Bitcoin Ordinals

Bitcoin Ordinals are inscriptions of digital content, such as images, text, audio, or even small games, written directly onto the smallest unit of Bitcoin, the satoshi. Created by developer Casey Rodarmor, the Ordinals protocol launched in January 2023 and gave Bitcoin a native way to host NFT-like artifacts without adding a new token standard or smart contract layer.

The protocol relies on ordinal theory, a numbering scheme that tracks every satoshi in the order it was mined, starting from the Bitcoin genesis block. Because each satoshi has a unique, traceable serial number, arbitrary data can be attached to a specific one through an "inscription." Inscriptions are stored in the witness data of a Taproot transaction, a part of the transaction structure introduced by the SegWit upgrade in 2017 and expanded by the Taproot upgrade in 2021. Both upgrades raised the effective amount of data a single Bitcoin block can hold, which made inscribing larger files practical.

Ordinals differ from typical NFTs on chains like Ethereum in one key respect: the content lives entirely on-chain, with no external metadata server or smart contract managing ownership. This makes an inscription immutable, but it also means wallet software must correctly track which satoshi holds which inscription, since Bitcoin itself has no built-in concept of an NFT.

Beyond one-off art collections, inscriptions gave rise to the BRC-20 standard, an experimental way of creating fungible tokens by inscribing simple JSON text onto satoshis. Dedicated wallets, indexers, and marketplaces emerged to support trading and transferring both individual inscriptions and BRC-20 tokens.

Ordinals sparked real debate. Inscription activity has repeatedly driven up Bitcoin transaction fees and boosted miner revenue, seen by some as a welcome incentive for network security as block rewards shrink. Critics argue inscriptions clutter the blockchain with non-monetary data and crowd out payment transactions, contending Bitcoin should stay focused on being sound, minimal money.