Ordinals assigns a permanent serial number to every satoshi based on the exact order in which it was mined, then lets users "inscribe" arbitrary content, such as images, text, audio, or even small games, directly onto that specific satoshi. Unlike token systems built with smart contracts, the whole scheme runs on Bitcoin's existing scripting rules: an inscription is embedded as witness data inside a Taproot transaction through a commit-and-reveal process, writing the content permanently into the blockchain itself rather than hosting it off-chain and merely linking to it.

Because the data lives fully on-chain, creator Casey Rodarmor calls inscriptions "digital artifacts" rather than NFTs, distinguishing them from most Ethereum-style collectibles whose media sits on an external server or IPFS. Ownership simply follows whichever wallet controls the unspent transaction output holding the inscribed satoshi, so a careless spend or fee payment can accidentally destroy an inscription; dedicated Ordinals wallets exist specifically to prevent this. The protocol also created a market for "rare sats", such as the first satoshi of a block or of a halving epoch, prized for their position in the numbering scheme rather than for any content attached to them.

Since its January 2023 launch on Bitcoin, the idea has spawned an entire inscription economy, most notably BRC-20, a fungible token format that repurposes inscriptions to mint and transfer tokens without smart contracts, and later Runes, a more efficient rival standard from the same creator. The surge in inscription traffic has repeatedly pushed Bitcoin fees sharply higher and reignited debate over whether non-financial data belongs on a monetary network, with critics warning of block space bloat and slower node syncing, and supporters countering that it strengthens miner revenue as the block subsidy shrinks.