFTs are digital artifacts.” 

An NFT can only be considered a digital artifact if it’s on-chain, decentralized, unrestricted, and immutable. Most NFTs in the market today store their data off-chain or on centralized chains, exposing it to loss or unauthorized access through back-door admin keys. 

For instance, most Ethereum NFTs contain a link pointing to a digital file hosted by a cloud storage service provider like IPFS. On the other hand, Ordinals inscriptions are recorded on-chain on the most secure and decentralized blockchain in the world.

Keep in mind that while Rodarmor prefers the term digital artifacts, it hasn’t caught on. People are referring to Bitcoin inscriptions as NFTs, which is the more popular and easily recognizable term. Still, the word digital artifacts may gain popularity since Bitcoin Ordinals NFTs really are different from most conventional NFTs.

Content Storage

When inscribing satoshis, content is stored in the witness portion of a transaction. The 2017 Segregated Witness upgrade introduced the witness portion of a Bitcoin transaction. This upgrade increased transaction data efficiency by splitting the Bitcoin transaction data structure into two parts: transaction and witness. 

The transaction portion contains transaction data like sender, receiver, input, and output, while the witness section holds signatures and other types of data that prove that a transaction has been authorized. 

Furthermore, the 2021 Taproot upgrade, which removed data constraints, enables inscriptions that are almost 4 MBs in size. 

Ordinals have leveraged these two upgrades. As a result, Taproot utilization has significantly increased past the 5% mark since the launch of digital artifacts.

Ordinal Inscriptions

Once mined, inscriptions are made on the first satoshi of the first output of a transaction, permanently making this inscribed sat different from other satoshis. 

Using Ordinal theory, someone can easily find the unspent output holding the inscribed sat. People can also track the movement and ownership of the inscribed sat over time, as well as buy and sell it. Inscriptions can be transferred to normal Bitcoin addresses, and they can benefit from other Bitcoin infrastructures, such as multi-signatures.  

Ordinal inscriptions use the Bitcoin unspent transaction output (UTXO) set. Therefore, the adoption of Ordinals will boost the demand for outputs and expand the size of the UTXO set. 

Moreover, inscription alters the perceived value of individual sats by giving them a form of rarity. For example, Bitcoin’s periodic events, such as halvings, can affect the rarity of inscribed sats.

How to Buy Bitcoin Ordinals OTC 

Bitcoin Ordinals are very new, so NFT marketplaces are still rolling out Ordinal support to enable the easy buying and selling of Bitcoin Ordinals NFTs. However, they are currently available to trade over-the-counter (OTC) in dedicated Discord servers. 

Here's a step-by-step process of how you can buy Bitcoin Ordinals:

• Get a wallet that supports Bitcoin Ordinals. For instance, Xverse is an easy-to-use Bitcoin NFT wallet that you can use to store your Ordinals inscriptions. Xverse is available for iOS, Android, and Chrome as a browser extension.
• Download and set up your Xverse wallet (and remember to back it up).
• Once your wallet is all set, you can start exploring various inscriptions that are for sale. To do this, you can join the Ordinals Discord server. 
• Find a channel labeled “link-your-project.” Here, you’ll find many Bitcoin Ordinals projects that have provided invite links to their Discord servers. 
• Join the servers that have caught your attention and begin due diligence. Find out what other people are saying. Also, visit the project website and its other social media accounts. Make sure you understand the project and what it’s about. Also, see if you can view each inscription on the official Ordinals website. To illustrate, Taproot Wizard #0001 is linked to the inscription on the Ordinals website, where you can view its blockchain data. In other words, each Bitcoin Ordinal should have an inscription number.
• Once you’ve found a Bitcoin Ordinal that you’d like to buy, go ahead and initiate a trade. 

Keep in mind that when you are trading on an over-the-counter marketplace like a Discord server, you have the be extra careful to ensure that your trade goes smoothly. So do your due diligence on the inscriptions you are buying and only trade with trustworthy counterparties. 

Where Can You Buy Ordinals NFTs?

You can buy Ordinals over-the-counter or on NFT marketplaces that support Ordinals. 

Over-the-Counter (OTC)

You can buy Ordinals NFTs on the Discord servers of the respective projects. 

To illustrate, on the Ordinal Punks Discord server, users can access a Google Sheet with ask prices and bids for different punks. Buyers need to identify the Ordinals NFT they want and initiate a deal. The project has provided instructions on how to do this. For instance, it doesn’t allow buyers and sellers to trade in the DMs to avoid fraud.  

NFT Marketplaces

Alternatively, Bitcoin NFT marketplaces are starting to roll out Ordinals support. The trustless marketplaces Gamma and Magic Eden are the first to enable you to seamlessly buy and sell Bitcoin Ordinals NFTs.

Xverse has enabled Partially Signed Bitcoin Transactions (PSBTs) in all transactions on the two marketplaces. Here, you can be assured of secure interactions since PSTBs allow you to review transaction details using a human-readable interface. 

You don’t have to understand complex code or take part in blind signing to participate in the marketplaces. All you need is the Xverse app. Since both marketplaces are trustless, no intermediary or centralized entity is required to complete a transaction. Thus, there is an extra layer of security and decentralization for all your transactions.

Popular Bitcoin Ordinals NFT Collections

Now, let’s take a look at some of the most popular Ordinals collections that have merged in this fast-growing new Bitcoin NFT market. 

Ordinal Punks

Ordinal Punks is a collection of 100 profile picture NFTs minted within the first 650 inscriptions. The collection pays tribute to the famous CryptoPunks NFTs. Based on the project’s sales data, the average price of these NFTs was $71,860 at the time of writing.

Taproot Wizards

Taproot Wizards is a collection of 2,099 JPEG NFTs. The concept behind this project is to “reignite the spark that made Bitcoin magical.” According to the creator, people have forgotten the magic of Bitcoin, which was felt widely during the early days. Developer Udi Wertheimer is the man behind this Ordinals NFT collection. 

The first Taproot Wizard in this collection made history when it was recorded in the largest Bitcoin block ever. The JPEG almost filled a whole 4 MB block.

Bitcoin Rocks

Bitcoin Rocks is a collection of 100 rocks in different colors that pays tribute to an Ethereum-based 2017 NFT collection called EtherRock. The person behind this collection goes by the pseudonym Rocktoshi. This Ordinals NFT collection holds auctions from time to time, allowing people to buy the various rocks. 

The highest sale to date was 9.86 BTC, according to the project’s Google sheet. This is over $200,000 based on the BTC price at the time of writing.

Inscribed Pepes

Inscribed Pepes is a collection of 69 unique characters inspired by the Pepe the Frog meme. They were minted within the first 2,500 inscriptions. The highest sale as of this writing was 1.5 BTC ($37,079.75). On the Inscribed Pepe’s Discord server, the project has four team members.

Timechain Collectibles

Timechain Collectibles are 21 original works of art depicting timepieces. The art was AI-generated and inspired by a 2021 treatise by software engineer Gigi that says, “Bitcoin is time.” Moreover, the timepieces have interesting stories behind them, which can be found on the project’s Discord server. 

Drawing information from the “confirmed sales” channel on the project’s server, the highest sale so far was 4 BTC. This cost was about $95,000 based on the bitcoin price at the time of writing.

How to Create & Inscribe Bitcoin Ordinals Using Xverse

Running a node to inscribe an Ordinals NFT isn’t for everyone. Fortunately, the Gamma NFT marketplace has introduced inscription, allowing anyone to inscribe Bitcoin Ordinals in a few easy steps using Xverse. Alternatively, you can also inscribe Bitcoin Ordinals using the Xverse mobile wallet on Gamma and a platform called ordinalsbot. 

Follow these steps to learn how to inscribe your first Ordinal NFT:

• Download Xverse Bitcoin wallet, available on iOS, Android and a Chrome extension. Xverse is suitable because it provides a Taproot Bitcoin receiving address, which you’ll need to get your Ordinals NFT.

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• Load your wallet with Bitcoin to pay network fees.
• Open Gamma or OrdinalsBot in your browser and connect your Xverse wallet.
• Click the “Ordinals” tab at the top of the website.

• Select “New Inscription.”

• Pick the content type you wish to inscribe and upload it. The accepted file types are WEBP, JPEG, GIF, PNG, and SVG. Still images and GIFs should be under 60 KB and 200 KB, respectively.

• Click “Continue.”
• Choose a transaction fee. The displayed fees include Gamma’s service fee and Bitcoin network charges earned by miners.

• Click “Continue.”
• Enter your Ordinals recipient address. You can find this address by going to the NFT section in Xverse. Click “Receive.” 

• Copy the Ordinals address and paste it on Gamma. Do not insert a Bitcoin wallet address that doesn’t support Ordinals NFTs.

• Pay for the inscription and wait for your Ordinals NFT. Depending on the amount of fees that you paid, the inscription may take hours or days.  

Bitcoin Ordinals are arguably one of the most exciting developments we’ve seen in Bitcoin. To part in this exciting new market, download Xverse to securely store and inscribe Bitcoin Ordinals today. 

FAQs

How are Ordinals different from Layer-2 Bitcoin NFTs?

Ordinals are native to the Bitcoin blockchain, while layer-2 Bitcoin NFTs are minted on layer-2 chains. For example, Stacks has become a popular second-layer protocol with a thriving Bitcoin NFT market. 

How many Ordinal Inscriptions are there?

Currently, there are over 160,000 Ordinal inscriptions. Specifically, at the time of writing, the most recent inscription was numbered 166,246. Given the impressive growth Bitcoin Ordinals are experiencing, we can expect to see millions of inscriptions on the Bitcoin blockchains in a few months. 

Are Bitcoin Ordinals safe?

Yes. Bitcoin Ordinals are recorded on the Bitcoin blockchain. Therefore, the chain’s robust security keeps them safe, and they cannot be altered. In fact, since Bitcoin is the most decentralized blockchain network and Ordinals are inscribed directly on-chain, Ordinal inscriptions are arguably the most secure type of NFTs in the market. 

Are Bitcoin Ordinals a good investment?  

Whether Bitcoin Ordinals are a good investment will vary from investor to investor and from project to project. Going by sales activity, however, the secondary OTC market is attracting sales worth hundreds of thousands of dollars. So, this could indicate that certain people believe Bitcoin Ordinals are a good investment.