Casey Rodamor’s Ordinal project has grown from a niche interest to an accelerating technology that’s captured the attention of collectors and developers in and out of the world of Bitcoin. Like them or hate them, Ordinals are – at least at time of writing – experiencing hockey stick-like growth.
It is still early days for the project – the market has not yet even picked an authoritative word between Bitcoin NFTs, inscriptions and Ordinals, though personally I prefer Ordinals – though there are signs of approaching adoption.
Case in point: Yuga Labs, the company that owns Bored Apes Yacht Club, CryptoPunks, Meebits, recently net 735 BTC (~!$16.5 million) from its Ordinals-based “Twelvefold” auction. Setting aside cultural judgments on whether this is a major boon for Bitcoin or an example of selling out, it represents a meaningful derisking event for Ordinals and validation of the category’s potential future growth.
Yet, Bitcoin’s product stack (including infrastructure, tools and platforms), which enables collecting and trading Ordinals, is lightyears behind those of alt ecosystems with mature non-fungible token (NFT) markets such as Ethereum and Solana.
For example: custody. For Ordinals collectors who haven’t spent any time in existing NFT ecosystems, what follows is one early Ordinals collector’s take on the custody products available today and how they ought to evolve over the coming weeks and months.
Custody for Bitcoin NFTs today
Ordinals collectors today have a few main custody options:
The first option is suboptimal for the average Ordinals collector for the same reason it is suboptimal for the average bitcoin (BTC) holder. Most users don’t want to run full nodes, and Sparrow wallet – an excellent open-source bitcoin wallet that gives power users fine-grained control and visibility – is too complicated to be adopted by the masses.
The third option – using a hardware wallet along with Sparrow – confers the best “security sans trust” but, along with the first option, suffers from being too difficult and accident-prone for non-experienced users to adopt.
As is the case with NFT users from other chains, the average Bitcoin Ordinals collector to trade off security for convenience, and thus gravitate to option two: the worst option, and in my opinion, one we ought to actively discourage, as it undermines the central Bitcoin value of self-custody.
Custody aside, two major problems with wallets today are the lack of an easy and safe user experience (UX) for the two most common expected user behaviors: transferring and transacting.
Problem 1: Transferring Ordinals
Current wallets (outside of Ord, which requires running a full node, knowledge of Github and interacting via the command line) offer no or half-baked support for Ordinals. Many users have accidentally sent or burnt valuable Ordinals by commingling them with their BTC in wallets incompatible with Ord.
Problem 2: Transacting Ordinals
Thus far, most Ordinals buying and selling has required costly and trustful intermediaries like third-party escrow services. Trustless transacting is table stakes UX on smart contract-based chains and also ought to be on Bitcoin.
But why bother catering to left-curve degens from alt chains? Because the majority of growth in Ordinals will either be driven by existing NFT users or be first-time Bitcoin or crypto users. I do not think Ordinals (or Bitcoin for that matter) gets scaled growth from existing Bitcoin users alone.
Ordinals solutions should embrace bitcoiner values
As Ordinals adoption (and Bitcoin and Bitcoin application adoption) grows, the marginal user will increasingly resemble the average NFT user from communities based around Ethereum or Solana. In my opinion, products designed for this user profile should advance three main goals: friendliness, self-sovereignty and trustlessness.
If you believe all products should maximize control and customization at the expense of useability and cognitive friction, or that user safety and protection is for feebleminded plebs unworthy of your coin/chain, we’re not going to agree. A good mass-market custody product should be designed for the lowest common denominator user: maximize convenience and ease of use, minimize user mistakes and cognitive friction.
That said, I draw the line at not compromising our movement’s normative maxim of “not your coins, not your keys.” Self-custody is admittedly hard: People forget or lose their passwords, seed phrases and private keys. But a product that gives on self-custody would abet the permissioned institutions we’re trying to disrupt and perpetuate the problematic behavioral patterns we’re trying to reform.
Finally, we need to evolve beyond transacting via trusted intermediaries like escrow services and OTC [over-the-counter] brokers. Fortunately, well-adopted standards like Partially Signed Bitcoin Transactions (PSBTs, from BIP 174) are already being implemented by upcoming wallets and exchanges to achieve this goal.
Gold standard custody and interacting UX
In my opinion the ideal Ordinals custody and interacting experience should feature the following:
An open-source browser wallet for interacting with apps like exchanges
Ordinals compatibility on (1) and (2) so the average user doesn’t need to run Ord
The ability to import watch-only wallets from (1) into (2), required for:
A interacting flow that enables users to sign transactions (e.g., PSBTs) with their hardware wallet in (1) without exposing keys
This is, in theory, how that might would using an air-gapped hardware wallet:
Users wanting to send or interact triggers a browser wallet.
The browser wallet generates a PSBT in the form of a QR code.
The user scans this QR code with their air-gapped hardware wallet.4. The hardware wallet generates a new QR code of a signed transaction.
The user scans the new QR code with their browser wallet.6. That browser wallet confirms the transaction is valid and broadcasts it to the Bitcoin network.
To get wide adoption, the above should be wrapped in a friendly-to-use UX that minimizes user mistakes. (Hat-tip to @bitcoinbeezy for helping me think through this flow.)
I believe Ordinals (and the technology and social consensus that enable it) represents a historic inflection point for Bitcoin that will catalyze the next leg of the network’s scaled adoption by masses of new users and applications.
As of this writing, teams shipping “next-generation” consumer wallets include Hiro (PSBT support, but can’t transfer), Unisat (PSBT support, but poor UX and can’t transfer) and Oyl (not yet launched). At the advanced user and enterprise end of the market, Casa, which currently supports Ordinals transfers but has a clunky UX, and Trident Wallet will soon support Ordinals.
I intend to support the teams that advance the above “gold standard UX.”
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Johann Sheafson is a fundamentals-oriented crypto analyst and commentator.