Introduction

Bitcoin has always been viewed solely as a means of storing money without the technological capabilities to process more complex data or structures such as smart contracts, NFTs or tokens.

However, at the end of 2022 everything changed with the advent of the Ordinals Protocol, an innovation by an unknown developer (Casey Rodarmor), which meant that each satoshi (1/100000000th part of BTC) would be numbered. It has become possible to catalog and track satoshis in the chain, which means that it is possible to purchase individual satoshi for the entire history of BTC and make records on them (for example, satoshis from a block mined by Satoshi Nakamoto himself, or satoshis from blocks with which Laszlo Heinitz paid for 2 pizzas on May 22, 2010).

Thanks to the advent of the Taproot Protocol at the end of 2021, bitcoin gained the ability to embed not only text, but also photos, videos, gifs and other materials into transactions.

This meant that for the first time it became possible to put pictures on satoshi, creating the first ever NFTs on Bitcoin and permanent digital collectibles.

Learn more about Ordinals Protocol:

Initially, satoshis did not have his own numbers. However, this new format assigns each satoshi its own serial number corresponding to the order in which it was created by the miners (1, 2, 3, 4, ...). Let's say you have 3 satoshis in your balance. How does the BTC blockchain understand which satoshi you want to send? No way. It doesn't care. Ordinals solves this issue by setting a rule that in a transaction you will always send satoshi with the lowest number.

We can still choose which satoshi to send: let's say we have sats № 13, 16 and 18. If we want to send sats №16 to a friend, first we will send 1 satoshi to another wallet (satoshi №13), and then we will send 1 more satoshi to a friend.

Inscriptions

An inscription is a digital asset, de facto an explanation (literally like a note) for each transaction. It is written in the OP-return field (this is the output of the transaction).

I found a transaction with this field: 8bae12b5f4c088d940733dcd1455efc6a3a69cf9340e17a981286d3778615684

It looks something like this:

As we can see, in the “OP_RETURN Data” field, we have a love confession from Charlie.

We have also recursive inscriptions. They were introduced by the Ordinals protocol in mid-2023. Simply put, a recursive inscription contains a reference to another inscription in its metadata. During visualization, the Ordinals protocol extracts data from previous inscriptions that will be included in the image or any other output data.

Recursive inscriptions allow you to contain more complex images or constantly updated data.

Learn more about Taproot Protocol and a little bit about SegWit:

Initially, Bitcoin had a very low transaction rate: up to 3 transactions per second.

Segregated Witness (SegWit) - Protocol update in 2017 to address scalability issues.

The main idea of SegWit is to reorganize the data in the block so that signatures are placed separately from transaction information. In other words, the SegWit update consists of separating the witnesses (signatures) from transactions. This allows you to increase network bandwidth by increasing the number of transactions per block.

In practice, a segwit address is your usual address for sending bitcoin.

Taproot Protocol is the most anticipated blockchain update after the segwit. The purpose of the protocol is to change the way Bitcoin scripts work to increase privacy, scalability and security. This and much more will be possible thanks to the joint implementation of Taproot and an update called the Schnorr signature scheme.

The update consists of three parts: Taproot, Tapscript and its cores are a new digital signature scheme called the Schnorr scheme.

Taproot:
Implementation of the Merkelized Alternative Script Tree (MAST) concept to scale the volume of transaction data in the blockchain.

MAST, but with the Taproot modification, is an offer to shove an arbitrary number of different wallets into 1 bitcoin address. That is, your taproot wallet is part of some 1 wallet at the time of the transaction creation. When someone wants to send money to you, you will actually send it first to some temporary shared wallet, and then taproot will send the money to the person you originally wanted to send it to.

Schnorr's scheme:
One of the main advantages of the Schnorr scheme is the ability to use multiple keys inside a complex bitcoin transaction and create a single unique signature. This means that the signatures of several participants in a transaction can be combined into one Schnorr scheme through signature aggregation.

Tapscript:
It is a set of OP-codes – instructions for executing a transaction. It is believed that increasing the available space in blocks will provide network flexibility and allow Bitcoin to support and create smart contracts. Due to this, data up to 4 MB can now be inserted into the op_return field, instead of just 80 bytes. (Increased as much as almost 52,500 times!)

You can visualize the data of 3 modifications like this:

The First BTC Ordinals

When the first Ordinals were inscribed, a simple numbering order was developed. That is, the chronological record of Ordinals. If you visit ord.io then you will discover a catalog of all Ordinals ever inscribed, in order. Earlier inscriptions are of great value to collectors of historical value and provenance.

At an early stage, several collections and independent descriptions were released, with Bitcoin Shrooms, Bitcoin Rocks и Ordinal Punks claiming to be the "Early" collections in BTC. For this reason, these collections are of great value.

To date, more than 60 million inscriptions have been created. By the way, this means that 2,400 BTC have been extracted from the bitcoin issue, which no longer participate in the formation of the asset value.

Rare sats

The creation of the Ordinals protocol made it possible to identify and extract Satoshi of historical importance for Bitcoin. The inscriptions on such satoshis are valued higher.

The rarity and exclusivity of satoshis depends on a number of factors: how early they were mined, whether they were the first satoshis in the block, whether they are palindromic (the same both forward and backward) or according to other specific criteria.

So, which Satoshi have historical significance:

Uncommon - the first satoshi of any mined block;

Rare - the first satoshi of every first block mined after difficulty adjustment;

Epic - the first satoshi of every first block mined after halving;

Alpha - satoshi, whose numbers end in 8 zeros;

Omega - satoshi, whose numbers end in 8 nines (mined before alpha satoshi);

Black Uncommon - the last satoshi of any mined block;

Black Rare - the last satoshi of each last block mined before the difficulty adjustment;

Black Epic - the last satoshi of every last block mined before halving;

Nakamoto - satoshis from a block mined by Satoshi Nakamoto himself;

Block 9 – satoshis from the first block mined after the emergence of the blockchain. This is the oldest block whose satoshis are in circulation, the previous 8 blocks are inactive;

Block 78 – satoshis from the first block mined by non-Satoshi Nakamoto in circulation. This block was mined by Hal Finney, the reward for it was 50 BTC;

Vintage - satoshis from the First 1,000 Bitcoin Blocks;

Pizza - satoshis from 10 000 BTC blocks, with which Laszlo Heinitz paid for 2 Papa John's pizzas on May 22, 2010;

Palindrome - satoshis, whose numbers are the same in both forward and reverse directions;

1d Pali - satoshis, whose numbers consist of 1 digit;

JPEG - satoshi, which was used to pay for the image for the first time on February 24, 2010;

Hitman - satoshi that Ross Ulbricht paid the killer with;

Silkroad - satoshis seized from Silk Road, which are part of the first bitcoin sold at auction on June 27, 2014 by US bailiffs.

The BRC-20 token standard

Immediately after the Ordinals came the BRC-20 standard. In March 2023, the developer domo published an experimental standard using Ordinals to create fungible tokens in BTC. The protocol was named BRC-20.

In general terms, BRC-20 is a standard that allows you to create and transfer tokens on the Bitcoin network. Instead of images, BRC-20 uses the Ordinal framework to write JSON data directly to satoshis with the specified parameters defining the operation and the name of the token.

Each BRC-20 token is formatted in a similar way, with each line containing key information, including ticker, supply, and desired action (for example deploy, transfer, etc.).

BRC-20 attracted huge interest because they represented a new protocol with a supposed “trailblazer” advantage, based on what is generally considered a blockchain of paramount global importance and security. In short, it combined huge potential with a protocol of potentially historic significance. It made Bitcoin so mobile that no one could ever imagine it.

Some of the most important BRC20S ($ORDI and $SATS) have already attracted great interest and are traded on CEXs.

A few remarks about the BRC20:

TO BE CONTINUED IN PT.2...

Introduction

Bitcoin has always been viewed solely as a means of storing money without the technological capabilities to process more complex data or structures such as smart contracts, NFTs or tokens.

However, at the end of 2022 everything changed with the advent of the Ordinals Protocol, an innovation by an unknown developer (Casey Rodarmor), which meant that each satoshi (1/100000000th part of BTC) would be numbered. It has become possible to catalog and track satoshis in the chain, which means that it is possible to purchase individual satoshi for the entire history of BTC and make records on them (for example, satoshis from a block mined by Satoshi Nakamoto himself, or satoshis from blocks with which Laszlo Heinitz paid for 2 pizzas on May 22, 2010).

Thanks to the advent of the Taproot Protocol at the end of 2021, bitcoin gained the ability to embed not only text, but also photos, videos, gifs and other materials into transactions.

This meant that for the first time it became possible to put pictures on satoshi, creating the first ever NFTs on Bitcoin and permanent digital collectibles.

Learn more about Ordinals Protocol:

Initially, satoshis did not have his own numbers. However, this new format assigns each satoshi its own serial number corresponding to the order in which it was created by the miners (1, 2, 3, 4, ...). Let's say you have 3 satoshis in your balance. How does the BTC blockchain understand which satoshi you want to send? No way. It doesn't care. Ordinals solves this issue by setting a rule that in a transaction you will always send satoshi with the lowest number.

We can still choose which satoshi to send: let's say we have sats № 13, 16 and 18. If we want to send sats №16 to a friend, first we will send 1 satoshi to another wallet (satoshi №13), and then we will send 1 more satoshi to a friend.

Inscriptions

An inscription is a digital asset, de facto an explanation (literally like a note) for each transaction. It is written in the OP-return field (this is the output of the transaction).

I found a transaction with this field: 8bae12b5f4c088d940733dcd1455efc6a3a69cf9340e17a981286d3778615684

It looks something like this:

As we can see, in the “OP_RETURN Data” field, we have a love confession from Charlie.

We have also recursive inscriptions. They were introduced by the Ordinals protocol in mid-2023. Simply put, a recursive inscription contains a reference to another inscription in its metadata. During visualization, the Ordinals protocol extracts data from previous inscriptions that will be included in the image or any other output data.

Recursive inscriptions allow you to contain more complex images or constantly updated data.

Learn more about Taproot Protocol and a little bit about SegWit:

Initially, Bitcoin had a very low transaction rate: up to 3 transactions per second.

Segregated Witness (SegWit) - Protocol update in 2017 to address scalability issues.

The main idea of SegWit is to reorganize the data in the block so that signatures are placed separately from transaction information. In other words, the SegWit update consists of separating the witnesses (signatures) from transactions. This allows you to increase network bandwidth by increasing the number of transactions per block.

In practice, a segwit address is your usual address for sending bitcoin.

Taproot Protocol is the most anticipated blockchain update after the segwit. The purpose of the protocol is to change the way Bitcoin scripts work to increase privacy, scalability and security. This and much more will be possible thanks to the joint implementation of Taproot and an update called the Schnorr signature scheme.

The update consists of three parts: Taproot, Tapscript and its cores are a new digital signature scheme called the Schnorr scheme.

Taproot:
Implementation of the Merkelized Alternative Script Tree (MAST) concept to scale the volume of transaction data in the blockchain.

MAST, but with the Taproot modification, is an offer to shove an arbitrary number of different wallets into 1 bitcoin address. That is, your taproot wallet is part of some 1 wallet at the time of the transaction creation. When someone wants to send money to you, you will actually send it first to some temporary shared wallet, and then taproot will send the money to the person you originally wanted to send it to.

Schnorr's scheme:
One of the main advantages of the Schnorr scheme is the ability to use multiple keys inside a complex bitcoin transaction and create a single unique signature. This means that the signatures of several participants in a transaction can be combined into one Schnorr scheme through signature aggregation.

Tapscript:
It is a set of OP-codes – instructions for executing a transaction. It is believed that increasing the available space in blocks will provide network flexibility and allow Bitcoin to support and create smart contracts. Due to this, data up to 4 MB can now be inserted into the op_return field, instead of just 80 bytes. (Increased as much as almost 52,500 times!)

You can visualize the data of 3 modifications like this:

The First BTC Ordinals

When the first Ordinals were inscribed, a simple numbering order was developed. That is, the chronological record of Ordinals. If you visit ord.io then you will discover a catalog of all Ordinals ever inscribed, in order. Earlier inscriptions are of great value to collectors of historical value and provenance.

At an early stage, several collections and independent descriptions were released, with Bitcoin Shrooms, Bitcoin Rocks и Ordinal Punks claiming to be the "Early" collections in BTC. For this reason, these collections are of great value.

To date, more than 60 million inscriptions have been created. By the way, this means that 2,400 BTC have been extracted from the bitcoin issue, which no longer participate in the formation of the asset value.

Rare sats

The creation of the Ordinals protocol made it possible to identify and extract Satoshi of historical importance for Bitcoin. The inscriptions on such satoshis are valued higher.

The rarity and exclusivity of satoshis depends on a number of factors: how early they were mined, whether they were the first satoshis in the block, whether they are palindromic (the same both forward and backward) or according to other specific criteria.

So, which Satoshi have historical significance:

Uncommon - the first satoshi of any mined block;

Rare - the first satoshi of every first block mined after difficulty adjustment;

Epic - the first satoshi of every first block mined after halving;

Alpha - satoshi, whose numbers end in 8 zeros;

Omega - satoshi, whose numbers end in 8 nines (mined before alpha satoshi);

Black Uncommon - the last satoshi of any mined block;

Black Rare - the last satoshi of each last block mined before the difficulty adjustment;

Black Epic - the last satoshi of every last block mined before halving;

Nakamoto - satoshis from a block mined by Satoshi Nakamoto himself;

Block 9 – satoshis from the first block mined after the emergence of the blockchain. This is the oldest block whose satoshis are in circulation, the previous 8 blocks are inactive;

Block 78 – satoshis from the first block mined by non-Satoshi Nakamoto in circulation. This block was mined by Hal Finney, the reward for it was 50 BTC;

Vintage - satoshis from the First 1,000 Bitcoin Blocks;

Pizza - satoshis from 10 000 BTC blocks, with which Laszlo Heinitz paid for 2 Papa John's pizzas on May 22, 2010;

Palindrome - satoshis, whose numbers are the same in both forward and reverse directions;

1d Pali - satoshis, whose numbers consist of 1 digit;

JPEG - satoshi, which was used to pay for the image for the first time on February 24, 2010;

Hitman - satoshi that Ross Ulbricht paid the killer with;

Silkroad - satoshis seized from Silk Road, which are part of the first bitcoin sold at auction on June 27, 2014 by US bailiffs.

The BRC-20 token standard

Immediately after the Ordinals came the BRC-20 standard. In March 2023, the developer domo published an experimental standard using Ordinals to create fungible tokens in BTC. The protocol was named BRC-20.

In general terms, BRC-20 is a standard that allows you to create and transfer tokens on the Bitcoin network. Instead of images, BRC-20 uses the Ordinal framework to write JSON data directly to satoshis with the specified parameters defining the operation and the name of the token.

Each BRC-20 token is formatted in a similar way, with each line containing key information, including ticker, supply, and desired action (for example deploy, transfer, etc.).

BRC-20 attracted huge interest because they represented a new protocol with a supposed “trailblazer” advantage, based on what is generally considered a blockchain of paramount global importance and security. In short, it combined huge potential with a protocol of potentially historic significance. It made Bitcoin so mobile that no one could ever imagine it.

Some of the most important BRC20S ($ORDI and $SATS) have already attracted great interest and are traded on CEXs.

A few remarks about the BRC20:

TO BE CONTINUED IN PT.2...