1. What are Bitcoin NFTs?
Bitcoin NFTs — aka Bitcoin ordinals, aka digital artifacts — are a way to write digital information to the Bitcoin blockchain.
The Bitcoin ordinals protocol was launched in January 2023 by Casey Rodarmor. The protocol allows digital content such as artwork to be transcribed to the Bitcoin blockchain. Unlike non-volatile tokens (NFTs) on Ethereum and other blockchains, Rodarmor wanted to create an immutable chain of content in a piece of art, text or video. The Genesis ordinal was pixel art of a skull by Rodarmor in Dec. 14, 1999.
When the NFT space based on the Ethereum ERC-721 standard took off in 2021, Rodarmor, who was a programmer and designer, saw an opportunity to create a similar but different experience to the Bitcoin blockchain. His solution was Bitcoin ordinals, based on ordinal theory, which he continued to perfect until 2022.
The most common theory involves satoshis, creating an individual identity and allowing them to be traced, transmitted and meaningfully added. The hype about ordinals really started in February 2023, six weeks after the creation of the genesis ordinal.
The number of letters doubled weekly in a few weeks. However, with better policy design and implementation, the numbers could have been much higher.
The rise of Bitcoin ordinals has caused the Bitcoin network to explode in terms of usage, cost and storage as shown in the chart above. This could also be the first major development in the Bitcoin application layer and could help move the transaction from a pure “store of value” to something more meaningful.
2. How do Bitcoin ordinals work?
Bitcoin ordinals are based on the theory of ordinals that essentially brought to life satoshis (sats) and allowed them to be treated as atomic units on the Bitcoin blockchain. Ordinals, in their simplest form, are number systems for sats.
The theory of ordinals drives the mechanics behind how Bitcoin ordinals work. Ordinals theory defines satoshis (sats) as atomic units that can be found and traded individually on the Bitcoin network. There are 100 million sats of 1 Bitcoin (BTC). Sats are numbered according to mining sequence, and this number, which uniquely identifies the sat, is the serial number.
Related: Bitcoin Vs. Satoshi: Important differences have been mentioned
By being retail units, sats can also be written to the digital objects that make up Bitcoin ordinals. They will be irreversible digital collections that can be made on the Bitcoin network using Bitcoin wallets. According to ordinal theory, sats can be linked to security tokens, accounts or stablecoins by serial numbers as stable indicators.
Because of the wide range of use cases that ordinals can support, Rodarmor is reluctant to equate Bitcoin ordinals with NFTs. The case of the use of ordinals on sat numbers attached or encoded with JPEGs can be called immutable symbols on the Bitcoin blockchain. Although the ordinal implementations he has found relevant in the market are NFTs on the Bitcoin blockchain, ordinals are more than completely immutable tokens.
3. How do you mine Bitcoin ordinals?
Mining, minting or writing Bitcoin ordinals are terms used to describe this process. Unlike mining NFTs on the Ethereum blockchain, which is the most mature process, mining Bitcoin ordinals is a technically complex process and requires flexible tools.
Bitcoin ordinals, in the early days, could only be mined by those who ran Bitcoin nodes. For technical users, a Bitcoin node with an ord application, a command-line wallet, becomes the gateway to mining ordinals. Node users would put some sats in their wallets to pay for gas and do their writing of ordinals.
However, a series of mining applications such as Gamma or Ordinals Bot aim to allow users to enter arbitrary entries to create their own Bitcoin ordinal. The user journey takes them through the payment process using a QR code and is intuitive for the less technically gifted.
