Ordinals: the new NFTs on the block(chain) - a beginner's guide

Bitcoin ordinals represent a revolutionary advancement in the world of digital collectibles, introducing a novel protocol that enables the creation of unique digital artifacts directly on the Bitcoin blockchain. This innovation has transformed the landscape of ordinal NFTs by leveraging ordinal theory, which assigns unique identifiers to individual satoshis—the smallest unit of Bitcoin. Through this protocol, each satoshi can be ranked, ordered, inscribed with immutable data, and transferred individually, opening up unprecedented possibilities for digital ownership and creativity on the world's most secure and decentralized blockchain.

TL;DR

The Bitcoin ordinals protocol introduces several key innovations that distinguish it from traditional ordinal NFT systems. Ordinal theory provides a unique numbering system based on mining and transfer order, allowing each satoshi to be tracked and identified. The inscription process enables users to embed unique, permanent data directly onto individual satoshis, creating digital artifacts similar to ordinal NFTs but entirely native to Bitcoin. Recursive inscriptions, launched in 2023, broke through previous data constraints by allowing users to connect multiple data sources and build complex on-chain applications. The market impact has been significant, with Bitcoin ordinal tokens gaining substantial traction and competing with Ethereum-based digital collectibles in terms of sales volume and market share. However, this innovation has created a divide within the Bitcoin community, sparking debates about alignment with Satoshi Nakamoto's original vision and concerns regarding network capacity and transaction fees.

What is ordinal theory?

Ordinal theory establishes a comprehensive framework for numbering and tracking individual satoshis using a systematic approach called ordinal numbers. These numbers are assigned based on the chronological order in which satoshis are mined and subsequently transferred through blockchain transactions. The theory employs various representation formats, including integer, decimal, degree, and percentile notations, providing flexibility in how ordinal numbers are expressed and understood—forming the foundational basis for ordinal NFT creation.

A fundamental innovation of ordinal theory lies in its ability to create distinct rarity levels for satoshis based on significant events within the Bitcoin network. These events include block mining milestones, difficulty adjustments, and halving cycles. The rarity hierarchy consists of six distinct categories: Common satoshis, which represent any satoshi that isn't the first in its block and constitute the vast majority; Uncommon satoshis, being the first in each block with approximately 144 created daily; Rare satoshis, marking the beginning of difficulty adjustment periods occurring every 2016 blocks; Epic satoshis, initiating each halving epoch every 210,000 blocks; Legendary satoshis, starting each market cycle; and the singular Mythic satoshi from the Genesis block, inscribed by protocol creator Casey Rodarmor with pixel art of a skull. The degree notation system provides an elegant method for representing ordinal numbers, incorporating block height, difficulty adjustment period, halving epoch, and cycle information in a format that makes rarity assessment intuitive and immediate for ordinal NFT collectors.

How do ordinal inscriptions work?

Ordinal inscriptions function as a mechanism for permanently embedding digital content onto the Bitcoin blockchain, creating immutable digital artifacts analogous to ordinal NFTs but entirely native to Bitcoin without requiring separate tokens or sidechains. The process enables creators to inscribe various forms of content—videos, artwork, text documents—directly onto individual satoshis, establishing a permanent, tamper-proof record of authenticity and ownership that defines the ordinal NFT experience.

The technical foundation of inscriptions relies on ordinal theory's hierarchical structure, where each satoshi maintains a specific order and value within the blockchain. This ordering system enables the precise sending and receiving of inscribed satoshis while requiring careful transaction construction to maintain compliance with ordinal theory rules. The inscription data is stored entirely on-chain using taproot script-path spend scripts, an efficient and economical storage method that allows content to be retrieved like regular web pages and even remixed with other inscriptions to create composite ordinal NFT artifacts.

Creating an inscription requires a two-phase commit/reveal procedure. First, users create a taproot output that commits to a script containing the inscription content. Subsequently, they spend that output to reveal the content on the blockchain, making it permanently visible and accessible. The content undergoes serialization using "envelopes," which package the content and metadata in a standardized format that ensures readability and compatibility across the ordinal NFT ecosystem. This sophisticated yet elegant system ensures that inscribed content remains genuine, verifiable, and eternally preserved on Bitcoin's immutable ledger.

How do I create an ordinal inscription?

Creating an ordinal inscription varies in complexity depending on your technical expertise, with accessible options available for users at all skill levels interested in creating ordinal NFTs. For beginners with minimal coding experience, various platforms provide user-friendly interfaces that handle all technical programming requirements, allowing creators to focus purely on their creative vision and content selection. These no-code solutions democratize access to Bitcoin inscriptions, enabling anyone with imagination to participate in this innovative ordinal NFT ecosystem.

Intermediate users comfortable with coding can explore developer-friendly resources such as the Ordinals API on GitHub, maintained by Hiro. This platform offers comprehensive documentation and benefits from an active developer community, providing support and collaboration opportunities for those seeking to build custom ordinal NFT inscription solutions. The API streamlines the inscription process while offering sufficient flexibility for more sophisticated applications.

Advanced developers who understand ordinal theory intricacies can follow a detailed manual process. This involves selecting the desired content, creating an envelope structure that wraps the content and metadata, generating a taproot output using compatible Bitcoin wallet software, broadcasting the taproot output to make the inscription live, and finally spending the output to reveal the ordinal NFT inscription content on-chain. Throughout this process, careful attention must be paid to constructing transactions that comply with ordinal theory rules, ensuring the inscription's validity and permanence within the blockchain's immutable structure.

The launch of recursive inscriptions

The year 2023 marked a pivotal moment in the evolution of Bitcoin inscriptions with the introduction of recursive inscriptions, a groundbreaking advancement that addressed critical challenges related to transaction fees and block space limitations. This innovation fundamentally expanded the capabilities of on-chain software on the Bitcoin blockchain, empowering developers to create sophisticated ordinal NFT applications capable of operating entirely within the Bitcoin ecosystem through a technique known as daisy-chaining, where data becomes interconnected through sequential calls.

Prior to recursive inscriptions, standard inscriptions faced a 4MB data storage limitation. Recursive inscriptions transcended this constraint by enabling developers to establish interconnected networks of data sources. By extracting and integrating data from existing inscriptions into new ones, this technology liberated developers from the rigid 4MB boundary. This breakthrough enables the execution of complex software fully on-chain by linking data through sequences of calls, dramatically expanding the scope of possible ordinal NFT applications.

The advent of recursive inscriptions holds transformative potential for enhancing interoperability within the Bitcoin network. As this technology continues to mature, it opens possibilities for increasingly sophisticated on-chain ordinal NFT applications, from complex data structures to interactive experiences. However, thorough understanding and careful consideration remain essential before engaging with recursive inscriptions in production environments.

Could Bitcoin surpass Ethereum in the digital collectibles market?

The competitive landscape between Bitcoin and Ethereum in the digital collectibles market has evolved dramatically with the emergence of ordinals. Recent data reveals an intriguing dynamic: while Ethereum maintains a strong position in the overall digital collectibles market, Bitcoin ordinal NFTs have demonstrated impressive growth and performance, signaling a significant shift in market dynamics.

Bitcoin ordinals have gained substantial traction within both buyer and seller communities, compelling the Ethereum ecosystem to monitor this emerging trend carefully. The achievement of over 21 million Bitcoin ordinals inscriptions represents a remarkable milestone that underscores the protocol's growing adoption and community engagement. This success has led to increased institutional support and community organization dedicated to funding core developers of the ordinals protocol.

The rising prominence of Bitcoin ordinal NFTs suggests a potential redistribution of market share, with implications extending beyond simple sales volume comparisons. The fundamental differences in blockchain architecture, security models, and philosophical approaches between Bitcoin and Ethereum create distinct value propositions that appeal to different segments of the digital collectibles market, with ordinal NFTs offering unique permanence and security characteristics inherent to the Bitcoin blockchain.

Bitcoin DeFi Projects

The Bitcoin decentralized finance landscape has experienced notable evolution, with inscriptions and ordinals emerging as potential components within this expanding ecosystem. As Bitcoin maintains strong market performance, innovative developers and community members are exploring ways to leverage ordinal NFT inscriptions within Bitcoin DeFi applications. The ecosystem has already witnessed successful Bitcoin DeFi implementations through solutions like the Lightning Network and wrapped Bitcoin (wBTC), demonstrating the blockchain's capacity for financial innovation beyond its original peer-to-peer cash system design.

Optimistic community sentiment suggests that ordinal inscriptions could introduce novel use cases and functionality within the Bitcoin DeFi space. The unique properties of ordinals—their permanence, verifiability, and native integration with Bitcoin—present intriguing possibilities for decentralized finance applications. However, the practical implementation and adoption of ordinal NFT-based DeFi solutions remain subjects of ongoing experimentation and development, with the community actively exploring the boundaries of what's technically feasible and economically viable.

A divided bitcoin community

The Bitcoin community finds itself fundamentally divided regarding the ordinals protocol, reflecting deeper philosophical tensions about Bitcoin's purpose and future direction. Proponents enthusiastically embrace ordinal NFTs as an innovation that expands Bitcoin's utility and creates additional financial use cases, potentially strengthening the network's value proposition and attracting new participants to the ecosystem. They view the protocol as a natural evolution that leverages Bitcoin's unparalleled security and decentralization for creative and financial applications beyond simple value transfer.

Conversely, skeptics argue that ordinals deviate from Satoshi Nakamoto's original vision of Bitcoin as a peer-to-peer electronic cash system, expressing concerns that the protocol fundamentally misappropriates blockchain resources. Critics point to practical issues including increased network congestion, rising transaction fees, and the consumption of valuable block space by ordinal NFT inscription data. They contend that prioritizing digital collectibles over efficient monetary transactions undermines Bitcoin's core purpose and potentially compromises its accessibility as a global payment system.

This philosophical divide reflects broader questions about blockchain governance, protocol evolution, and the balance between innovation and preservation of founding principles. Given the protocol's ongoing development and the continuing nature of these debates, potential participants are strongly encouraged to conduct thorough research, understanding both the opportunities and controversies surrounding ordinal NFTs before engaging with the ecosystem.

What's new?

Recent developments in the ordinals ecosystem demonstrate continued innovation and mainstream adoption. Major cryptocurrency wallets have integrated comprehensive ordinals support, including compatibility with recursive inscriptions. This integration extends to both mobile applications and browser extensions, with hardware device connectivity enabling users to manage Bitcoin, ordinals, and BRC-20 tokens within a unified account interface. These wallets simplify address management through support for Native Segwit and Taproot protocols, while providing detailed ordinals metadata including sat numbers and inscription IDs for ordinal NFT collectors.

In a significant corporate development, major institutional Bitcoin holders have announced plans to develop decentralized identity services built on ordinals inscriptions. These initiatives aim to provide trustless and tamper-proof decentralized identities leveraging the Bitcoin network's security and permanence. Such enterprise-level adoption signals growing recognition of ordinal NFTs' potential beyond digital collectibles, suggesting broader applications in identity management and verification systems.

These developments indicate an ecosystem transitioning from experimental technology to practical infrastructure, with increasing integration into established cryptocurrency tools and services. The combination of improved user accessibility through wallet integrations and institutional interest in ordinal NFT-based services suggests a maturing market with expanding use cases.

Conclusion

Bitcoin ordinals represent a transformative innovation in the digital collectibles landscape, introducing a novel approach to creating unique ordinal NFT artifacts directly on the Bitcoin blockchain through ordinal theory. This protocol uniquely identifies each satoshi, enabling creative inscriptions ranging from artwork to videos, with rarity tiers spanning from common satoshis to the singular mythic satoshi from the Genesis block. The introduction of recursive inscriptions dramatically expanded possibilities for complex on-chain ordinal NFT applications, breaking through previous data limitations and enabling sophisticated interconnected systems.

The market response has been substantial, with Bitcoin ordinal NFTs gaining significant traction and demonstrating strong performance, despite competition from established platforms. Integration into mainstream tools and institutional interest demonstrate growing mainstream acceptance and practical application beyond speculative collectibles. However, the Bitcoin community remains divided on these developments, with ongoing debates about alignment with Satoshi Nakamoto's original vision, network capacity concerns, and transaction fee impacts.

The ordinal NFT phenomenon exemplifies the tension between innovation and tradition within cryptocurrency ecosystems, raising fundamental questions about protocol evolution and blockchain utility. While the technology offers exciting possibilities for digital ownership, decentralized identity, and on-chain applications, these opportunities must be balanced against legitimate concerns about network resources and founding principles. As the ordinal NFT ecosystem continues to mature, careful research and thoughtful consideration remain essential for anyone exploring participation in this dynamic and evolving space. The future trajectory of Bitcoin ordinals will likely depend on the community's ability to address technical challenges while respecting the philosophical foundations that have made Bitcoin the world's most trusted and decentralized blockchain.

FAQ

What is an ordinal NFT?

An ordinal NFT is a unique digital asset on the Bitcoin blockchain, created by attaching data to a specific satoshi. Each ordinal NFT has a distinct ordinal number, making it verifiable and immutable on the blockchain.

What is the difference between NFT and Ordinals?

NFTs are unique digital assets on various blockchains using smart contracts. Ordinals are inscriptions directly on Bitcoin's blockchain without smart contracts, focusing on permanence.

How to buy an ordinal NFT?

Set up an Ordinals-compatible wallet, connect it to a marketplace, browse collections, and purchase directly. Ensure your wallet has sufficient Bitcoin for the transaction.

Are NFTs worth anything anymore?

Yes, NFTs still hold value in 2025, especially in gaming, digital identity, and established collections. While many have lost value since the peak, those with practical applications remain valuable. The market continues to evolve, focusing on utility rather than speculation.