Ordinals: The Bitcoin Protocol Revolutionizing NFTs
Ordinal NFTs are a hot topic in web 3.0. What are Ordinal NFTs, and why are crypto Wales crazy about them?
Like the Blue Diamond, Ordinal NFTs are becoming an identity for the social class. The Bitcoin NFT protocol, Ordinal, launched on January 21, 2023, and it's taking web 3.0 by storm despite its novelty. According to data on Dune, the number of inscribed Ordinals is 106,888 as of writing.
Popular NFTs, including Ordinal Punks (which pays homage to the CryptoPunks NFT), Bitcoin Rocks, and Timechain, among many others, are selling crazily on Ordinal. For instance, as of writing, the floor bid on the Ordinal Punks is 4.2 BTC (equivalent to $95,388.30), according to the Ordinal Punks data.
What are Ordinal NFTs, and why are crypto Wales crazy about them?
What Is an Ordinal?
The ordinal protocol explains the order of arrangement of each unit of Bitcoin, also called a Satoshi, in a mining block. An Ordinal is a unique number (more like an ID) tracking a Satoshi (Sat). A Satoshi is the smallest unit of Bitcoin; it's the native currency of the Bitcoin network.
What Are Ordinal NFTs?
To give Ordinals human-friendly and aesthetically appealing identities, creators can inscribe random content on them---turning them into digital artifacts in a process called inscription. These artifacts are Ordinal NFTs.
To simply define it, Ordinal NFTs are on-chain Bitcoin digital collectibles created using the Ordinal protocol.
These might include images, digital artworks, videos, and music, among many others. Each Sat can accept a mime type (JPEG, PNG, etc.) and a byte string (a cryptographic hash key) as an inscription. Thus each is unique and transferrable to another Bitcoin wallet. However, as much as Satoshis and blocks are immutable, Ordinals are also unmodifiable.
The Ordinal protocol follows that each digital collectible on the Bitcoin network targets a Satoshi, the native currency of the Bitcoin network, which is also its smallest unit, as mentioned earlier.
You can visit the Ordinal alpha website to see the latest inscriptions.
How Ordinal Is Bringing NFTs On-Chain in Bitcoin
Although there have been NFT use cases on the Bitcoin network since 2015, Bitcoin NFTs have never existed on-chain before now. Instead, they flow on Bitcoin smart contract layers like Stacks. While people can buy these NFTs using BTC, they're still not native to the Bitcoin network, as they target off-chain metadata.
Thus, they're mutable and subject to upgrade; this is a blueprint of most NFTs today, and experts agree it's a deficiency. At least, Casey Rodarmor, the brain behind the Ordinal protocol, maintains that NFTs targeting off-chain metadata and subject to upgrade are not fit to be digital artifacts.
Digital artifacts are a different kind of NFTs if that's the case. So while all digital artifacts are NFTs, the reversed statement isn't true. Ordinal documentation strikes some points to define digital artifacts more adequately.
It maintains that, unlike conventional NFTs, digital artifacts are complete and don't point to off-chain metadata on IPFS or Arweave. The doc also defines digital artifacts as "permissionless," iterating that NFTs requiring royalties to sell isn't digital artifact. And lastly, no one should be able to change their metadata.
The Ordinal protocol brings nativeness and originality to Bitcoin NFTs by ensuring that digital collections sit on the Bitcoin network directly without third-party interference. It's motivating to see that the Bitcoin network, as complex as it is, is amenable to such technology.
Why Are Ordinal NFTs Scarce?
Although Ordinal NFTs are receiving a warm welcome from the web 3.0 community, they're scarce and seem impossible to come by.
So why the scarcity?
- Ordinal NFTs are expensive to create since they reside on the Bitcoin blockchain.
- Minting requires high-computing power and is energy-draining.
- The technical knowledge of the Ordinal protocol mechanism is low.
- There is stiff competition while minting, as the Bitcoin network gets easily congested. Thus, fitting into the picture can prove impossible.
- The risk of investing in Ordinal NFTs is high since it's a new technology.
How to Mint or Buy an Ordinal NFT
Ordinal NFTs aren't only scarce. They're expensive and can be risky investments. The Ordinal protocol doesn't support browser-based wallets as of writing. And getting a hold of one can be challenging. If you don't mind the cost implication and the technicalities involved, you might want to follow the following guide.
You require a new Bitcoin wallet to buy an Ordinal. As of writing, the Sparrow Wallet comes highly recommended for the purpose.
However, wallets created this way are receive-only, and you must follow some rules strictly to avoid losing your collections. Ensure you use the created wallet to collect only Ordinals to allow forward compatibility. And you must set it up with the Taproot system.
Follow the instructions in this guide on the Ordinals Handbook to create an Ordinal NFT-compatible Sparrow wallet.
After creating an Ordinal-compatible wallet, you can now get an Ordinal NFT. To achieve this, you can run a personal inscription node, use a third-party service, or purchase one in the peer-to-peer (hand-to-hand) market.
But so far, hand-to-hand or over-the-counter (OTC) purchases and third-party inscription routes are the easiest ways to get an Ordinal NFT if you don't own an inscription node.
To buy an Ordinal NFT via the OTC method, you might want to jump into the Ordinals Discord channel to patronize people willing to sell randomly. However, be careful and avoid getting scammed since you'll likely get involved in blind trades. For instance, you might need to send payment in BTC or ETh to a seller before getting your Ordinal NFT. So do your research (DYOR) thoroughly.
Dotta explains further in the following tweet.
You can also inscribe one using third-party services like the inscription bot. This option can be expensive, though---depending on the digital artifact in question.
How Ordinals Bring More Revenue to Miners
The returns on mining a block are rewarding. But miners often spend a fortune on amassing enough computing power to mine. Currently, miners earn a 6.25 BTC subsidy for every block mined successfully.
Since inscriptions are on-chain and depend on Satoshis and blocks, the Ordinal protocol is a revenue game changer, as it helps miners earn extra money for their proof of work (PoW) efforts.
The reality for creators and investors is that Ordinals are scarce web 3 collectibles, and they'll pay expensively to inscribe one on a Satoshi.
As of writing, Dune stat puts the cumulative amount spent on inscribing Ordinals on the Bitcoin network above $800,000 since its inception.
Ordinal NFTs May Not Be Environmentally Friendly
Despite all we've said about Ordinals, Bitcoin is undoubtedly environmentally unfriendly, considering its carbon footprint and the energy it consumes. According to Digiconomist stats, Bitcoin contributes 46.01 Mt of carbon and 46.04 Kt of e-wastes into the environment annually. The same stats put the annual energy consumption from Bitcoin mining at 82.49 Terawatt hour (TWh).
Over time, many environmental experts have warned against the deteriorating effects of continuous Bitcoin mining. The quest to reduce the crypto carbon footprint and avoid this environmental suicide is one of the reasons many altcoins, including Ethereum, use the proof-of-stake (PoS) mechanism.
Ordinal skeptics seem more concerned about inscriptions clogging blocks and increasing invalid transactions. To discard this controversy, Ordinal supporters are optimistic that it'll bring new vibes and innovations to the table.
But while the carbon-contributing potentials of Ordinal NFTs aren't a mainstay discussion—at least not yet, creators' urge to get involved in the business might increase the number of mining and activities in the Bitcoin network. Invariably, as more hands go on deck, we might expect energy usage and carbon emissions to spike in the nearest future.