“The nature of Bitcoin is such that once version 0.1 was released, the core design was set in stone for the rest of its lifetime… I don’t believe a second, compatible implementation of Bitcoin will ever be a good idea.”
The creator of Bitcoin, known by the pseudonym Satoshi Nakamoto, wrote these words in a forum post on June 17, 2010, and they set the tone for the protocol’s slow evolution in the 13 years since. Bitcoin’s deliberate approach to change and innovation is rooted in a commitment to security, stability and decentralization. Developers and thought leaders in the Bitcoin community have emphasized the importance of maintaining a slow and careful pace when it comes to introducing changes – avoiding unintended consequences and ensuring that any modifications to the protocol align with the its founding principles.
Thus it created quite a stir in the crypto community when developer Casey Rodarmor – whose career includes time at Google, as well as contributing to the Bitcoin protocol – introduced in January 2023 the Ordinals protocol and the hottest new NFT project was built on Bitcoin. Non-fungible tokens are a major focus in the blockchain world, but have been primarily associated with Ethereum and Solana. While NFTs on Bitcoin aren’t a new concept, the Ordinals innovation lies in enabling the storage of immutable information on the Bitcoin blockchain.
Ordinal NFTs combine two essential components: ordinals and inscriptions. The term “ordinal” refers to a piece of bitcoin inscribed with rich data, such as text or images, residing on the blockchain. Essentially, ordinals serve as the serial numbers of each satoshi, or “sat” for short, the smallest denomination of a Bitcoin (one hundred millionth). With the Ordinal Protocol, users can identify, track, transfer, and inscribe arbitrary content on each individual sats. The inscriptions, comprising images, videos, audio, text, or applications, define the content of Bitcoin Ordinal NFTs.
Bitcoin Ordinals require no additional layers, making them entirely Bitcoin-native and backward compatible with the network. Rodarmor thus refers to Bitcoin Ordinal NFTs as digital artifacts. “They are permissionless, uncensorable, and immutable,” he wrote in the Ordinal Theory Handbook. “In essence, ordinal inscriptions allow Bitcoin to store digital artifacts that are as valuable as physical artifacts, and their potential uses are yet to be fully realized.”
Each satoshi in Bitcoin Ordinals receives a sequentially ordered number, ranging from 0 to 2,100,000,000,000,000, based on the time of mining and Bitcoin’s maximum supply of 21 million tokens. This unique ordinal number provides a distinctive identity to every sat on the Bitcoin blockchain. To create an ordinal NFT, users initiate a transaction for an individual satoshi, attaching desired metadata as inscriptions, such as text, images, or videos.
Bitcoin Ordinals maintain the fungibility nature of Bitcoin, as the Bitcoin protocol itself does not formally recognize them. However, a dedicated community of ordinal enthusiasts has collectively developed the system and tools to honor it – which revolve around the perceived value of different aspects of their rarity. As Rodarmor described it in the Handbook:
Humans are collectors, and since satoshis can now be tracked and transferred, people will naturally want to collect them. Ordinal theorists can decide for themselves which sats are rare and desirable, but there are some hints… Bitcoin has periodic events, some frequent, some more uncommon, and these naturally lend themselves to a system of rarity.
And he notes four of these periodic events: blocks (a new one is mined approximately every 10 minutes), difficulty adjustments (the protocol factors in the current hashrate, or computing power, every 2016 blocks and makes an adjustment to maintain the 10-minute target for block production), halvings (every 210,000 blocks, approximately four years, the amount of bitcoins minted with each block is cut in half) and cycles (every six halvings, the halving and difficulty adjustment coincide).
In addition to energizing NFT enthusiasts, the Ordinals project has triggered a predictable divide within the Bitcoin community. Some view it as an innovative expansion of the network’s capabilities, while others see it as a threat to the core principles of Bitcoin. The controversy is rooted in differing perceptions of Bitcoin’s purpose, with some viewing it as a means of protecting savings and fighting inflation, and others interpreting it as a political and social statement, as well. Periods of heavy Ordinals activity have also resulted in higher network fees, prompting mixed reactions within the Bitcoin community. While some argue that this is a positive development incentivizing miners, others express concern about potential impacts on the stability and user-friendliness of the Bitcoin network.
As the enthusiasm for Bitcoin Ordinals has grown, a number of projects have formed to develop various aspects. Taproot Wizards aims to reshape Bitcoin’s perception by injecting innovation into the blockchain. Co-founders Udi Wertheimer and Eric Wall announced November 16th that the project had raised $7.5 million in a funding round led by Standard Crypto to rebuild Bitcoin’s “wizard village,” suggesting a desire to compete with Ethereum and Solana. Wertheimer emphasized their goal of bringing back the culture of building on Bitcoin and making it magical again, stating, “We care a lot about Ordinals and Taproot Wizards, but our mission is bigger than that; we want to bring innovation back to Bitcoin.”
Taproot Wizards introduces a limited mint of 2,121 wizards, each paying homage to the total supply of Bitcoin: 21 million. Currently, 99.3% of the total supply has been inscribed, with less than 1% (20 Taproot Wizards’ Ordinals) distributed. Wertheimer emphasized their strategic approach to releases, aiming to find individuals on a mission rather than those solely focused on JPEGs. The distribution of Ordinals has been reserved for active community members who participated in the “wizard school” or demonstrated significant dedication, such as getting tattoos or sending videos of themselves showering in wizard outfits to claim one.
On the creative end of the community, one of several new projects from the Thesis venture production studio, Etcher serves as a launchpad for creators, enabling them to introduce their work in a distinctive and authentic manner and cultivate a close-knit community around their work. Referring to itself as “Shopify for Ordinals,” Etcher aims to move beyond the era of static JPEGs by focusing on immersive, generative, and interactive art experiences. It merges art and technology, leveraging the security and distribution strengths of Bitcoin. Etcher enables creators to concentrate on their art while it manages the technical aspects.