Ordinals are inscriptions of content onto individual satoshis that can be tracked and held by users. The data is purely on chain, doesn’t rely on other protocols, and will therefore survive as long as the bitcoin blockchain is up and running. Many new services have emerged that allow users to inscribe, hold, and sell inscriptions. Everyone is doing it. It’s all the rage.
INTRODUCTION
At the beginning of this year, a bitcoin developer named Casey Rodarmor released a bitcoin native protocol called ordinals, that allows individual satoshis to be “inscribed” with arbitrary data, enabling them to host images directly on the bitcoin network… no third party image hosting services, no links required, all directly on chain. This is a significant contribution to the bitcoin network that opens up a world of possibilities for the blockchain that most regard simply as a monetary instrument. This innovation has been met with strong opinions from both sides of the emotional spectrum. Bitcoin maxis regard it as graffiti on the blockchain that threatens to clog up the mempool, raise mining fees to untenable levels, and possible introduce exploits. Others see this as a breakthrough innovation that allows bitcoin to be a platform for free expression. Since its launch just weeks ago, almost 300,000 “inscriptions” (the Ordinal term for NFTs) have been created, and that number is quickly growing. Even projects like Yuga labs, famous for their Bored Ape Yacht Club collection, has decided to jump in with a new project.
HOW IT WORKS
Ordinals are called ordinals because in number theory it denotes that numbers signify an order. Ordinal numbers are integers (natural numbers like 1, 2, 3…) and can be used to identify an objects place in a list. Satoshis, the fundamental unit of bitcoin where each Satoshi is worth 1 / 100,000,000) of a bitcoin are not naturally ordered and do not have unique identifiers. When people transfer Satoshis between each other, as Casey Rodarmor puts it, they are held in a Satoshi goo superposition, indistinguishable from one another. This was the first basic innovation of Ordinals, creating a protocol that identifies and tracks individual satoshis. The details are somewhat complex, so feel free to read more about ordinal theory on the Ordinals website.
Now that individual satoshis have unique identifiers and can be tracked across the blockchain, they can be inscribed with content. The details of this are also complex, but essentially they are inscribed through an envelope serializing procedure that recognizes the ordinal protocol, denotes the inscription content type, and then includes the actual data in the OP_FALSE and OP_PUSH sections of a bitcoin transaction. Altogether, “the inscription content is contained within the input of a reveal transaction, and the inscription is made on the first sat of its first output.”
One very important thing to note about inscriptions is that they are inherently limited by the megabyte contents of a bitcoin block. This means that currently 4MB is a hard cap on the size of the data one can inscribe. However, in reality the current practical limit is considerably smaller than that, around 400kb. The reason for this lower limit is because larger data will not be relayed by the Bitcoin Core. The only exception to this is bitcoin miners who have the ability to accept and transmit larger transactions. So yeah, 400kb for the average user. That’s pretty small, which is an interesting constraint on the type of content that can be hosted there. Its also important to mention that the cost of an inscription is directly related primarily to the size of the inscription, as well as how in demand blockspace is at the time of inscription.
Now that we have some of the basics and mechanics down, lets dive into how you can start inscribing, browsing inscriptions, finding a marketplace where these are bought and sold, and holding your inscription (heads up: it will need an ordinal compliant bitcoin taproot wallet). At first, inscribing and holding inscriptions required a lot from its users. You had to be running a full bitcoin node using Bitcoin Core 24 or newer. Even getting to this stage is a task beyond the reach of most. Syncing a full node – meaning the entire history of the blockchain – requires several days or weeks of downloading time, and a large disk on which to store the almost 500GB. Once the full node is synced, a few configurations need to be implemented using the command line in the bitcoin node. Additionally, the Ordinal client needs to be installed, and can only be interacted with on a command line basis. A taproot bitcoin wallet is needed otherwise inscribed sats could be accidentally lost and transferred. It’s a lot, and not for beginners.
Wallets
Luckily, with the enthusiasm for Ordinals, several companies have developed tools that accomplish all this for you… and they are growing and developing at a blistering pace. Lets start with wallets. As mentioned, you need a bitcoin Taproot wallet that plays nicely with the ordinal client to ensure you can hold your inscriptions without accidentally transferring them. Several wallets have stepped up to the plate. Two of the best available are Sparrow Wallet and Hiro Wallet. These are both fairly wysiwyg, and there are good guides on how to use them for managing inscriptions. Additional available ordinals wallets include ordinalswallet.com and xverse.app.
Inscription Services
Now that you have a wallet that can hold and manage inscriptions, lets talk about resources that allow you to make your own inscriptions. There are two that have really risen to prominence in these early days. The first one is gamma.io. Gamma was one of the first out of the gate offering ordinal minting services, and they have been rapidly developing new tools. Their basic service is an incredibly simple 5 step process that involves choosing the type of data (single image, or text), drag and dropping data to be uploaded and inscribed, fee estimation for the inscription, giving your ordinal compliant wallet address, and finally payment for the inscription. Its really simple once you have the wallet figured out. In their recent tweet, they described some new functionality including minting in bulk (multiple inscriptions at the same time), linking inscriptions to higher resolution assets that are hosted off chain, and generating a dedicated collection page for users. All very cool stuff! Additional minting services that are worth mentioning include inscribenow.io, ordinalsbot.com, ordswap.io, ordimint.com, and generative.xyz.
Today, we’re announcing one of our biggest releases yet — one we know will change the game for #Bitcoin Ordinals:
Ordinal Collection Mints 💎
In our typical fashion, this isn’t just a bulk mint option. It’s so much more. Buckle up… 🧵
— Gamma.io (@trygamma) February 28, 2023
MARKETPLACES
With all the sustained hype around Ordinals, its no surprise a multitude of marketplaces have come into being that allow users to buy and sell inscriptions. In general, there is significant overlap between inscription services, wallets, and marketplaces. Nevertheless, to date, there are a few key players in the space. Marketplaces are either trusted or trustless, meaning that you either rely on the marketplace to act as an intermediary between buyer and seller (trusted) or not (trustless). Trustless marketplaces typically use a PBST mechanism which stands for “partially signed bitcoin transaction,” which allows buyer and seller to put funds and inscriptions in a conditional contract that only executes when all conditions are met. Trustless intermediaries are more in line with the ethos of decentralization, but both have been working seamlessly for all parties. Additionally, these marketplaces are their own islands: there is currently not a general marketplace where all ordinals that are for sale are listed. Each of the following marketplaces have a unique set of ordinals for sale. The most used frequently used sites are ordinals.market, ordswap.io, ordina.ls, and scarce.city. Of these, Scarce.City is worth distinguishing based on the fact that they are an auction house that has been in the space since the beginning of #rarepepe, which makes their prestige, longevity, and mechanism of sale orthogonal to the other marketplaces mentioned. Another class of buying and selling avenues worth mentioning are the various telegram and discord communities that have sprung up like wildflowers around this space. There are innumerable ordinal projects / collections that have bespoke chat spaces devoted to them, where buyers and sellers often meet.
RESOURCES
The last class of repositories worth sharing are general informational sites. We are still very much in the early days of ordinals, but as a type of digital asset, they seem to have the hallmarks of one that will stand the test of time. Data inscribed on the most trusted, longest running, and widely adopted blockchain is a recipe for longevity. This innovation has actually caused me to reconceptualized the purpose and significance of bitcoin: I see it now as not just the most innovative monetary instrument in the history of humanity, but now it’s a time capsule that preserve information longer and further into the future than any other that I am aware of. This is historic. Coming to this realization and understanding has required uncountable hours scouring the web for small scraps of information. The best way for you to begin that knowledge journey is by first reading ALL of the information contained on ordinals.com. Next, I recommend searching for any and all podcasts that Casey Rodarmor has done (which are many), and listening to all the nuance of his technical explanations and plans for the future. We are currently in V1, so to speak. After that, getting involved in the various chat rooms and visiting all the resources mentioned here will help crystallize your understanding of the mechanics. Here are a few podcasts and videos you might invest some time listening to: resource1, resource2, resource3, resource4.
I hope you have enjoyed this explainer. I know it’s a lot. All new technologies are, even though most of them will fail. For my money, I strongly recommend investing the time to learn about Ordinals. They are not going anywhere, and understanding them with a level of nuance is an easily claimed feather in the cap that even many seasoned crypto enthusiasts have yet to claim. Bitcoin native NFTs are a significant advancement of human ingenuity and the possibilities portended by the bitcoin network.
Follow me @DANCETURN to receive regular updates about ordinals, what they mean, how they are changing the game, and the latest Ordinal tech. You wont be sorry – unless you fade this novel class of digital goods.
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*All investment/financial opinions expressed by NFT Plazas are from the personal research and experience of our site moderators and are intended as educational material only. Individuals are required to fully research any product prior to making any kind of investment.
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