Ordinals

The Ordinals protocol, launched in January 2023, allows users to inscribe data on satoshis – the smallest units of bitcoin – with each such inscription called an Ordinal. The inscribed data can include smart contracts, enabling the satoshis to carry NFT-like functionalities. The term Ordinals most commonly refers to these NFT-like entities that can be minted directly on the Bitcoin blockchain.

Ordinals are a numbering scheme for bitcoin that allows tracking and transferring of individual satoshis. The number of inscriptions using Ordinals exploded in February 2023, shortly after the protocol’s launch, as users flooded the network inscribing various content, such as images, video games, and other digital items. The inscription on satoshis is made possible by a November 2021 upgrade of the Bitcoin network called Taproot, along with certain functionalities that were added earlier via the 2017 Segwit update.

While they have a lot in common, Ordinals are not exactly the same as traditional NFTs, which are usually minted on smart contract-enabled networks such as Ethereum or BNB Chain. While both Ordinals and traditional NFTs live on the blockchain, the latter often include dynamic metadata connected to off-chain sources – which, some argue, contradicts the notion of them being immutable. In contrast, all Ordinals’ data are inscribed directly on-chain.