Bitcoin Ordinals

Originally, the Bitcoin blockchain could not host NFTs as its sole purpose was to enable peer-to-peer transactions.

However, since 2023, it is possible to create and transfer NFTs on the Bitcoin blockchain thanks to Ordinals.

To create NFTs in Bitcoin, we must use the Ordinals protocol and assign certain information or metadata to a Satoshi.

To understand this, we must first understand several concepts.

Satoshis

Satoshis are like Bitcoin cents. In the same way that 100 cents are worth one dollar, 100 million satoshis are worth one Bitcoin.

It is the minimum amount of Bitcoin that can be bought, sold or transferred.

There is no cryptocurrency called Satoshi, rather it is a way of calling small amounts of Bitcoin.

It has some utility when making transactions of less than one Bitcoin because it is easier to read or hear that you are going to buy 1000 satoshis than 0.00001 Bitcoin.

Ordinals

Ordinals in Bitcoin refers to several things. These are the protocol, the satoshis numbering system and the Bitcoin NFTs.

Ordinals is a protocol that assigns a number to each Satoshi for the purpose of tracking satoshis and satoshi transactions.

The criteria under which they are numbered is nothing more than the order in which they have been created and by the order of entry and exit of transactions.

The number assigned to them also depends on their rarity.

Aspects that can make a Satoshi rarer than the rest are that it is the first Satoshi of a block, that it is the first Satoshi after halving, that it is the first Satoshi of a cycle or that it is the first Satoshi of the first bitcoin block.

This protocol allows not only to number satoshis by the aforementioned criteria, but also to assign certain information to them. Herein lies the potential of Ordinals.

Using the Ordinals protocol you can inscribe information on a Satoshi. This consists of attaching information such as an image or audio to a Satoshi, turning it into a “digital artifact” as they call it in the protocol. The information attached to that Satoshi cannot be attached to another Satoshi and cannot be unlinked from that particular Satoshi.

Well, this thing that I just described and that the protocol calls a digital artifact, is an NFT. This can be transferred, bought, sold and tracked on the Bitcoin blockchain.

Normally these digital artifacts or NFTs on the Bitcoin blockchain are called Ordinals.

Differences between Ordinals and other NFTs

Bitcoin Ordinals contain the information on-chain, i.e. on the blockchain. While this is normally not the case in other blockchains.

Typically, the information contained or associated with an NFT resides outside the blockchain, while what is on the blockchain is only the Smart Contract that associates the information with the token.

The fact that the NFT information resides on the blockchain allows users to check that information at all times.

On the other hand, Ordinals are immutable.

This means that the creator of an Ordinal (the person who attached information to a Satoshi) can never modify that information or unlink it from the Satoshi.

In contrast, NFTs on other blockchains such as Ethereum may or may not be immutable.

This is linked to the previous point. If the information is outside the blockchain, it can be modified by the author and therefore may change the value of the NFT. This will never happen with Bitcoin Ordinals.