Ordinals Explained: BTC NFTs R A BFD!

• Ordinals are BTC NFTs--they're a clever innovation that allows BTC to hold NFTs on-chain without smart contracts
• Buying and creating ordinals is hard. Selling or trading them is SUPER hard
• Many ordinals have already mooned in price
• The future might be bright for ordinals as new UIs and trustless trading systems are developed

Bitcoin, aka BTC, aka Boomer Coin, aka Orange Coin, aka digital gold… was SUPPOSED to do one thing only: store value. The investment methodology was simple–hodl long term and then cash out for fiat or other cryptos. After all, the oldest, most secure, most valuable, and until recently, most boring cryptocurrency, doesn’t support smart contracts. That means it would never be able to support NFTs like the Ethereum Network… right? Wrong. Ordinal Theory changed everything.

Ordinal: adjective

1. of or relating to an order, as of animals or plants.
2. of or relating to order, rank, or position in a series.

Thanks to Taproot, and the innovations of Casey Rodarmor’s Ordinal Theory, Bitcoin is suddenly able to support NFTs! How is this possible? Bitcoin NFTs, also known as ordinals, work by tracking individual Satoshis. You may have heard a Bitcoin Maxi say, “Stack Sats.” They are referring to Satoshis–the smallest denomination of Bitcoin: a Sat is one hundred millionth of a BTC. While Sats are supposed to fungible, i.e. identical to one another, each Satoshi was given a unique identifying number when it was mined into existence. Rodarmor’s ordinal innovation uses this identifying info to inscribe NFT data on to individual Sats. Or to put it another way, BTC transactions can now hold NFT data which points to one Sat. If that Sat is in your wallet, then you own the BTC NFT!

In one way, ordinals have a major advantage over the traditional NFTs of Ethereum: ordinals and all their data are 100% stored on chain. This means that as long as the BTC network is alive, a BTC NFT is alive. In contrast, many Ethereum NFTs have their image data or metadata stored off chain. Hopefully the data is stored on the IPFS and not a centralized database! Either way, it is possible that an NFT's imagery could be lost forever through no fault of Ethereum or the NFT holder. While data storage is an advantage enjoyed by ordinals, they are brand new and have a few sketchy things about them.

There are three main pitfalls to ordinals right now: One is that it is possible to ACCIDENTALLY spend the inscribed Sat that contains your NFT. Two, you need to run a FULL BITCOIN NODE to be able to transfer or trade an ordinal. Three, all trading of ordinals is being done “OVER THE COUNTER” or peer to peer–there’s no safe, trustless way to conduct a trade. 

This excellent thread covers how to create, buy and trade ordinals. The long and short of it is that you need a special wallet that can read Taproot transactions. In order to not accidentally spend your inscribed Sat, you should make one wallet for each ordinal you buy. While there are services for buying and creating ordinals, if you want to trade, you’ll need to set up a full node which takes at least a day to sync. Lastly, if you get your full node together, you should trade by contacting members of an official ordinal community Discord. From there you’ll have to be wary of getting scammed as you pay A LOT of BTC for an ordinal… if you didn’t know, many ordinal collections have gone to the moon. 

Perhaps the most exciting thing about NFTs on BTC is their newness. It’s only been a few weeks and the scene has exploded! The current count, as of February 9th, 2023, is around 40,000 ordinals are currently in existence. Because there are many barriers to trading, and no smooth UIs for ordinals, many people theorize that ordinals will only grow in value as devs create better tools for ordinal trading. Until then, be very careful when buying or selling these assets–a lot can go wrong. Don't forget that the hype could die down and crash ordinal prices. If you do ape in, stay safe and enjoy subverting the maxis’ chain, you BTC NFT degen!