METAV.RS / NFT Ordinals: A Guide to the New Bitcoin NFT
In this Content:
NFT Ordinals is turning the crypto world upside down and especially the Bitcoin Blockchain. NFTs are driving Ethereum’s decentralized financial applications, while Bitcoin lacked this feature for some time. Ordinals, a new protocol, has changed this situation.
Users have created over 100,000 inscriptions on satoshis, the smallest denomination of Bitcoin. Using Ordinals, these inscriptions are unique digital assets, such as NFTs. They serve as proof of ownership, allowing for the monetization of digital content in a new way. This development has the potential to expand Bitcoin’s use cases and create new opportunities in the Web3 market in general.
Quick summaryOrdinals are a unique form of digital asset that uses the Bitcoin blockchain to generate data. While most non-fungible tokens store files on a server and point to corresponding directories, Ordinals write data directly to each satoshi and allow smart contract code within a Bitcoin transaction to create NFT Ordinals. This method offers several advantages over traditional NFTs, including improved authenticity, but lacks creator royalties. Ordinals are gaining popularity on the Bitcoin blockchain and are becoming a new standard for digital art ownership and authentication. NFT Ordinals could be worth $4.5bn by 2025.
How NFTs are slowly moving from Ethereum to Bitcoin: NFT Ordinals
Concretely, what NFT Ordinals are about?
While Rare Pepes were the first NFTs on the Bitcoin blockchain, Ordinals represent a new approach that utilizes the Taproot update to create a unique digital asset called an “Ordinal.” The Ordinals protocol, which enables users to generate data directly on the Bitcoin blockchain, was introduced by software engineer Casey Rodarmor in January 2023.
Unlike NFTs on Ethereum, which store files on a server and point to corresponding directories, Ordinals write data directly to each satoshi and enable smart contract code within a Bitcoin transaction to create NFT Ordinals. Besides, Ordinals track unique satoshis and assign them non-fungible features based on voluntary membership, maintaining their fungibility. While similar to NFTs, Ordinals have distinct differences worth noting.
Similar to an NFT but still different from it
Most NFTs, whether on Ethereum or other blockchains rely on off-chain storage solutions to store their data. Basically, an off-chain transaction means a transfer of value outside the blockchain register. However, this approach has been criticized for being incomplete and dependent on external sources. Ordinals protocol aims to address this issue by fully inscribing data directly on the blockchain. This happen to turn NFT Ordinals into virtual artworks more than Non-Fungible Tokens.
This complete storage approach offers several advantages over traditional NFTs, including improved authenticity. They however differ from NFTs with the lack of creator royalties. Ordinals are gaining popularity on Bitcoin blockchain. This could signal a cultural shift in the cryptocurrency world towards a new standard for digital art ownership and authentication.
What is the origin of those NFT Ordinals?
Bitcoin developers have been striving to bring non-fungible tokens to the top blockchain for nearly a decade. It began with the creation of the Rare Pepe NFT collection by Counterparty. The Inscription process was implemented during the SegWit upgrade in 2017, which writes or inscribes the content data into the Bitcoin transaction’s witness.
In 2017, SegWit fixed many bugs in Bitcoin Core, increased transactions per block, and laid the groundwork for Layer 2 payment channels like the Bitcoin Lightning Network. Some think the creation of Ordinals is a brilliant move by the team. They pieced together several different things in a way that the original creators did not anticipate, aligning with the Bitcoin ethos.
Making the Bitcoin Blockchain great again
Even if NFT Ordinals faces some criticisms such as overusing the network, they are still valued. An upgrade called Taproot is allowing all parties in a transaction to collaborate. It is to facilitate smart contracts implementation. The Schnorr signatures on the other hand are used to combine public keys and create a new public key, as well as combine signatures to create a new signature.
This upgrade also makes it difficult to identify transaction inputs on the Bitcoin blockchain by scrambling single and multiple signatures. This enhances privacy and lowers transaction costs by reducing the amount of data required to make transactions. This is why they have risen as Bitcoin has grown in popularity.
What can it mean for the future?
Ordinals have proven to be a boon for many players on Bitcoin. and as of now, the lifespan of the hype surrounding Ordinals depends on the projects it will have arounds. Given that the infrastructure technology such as marketplaces and wallets are still in development, it is highly probable that more people will adopt ordinals, especially since it is still in its early stages. Ordinals marketplaces such as ORDX are already expanding. As the onboarding process becomes more seamless, the groundwork for further growth will be laid, enabling greater adoption.
If one of the major NFT corporation is taking the boat on those Bitcoin NFTs, this means NFT Ordinals could indeed become a big deal. The NFT frenzy surrounding Bitcoin is prompting some users to make rather unexpected choices. In fact, a growing number of users are transferring their NFTs from Ethereum to Bitcoin. This has been the case with some Bored Apes Yacht Club owners.
Some memes around Yuga Labs going on Bitcoin Blockchain
One of them to perform this migration, used a tool called Teleburn. It enables NFT owners to assign a pre-existing NFT from a different network to a Bitcoin entry, while simultaneously removing it from circulation on the original network. This new feature allows the token to be transferred between chains according to its creators.
Yuga Labs jumps on the bitcoin blockchain bandwagon with the “TwelveFold” NFT Ordinals collection
Yuga Labs released a new Non-fungible Token collection called TwelveFold on February 27th, 2023. This collection will be minted on the Bitcoin-based Ordinals protocol, which has been gaining popularity since its launch last month. The collection will consist of 300 generative art NFTs created by Yuga Labs and placed on a 12×12 grid, serving as a representation of the cartography of data on the Bitcoin blockchain. Yuga Labs has stated that the collection will include 3D elements and hand-drawn features.
Despite Yuga Labs’ success with its blue-chip Bored Ape Yacht Club collection and its expansion through its skill-based mint Dookey Dash, the company clarified that TwelveFold will not have any connection to its current Ethereum-based collections and will not come with further utility.
This was to make different choices from the Yuga Labs’ typical approach. In the meantime, these tokens from the Ordinals protocol have been credited with contributing to the recent increase in cryptocurrency prices. One of the leading collections, Ordinal Punks, selling a token for 9.5 BTC, equivalent to about $214,000, featuring artwork that looks like CryptoPunks.
NFT Ordinals market could be worth $4.5 billion by 2025
According to Dune Analytics, over 300,000 registrations for NFT Ordinals have been made since the end of January. This new form of NFTs seems to have contributed to recovery on the rise of the cryptocurrency recently. Analysts predict that the his market could reach $4.5 billion by 2025. It is however likely to be different from others due to the high cost of joining the network.
Experts at Galaxy Digital believe that Ordinals market could exceed this given value. It can happen if it expands beyond the artistic dimension and includes mainstream NFT projects such as utility projects. The researchers are optimistic about the future of Ordinals market and predict a valuation of $1.5 billion based on current demand and infrastructure growth.
In the end, Ordinals market could become a successful competitor to Ethereum by offering new use cases and could potentially reach a valuation of $10 billion in the long term.
Are there already Ordinals collections that stand out?
Ordinals have received significant recognition due to impressive collections and sales, with certain pieces fetching hundreds of thousands of dollars. Among the most prominent collections is Ordinal Punks, which pays homage to CryptoPunks and comprises 100 Bitcoin NFTs minted within the initial 650 Inscriptions on the Bitcoin blockchain.
On another note, Bitcoin Rocks is a collection of NFTs that draws inspiration from the Ethereum NFT collectible project called Ether Rocks. Limited to only 100 NFTs, Bitcoin Rocks has commanded impressive prices with some pieces listed for as much as 1,000 BTC, currently valued at over $22 million. The lowest bid for one of these rocks is currently 2.7 BTC, which is close to $61,000. The collection is a testament to the early days of NFTs and represents the convergence of the Bitcoin and NFT communities.
Another one taken as one of the earliest Ordinals on Bitcoin is the Bitcoin Shrooms. It is a collection of NFTs showcasing different mushroom designs inscribed on the Bitcoin chain from Inscription 19 onwards.
Ordinal NFTs are a new horizon in the realm of crypto collectibles. With increasing Inscriptions, the community around these distinct NFTs is strengthening. A lot of private discord servers around this new feature are multiplying. Prominent collections are already fetching astounding prices and creating buzz among collectors and investors. The next could be brands creating a Web3 project around Ordinals NFT.
It could be interesting to witness innovative collections inscribed into the Bitcoin blockchain in the future. Ordinals are definitely opening a new chapter in the development of blockchain-based art and digital collectibles.
