Bitcoin Ordinals are a new kind of NFT (Non-Fungible Token), but instead of being on the Ethereum network like most NFTs, they exist on the Bitcoin network.
You can think of them as individual "sats" (short for satoshis, the smallest unit of Bitcoin) that have been given a unique identity by inscribing them with some information, such as a piece of text or an image. This unique information turns the sat into a kind of NFT because it is now different from all other sats.
The way they are inscribed is by using the Ordinal Theory, which assigns a unique ordinal number to each sat based on the sequence in which it was mined and transferred. This is done with the help of an open-source software called 'ord'. This theory allows the creation of "digital artifacts" - sats with unique inscriptions that are stored directly on the Bitcoin blockchain and can't be altered.
These digital artifacts can be bought, sold, or transferred just like any other NFT. Their value may change based on the uniqueness of the inscription and other factors like their position in the Bitcoin blockchain.
For example, a sat that was the first to be mined after a major event in Bitcoin's history (like a "halving" event where the number of new bitcoins created and earned by miners is cut in half) might be seen as more valuable. These special cases are referred to as "exotic" ordinals.
While this new concept of Bitcoin Ordinals has brought some excitement and diversity to the Bitcoin community, it's also been a point of contention. This is because these inscriptions take up space on the Bitcoin blockchain that some people feel should be reserved for financial transactions. This could potentially lead to higher transaction fees and impact the overall use of Bitcoin as a currency.
Rather than undergoing the traditional minting process, Ordinals are born from a method known as inscription. This means that when you're about to press "Mint," you're technically initiating the "Inscribe" command. This process involves embedding your desired content, such as a Pixel character image, straight into a 'sat,' the smallest unit of Bitcoin. Once inscribed, this satoshi makes its journey into your digital wallet. Unlike NFTs on Ethereum that typically store images on third-party servers or the InterPlanetary File System (IPFS), Bitcoin NFTs embed the data directly on the Bitcoin Blockchain, ensuring their immutability and permanence.
The inscription process isn't alien; it closely resembles the familiar act of minting Ethereum NFTs. You simply need to connect your preferred wallet (we recommend XVerse), initiate the minting command, cover the transaction fee and price, and then wait for your fresh Ordinal to settle comfortably in your wallet.
At present, a variety of marketplaces for trading ordinals are emerging. These include smaller and larger platforms, with the most prevalent ones being gamma.io, MagicEden, and OrdinalsMarket. Additionally, Binance NFT is preparing to feature selected Ordinal Collections. The process of trading these ordinals is as straightforward as trading NFTs on the Ethereum platform.