Ordinal elements are driving Bitcoin’s popularity, but in order for this to continue, the protocol will need to incorporate more standards.
This is an op-ed from Danny Yang, founder of the Stanford Bitcoin Meetup, who scored the OnChainMonkey NFT group on Bitcoin.
In the past few years, NFTs have been the go-to application for Ethereum and other blockchains. While much of this mainstream user base left with Low NFT prices, many left. But the initial surge in NFT interest has drawn most of these users into blockchain projects besides Bitcoin, even though BTC is the largest cryptocurrency by market cap (It is twice the size of Ethereum) and has the highest level of security and most proven capacity as a store of value. Unsurprisingly, a protocol like Ordinals has arrived to enable NFTs to exist on Bitcoin. It was only a matter of time until someone realized that Bitcoin’s survival could support a truly “killer” application.
Contrary to some complaints, the Ordinals protocol and the ability to create NFTs on Bitcoin is great for the future of Bitcoin. With hierarchies, we can now register and store non-fungible digital assets on the Bitcoin blockchain. More stored value means more incentive to participate in the network – we’ve seen this reflected in An increase in the workings of bitcoin nodes – Increase the competitiveness of Bitcoin miners and the value of Bitcoin.
It’s not a fad either. NFT collectors rushed to pay more $16 million in bitcoin for 288 Yuga ordinal coefficients. Bitcoin NFTs are the new “gold standard” and cement Bitcoin’s position as the global store-of-value standard.
What is the order?
The first ordinal pattern was added to Bitcoin in December 2022, and began to gain traction in early 2023. The ordinal has two parts: an individual satoshi (the smallest unit of Bitcoin), and a token. Each satoshi is identified in the order in which it was created in the Bitcoin protocol, and the Ordinals protocol tracks each satoshi as it is transferred between wallets.
A token is data written (or patterned) on the Bitcoin blockchain and associated with an individual satoshi (“token”) at the time of registration. This allows people to record data on Bitcoin, and assign and transfer ownership of that data on-chain or pattern using “token” satoshi.
The first ordinal generated is numbered “ordinal 0” and each subsequent ordinal increments the counter by one. All ordinal values form one ordinal NFT array. There was an initial rush to create the lowest ordinal number, motivated by the possibility of summing up very low ordinal numbers. The value of these early ordinal values was mostly in low ordinal number, and the actual written data was not as important (many were just images copied and pasted from existing works, often without permission from the original creators).
In other words: ordinal is like a digital postage stamp, and the protocol allows anyone to print their own. Just as with real physical stamps, these digital stamps are assets that can be owned, sold and transferred. The stamp or ordinal is characterized by being digital, stored and secured on the Bitcoin blockchain. Both Bitcoin and Ordinals are open and permissionless protocols, so anyone can use Ordinals to print any stamps they want.
in the past few weeks, We’ve seen over 750,000 “stamps” printed on Bitcoin. And just like physical stamps, some are worth more than others. One Yuga Labs “stamp” sold for more than 7 bitcoinsworth over $150,000 at the time.
Why are Ordinals good for Bitcoin?
The main criticism of the arrangement is that storing additional digital assets on Bitcoin means that more space must be used to store these digital assets. Each year, the Bitcoin blockchain can store just over 200 GB of data at a theoretical maximum (as each Bitcoin block has a theoretical maximum size of 4 MBwith miners adding 1 block approximately every 10 minutes, thus, approximately 210 GB of data per year), which includes all normal bitcoin transactions plus the accompanying token satoshis and pattern data.
Ordinal storage can easily use up much more block space than organizer transactions do, eliminating these regular transactions and increasing transaction fees. But this is not bad. The increased fees indicate the demand for and use of Bitcoin, and this money goes directly to the Bitcoin miners who secure the blockchain. This incentivizes more miners and nodes to join, further strengthening the blockchain. Critics also forget that bitcoin is a true free market. The higher fees must mean that the ordinal values being written to Bitcoin are of a higher value than normal transactions, just by the very nature of their existence. If it isn’t, it won’t sell and it won’t be created.
I agree with the critics who point out that most NFT pools going into Bitcoin waste space – in their rush to be trendy, they amplify the blockchain with transactions I don’t see as having real value. When I scored a collection of 10,000 ordinal images, our team decided To deliberately use only 20 kilobytes of the total Bitcoin blockchain data, which reduces the downtime of the rest of the mempool. Block space consideration should be a criterion for any NFT pool launched on Bitcoin.
Ordinal order does not need a criterion
The Ethereum NFT market has had several years to develop – at the time of writing, two of the top three applications used on Ethereum (by how much gas is paid) are NFT markets (On Etherscan, same as Blur and OpenSea’s Seaport). Bitcoin is the largest blockchain by market cap, so it stands to reason that there will be a Bitcoin NFT market (or several markets) soon. However, this was where Ethereum got it right in their NFT standardsand this is what Bitcoin NFTs are still missing.
As mentioned earlier, all ordinal numbers are part of a single NFT pool on Bitcoin. An important NFT standard available on Ethereum, not yet on Bitcoin, is the ability for a given creator to select a custom NFT pool from only NFTs. The NFT collection standard is vitally important to source, security, interoperability, and growth. On Ethereum, there are many NFT explorers, wallets, and markets, and all of them can transact with others and understand which group which NFT belongs to.
There is no such search capability for ordinal rankings on Bitcoin yet. To be fair, the ordinal arrangement is brand new. Ethereum has had several years to develop NFT standards, such as ERC-721 And ERC-1155. But now that Bitcoin NFTs are here, we need to create these standards as soon as possible.
Ordinal is also not a finished product. In fact, it’s still very much an alpha version. The protocol is being actively developed and upcoming updates will give it more power and make it more efficient.
One of the important upcoming features is “groups and source. This would allow creators to clearly verify that a group of arrangements are part of the same group. The technology used to enable this feature is in itself a powerful feature: the ability for one arrangement to refer to another ordinal. The source of a group is determined by having an ordinal parent group being referenced from Through many ordinal children all representing members of the collection, this has two important advantages: the source of the collection is very clear, and the storage space required to store all the data of a single order can be greatly reduced by reusing the data at the origin.
This is what we did with our ordinal pattern: you can see for yourself what the collection source looks like Ordinal inscription 20219. This standard will improve security and source for everyone, and we need this to prevent people from being scammed. Right now, the creators are passing out custom lists of arrangements they say are a “collection.” Because markets and explorers only have access to some of this metadata, they find it difficult to verify the source of these listings.
If we can get a standard setup up and running, it can always be made better. In the meantime, it will give teams that build Bitcoin NFT DApps (such as wallets and explorers) the infrastructure they need.
Ordinals is starting a new renaissance in Bitcoin development and bringing in a new wave of Bitcoin users.
We’ve seen this on other blockchains like Ethereum and Solana. Except this time, it happens on the most decentralized, most secure, and highest value blockchain. Bitcoin could easily have the highest single NFT value, and even the highest overall market capitalization of all NFTs. And as more users use Bitcoin, it will only get more secure.
This is a guest post by Danny Yang. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
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