Bitcoin NFTs, also known as Ordinals, have quickly gained attention in the crypto world and are providing new opportunities for blockchain and digital art enthusiasts. While NFTs have typically been minted and traded on Ethereum-based platforms, a new protocol called Ordinals was launched in January 2023 to enable on-chain Bitcoin-native NFTs. This protocol takes advantage of the Bitcoin Taproot upgrade, which expanded the cryptocurrency’s capabilities and allowed for the creation of Bitcoin NFTs.
Ordinals are serial numbers imprinted in a single satoshi, the smallest unit of Bitcoin. They are assigned in the order in which they are mined, giving each satoshi a unique identity. Unlike traditional NFTs that rely on off-chain content stored on platforms like IPFS, Ordinals are fully on-chain and enjoy the immutability and security of the Bitcoin blockchain.
Creating Bitcoin NFTs using Ordinals can be done in two primary ways. The first method requires technical skills and involves running a full Bitcoin node and installing the Ordinals protocol. The second method is more straightforward and uses a no-code tool like Gamma or Ordinalsbot.com to inscribe the ordinal NFT.
Trading Bitcoin Ordinals currently takes place peer-to-peer over-the-counter (OTC) in dedicated Discord servers, with escrows as intermediaries. Infrastructure and marketplaces for trading Bitcoin Ordinals are still being developed. However, the market is entirely trustless, utilizing secure, partially signed Bitcoin transactions (PSBT) and atomic swaps.
To buy Bitcoin NFTs, Taproot-compatible wallets like the Ordinals wallet, Xverse, and Hiro wallets must be used. Selling Bitcoin NFTs involves picking a Taproot-compatible wallet, creating an account, securing the seed phrase, uploading the inscription, and using a peer-to-peer OTC market like the Bitcoin Ordinals Discord server.
Bitcoin Ordinals differ from traditional Ethereum-based NFTs in several ways. Bitcoin inscriptions are always immutable and have on-chain content, making them more secure and durable. Ethereum-based NFTs can be changed or deleted by the contract owner and may have off-chain content stored on platforms like IPFS. Additionally, Bitcoin Ordinals have sparked a debate about Bitcoin’s primary use case and its block size and network architecture.
As the Ordinals market continues to develop, the future of Bitcoin NFTs and their impact on the Bitcoin network remains to be seen. However, Bitcoin’s true value lies in its ability to adapt and meet the demands of its users.