By Sergey Vartanov Khachaturyan
Ordinals, are a new framework originating on the Bitcoin blockchain, introducing a new primitive that fundamentally differs from the established standard introduced by NFTs. By leveraging Bitcoin's security and transparency, Ordinals enable the creation and management of unique digital artefacts that are immutable and highly traceable. The framework opens up vast possibilities for art, identity, and data integrity, transforming how we perceive and interact with digital artefacts to date.
Casey Rodarmor introduced the concept of Ordinals and released the initial paper outlining the concept. Rodarmor envisioned a system that utilises Bitcoin's inherent security and transparency to bring unique, identifiable digital assets to its blockchain. He unveiled the idea in more detail in his paper, "Ordinals: A Method for Tracking Individual Satoshis and Inscribing Data," which has since become the foundation for the Ordinals’ ecosystem.
Ordinals Theory by Casey Rodarmor
The first Ordinal to be minted on Bitcoin, Inscription 0, is a simple black skull with white markings. This Genesis inscription, created by Rodarmor, is a piece of "tiny pixel art" that marked the beginning of what Ordinals ecosystem is today. The image was timestamped on December 14, paying homage to Bitcoin's genesis block.
Inscription 0
Bitcoin operates on a fundamentally different architecture compared to Ethereum. Each Bitcoin transaction comprises data known as Unspent Transaction Outputs [UTXOs]. Ordinals leverage this UTXO model to create a numbering scheme for individual satoshis, the smallest unit of Bitcoin, giving each satoshi a unique identifier.
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UTXOS
Ordinals assign a unique number to each satoshi, allowing them to be individually tracked and identified. These identifiers can be represented in various formats, such as decimals, degrees, or percentiles. An inscription in the Ordinals ecosystem is arbitrary content attached to a specific satoshi.
For example, if a satoshi carries a profile picture image, it is the Ordinal, and the image is the inscription. When creating an inscription, this data is added to a specific UTXO.
Bitcoin’s protocol enforces a dust rule, preventing the creation of transactions that output very small amounts, which are economically unfeasible to spend. This rule mandates a minimum amount of satoshis to be grouped and spent in a transaction. Consequently, Ordinals cannot utilise individual satoshis directly. Instead, they operate in groups, typically around 600 satoshis, to remain above the dust threshold. Casey Rodarmor, the creator of Ordinals, developed an indexer that every Ordinals explorer relies on. This indexer scans the entire transaction history, interpreting the Ordinal's data embedded within.
On Ethereum, NFTs are governed by smart contract code, typically adhering to standards like ERC-721 or ERC-1155. Each NFT is a unique token stored within a smart contract, and ownership is recorded by associating a unique token ID with an address. For instance, in the Mutant Ape Yacht Club case, the contract storage would map each unique NFT ID to an owner’s Ethereum address.
To fully grasp Ordinals' promise, it is crucial to draw parallels with the initial offerings of NFTs and the value-creation elements they introduced. While Ordinals offer a more integrated vision of digital artefacts within the Bitcoin ecosystem, the market remains nascent, facing potential challenges akin to those experienced by early NFT adopters. By addressing these challenges proactively, Ordinals can potentially avoid the pitfalls that hinder the broader acceptance and utility of NFTs.
Dune Analytics: Ordinals Inscriptions over time
Unlike many NFTs on Ethereum that point to off-chain data stored on the Interplanetary File System [IPFS] and can be altered through dynamic metadata, Ordinals inscribe all data directly on-chain. This ensures the permanence and authenticity of the digital artefacts on the oldest and most secure blockchain. Leveraging Bitcoin’s robust security model, Ordinals offer immutability and traceability. This ensures that each Ordinal's ownership and history are transparent and tamper-proof.