Bitcoin ordinals, also known as “sats,” have emerged as a unique way to write and create Bitcoin’s smallest unit, the Satoshi, into a unique digital artifact. In this comprehensive guide, we’ll explore what Bitcoin ordinals are, how they work, and their key differences from traditional NFTs.Thank you for reading this post, don't forget to subscribe!
What are Bitcoin Ordinals?
Bitcoin ordinals, often called “Sats,” are individual Satoshi imprinted with unique information, turning them into a de facto form of non-fungible token (NFT). Simply put, sats are the smallest units of Bitcoin, each worth 0.00000001 BTC. This imprinted information can be text or images, making a Satoshi as unique and highly valuable as a collectible coin.
Origin of Bitcoin Ordinals
Bitcoin ordinals have their roots in the ongoing debate within the Bitcoin community over whether Bitcoin should function solely as a financial transaction network or also as a secure and decentralized data storage platform. As Bitcoin aims to become a global reserve currency, it faces the challenge of accommodating experimental use cases such as storing data on its blockchain.
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Initially, Bitcoin only allowed small text messages of up to 80 bytes to be encoded in its blocks through a function called OP_RETURN. However, with significant hard fork updates such as Taproot and SegWit, the block size limit was increased to 4 MB, enabling more efficient organization of transaction data.
How Bitcoin Ordinals Work
Bitcoin ordinals are identified based on four parameters:
- saturn index in block
- Index of blocks in the difficulty adjustment period
- Index of blocks in the halving era
- cycle number
This unique identification system allows SAATs to be ranked generically. At the protocol level, the set remains mutable, but at the social level, each imprinted set becomes a unique digital artifact due to its additional information.
General inscriptions: how they work
Creating ordinals involves a two-step process. First, you create a taproot output with the inscription content, and then you spend the output, revealing the inscription content on the blockchain. This inscription content is wrapped in an “envelope” that does not affect the script but allows tracking, transfer, purchase, sale, or retrieval.
How are ordinals different from NFTs
Bitcoin ordinals are similar to NFTs in some ways, but they have distinctive features:
- On-chain nature: Ordinals contain raw file data written directly into the Bitcoin blockchain, unlike NFTs, which can reference files hosted on other platforms.
- Block Size Limit: Bitcoin’s 4MB block size limit limits the number of “Bitcoin NFT mints.”
- Concurrency: Sets can potentially carry multiple inscriptions, creating multi-vector NFTs.
- Lack of smart contract functionality: Bitcoin lacks the infrastructure for decentralized exchanges and user-friendly wallets, leading to OTC trading.
- Lost Inscriptions: Sets containing inscriptions may be accidentally spent, leading to potential loss of these digital artifacts.
- Content moderation: The permissionless nature of Bitcoin means that inscriptions cannot be censored, raising concerns about illegal or copyrighted material.
How to Buy and Create Bitcoin Ordinals
To interact with Bitcoin Ordinals, you will need a specific wallet:
Sparrow Wallet: To receive ordinals. It does not require running a full Bitcoin node.
Ord Wallet: To make inscriptions. Requires a full Bitcoin node and sufficient storage space.
Read about the Top 9 Crypto Wallets in October 2023.
bitcoin nft collection
- Collection Overview: Ordinal Punks is a collection of 100 NFTs that were minted within the first 650 inscriptions on the Bitcoin blockchain.
- Key Details: The highest ranked inscription in the collection, ranked #642.
- Market Price: The lowest bid for Ordinal Punks starts at 3.7 BTC, while the highest asking price soars to an impressive 50 BTC.
- Collection Overview: Taproot Wizards is a simple collection consisting of hand-crafted NFT Wizards, thoughtfully created by Udi Wertheimer.
- Rarity: As of now, only a limited number of taproot wizards are imprinted on the Bitcoin blockchain.
- Collection Overview: TimeChain Collectables is an exclusive set consisting of just 21 ordinals, each representing a different variation of the timepiece.
- Mint Date: The entire collection was minted in a single block on January 30, 2023.
- Rarity Level: The collection houses a diverse range of clocks including pocket watches, antique sundials, wrist watches, wall clocks, cyberpunk alarm clocks, clock towers, monoliths and grandfather clocks.
In the hot world of Bitcoin NFTs, these collections offer a glimpse of the unique and creative possibilities emerging within the field. Remember to exercise caution and do thorough research before plunging into this exciting market.
How to Create Your Own Bitcoin NFT
Creating your own Bitcoin NFT could be a profitable venture. In this step-by-step guide, we’ll walk you through the process, highlighting the necessary details and prerequisites.
Before diving into the casting process, make sure you have the following:
- Gamma.io: You will use a no-code inscription tool called Gamma.io.
- $50 worth of Bitcoins: You will need this to pay the inscription fee.
- Taproot-Compatible Wallet: Your wallet must support Taproot addresses. Examples include Mun, Sparrow, and Specter wallets.
- Coinbase and Binance deprecation: Note that Coinbase and Binance do not support taproot addresses.
Step 1: Go to Gamma.io
Visit the official Gamma website: Gamma.io/Ordinals.
Step 2: Select inscription type
Choose the type of inscription that matches what you want to embed on your Bitcoin Satoshi.
Step 3: Choose your fee plan
After selecting the inscription type, choose a fee plan that suits your preferences.
Step 4: Get your general recipient address
It is recommended to use Sparrow Wallet from the list of compatible wallets mentioned earlier. Once you’ve found your Sparrow wallet address, enter it in the “Recipient Bitcoin Address” field.
Step 5: Add Taproot Address Prefix
Taproot wallet addresses start with “bc1p, Make sure your wallet address follows this format.
Step 6: Proceed with payment
Send the chosen transaction fee plan to the given wallet address, ensuring that it starts with “bc1p“Prefix. Some people recommend sending Bitcoins from a different wallet than the one receiving your ordinal NFT to avoid any complications.
Step 7: View Your Ordinal
Depending on the fee plan you choose, you may have to wait for a few days. You will receive an email link to track your ordinal. Once the waiting period is over, you can view your freshly created Bitcoin NFT in an ordinal viewer.
And there you have it – you have successfully created your own Bitcoin NFT!
Bitcoin Ordinals represent a unique and experimental approach to adding value to individual sets within the Bitcoin network. As the crypto space evolves, Ordinals continues the discussion about the future of data storage and value on blockchains and their potential impact on the digital collectibles world.
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Questions and Answers
Q1: What are Bitcoin ordinals?
Answer: Bitcoin ordinals, often called “sets,” are the smallest units of Bitcoin, equal to 0.00000001 BTC. They become unique by being imprinted with specific information, such as dollar bills being signed by notable celebrities, effectively making them NFT-like assets.
Q2: How have Bitcoin ordinals evolved along with Bitcoin?
Answer: Bitcoin ordinals have also evolved along with the evolution of Bitcoin. Originally designed for financial transactions, Bitcoin has adapted to accommodate data storage with updates like Taproot and SegWit, which increased the block size limit to 4 MB.
Q3: What parameters define Bitcoin ordinals?
Answer: Bitcoin ordinals are identified through a unique set of parameters, including the index of blocks set, the index of blocks in the difficulty adjustment period, the index of blocks in the halving era, and the cycle number. These parameters allow sets to be ranked generically.
Q4: How do general inscriptions work?
Answer: General inscriptions are similar to digital artifacts stored in taproot scripts—path affordance scripts. Creating an inscription involves a two-step process: first, creating a taproot output with the inscription content, and second, spending the output to reveal the inscription on the blockchain.
Q5: What makes Bitcoin Ordinals different from NFTs?
Answer: Bitcoin Ordinals differ from traditional NFTs in several ways. They are “on-chain”, meaning that the actual raw file data in them is written directly into the Bitcoin blockchain. Bitcoin’s 4MB block size limit could potentially limit the number of “Bitcoin NFT mints.” Additionally, sets can carry multiple inscriptions, potentially creating multi-vector NFTs.
Q6: How does one buy and create Bitcoin Ordinals?
Answer: There are two types of wallets available to interact with Bitcoin Ordinals. Sparrow wallets are ideal for acquiring ordinals and do not require a full Bitcoin node. To create inscriptions, Ord wallets are used, but they require a full Bitcoin node and sufficient storage.
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