rewrite this title What Are Ordinals? Bitcoin NFTs Are Gaining Significant Attention

NFTs have experienced an incredible surge in recent years. At one point, they even surpassed Bitcoin in popularity, becoming one of the most talked-about concepts worldwide. 2021 was the golden year for NFTs, with total sales reaching $25 billion, a remarkable increase from just $95 million the year before. Throughout this story, Ethereum was the prevalent blockchain used for NFTs. While Ethereum continues to be the common blockchain for NFTs, a revolutionary development for both NFTs and Bitcoin has occurred in recent months. This development has made it possible to efficiently and effectively create NFTs on the Bitcoin network.

Bitcoin NFTs are not a new phenomenon. On the contrary, Bitcoin NFTs were being produced even before NFTs became widely known. On the Counterparty platform, visual assets could be tokenized. Counterparty was built on Bitcoin.

Furthermore, the Colored Coins project, which included Ethereum founder Vitalik Buterin during its whitepaper preparation, is also known as a progenitor of NFTs. Thanks to Colored Coins, unique assets could be stored with “satoshi,” the smallest unit of Bitcoin. This allowed documents requiring registration in membership and contract sectors to be stored on the Bitcoin mainnet. However, these initiatives did not achieve the desired efficiency, and at that time, Bitcoin was not suitable for such uses.

As time progressed, Bitcoin also evolved technologically. Developments in the last five years, such as SegWit, Lightning Network, and Taproot, paved the way for Bitcoin to exist in various use cases beyond being just an electronic cash system. The recently much-discussed Ordinal NFTs are a fruit of this process.

What Are Ordinals?

In January, Bitcoin developer and software engineer Casey Rodarmor launched the Ordinals protocol, which enables the creation of NFTs on the Bitcoin network. While some enthusiastically welcomed Ordinals, others argued that it posed a threat to Bitcoin. As time went on, Ordinals became better understood and garnered significant support.

Ordinal NFTs, and seemingly what will henceforth be known as Bitcoin NFTs, are created by attaching data to satoshis, the smallest units of Bitcoin. As is known, Bitcoin consists of small units called satoshi or sats. 1 Bitcoin is made up of 100 million satoshis. With the Ordinals protocol, it’s possible to attach data to each of these units. This creates a new type of digital asset, which its developer calls an “Inscription.”

What’s the Difference from Known NFTs?

The difference between these NFTs and the NFTs we know on Ethereum is this: NFTs on Ethereum and many other blockchains require data to be stored off-chain. To explain with an example, the image associated with an NFT you own is not stored within the blockchain itself but on IPFS, a decentralized file storage system. This situation has been one of the biggest question marks regarding NFTs until now. Off-chain data storage raised a question of trust. With Ordinal NFTs, however, all data is written directly onto the chain.

Ordinals NFT Data Is Completely On-Chain

According to Casey Rodarmor, the developer of Ordinals, inscriptions are digital artifacts, unlike the vast majority of NFTs. At this point, Rodarmor claims that existing NFTs are not in the class of digital artifacts because they are stored off-chain, reside on centralized chains, and carry backdoor vulnerabilities. According to him, inscriptions are true digital artifacts because they are located on the oldest, most decentralized, and secure blockchain in the world.

Ordinals Craze Increased Block Sizes

After the Ordinals protocol was implemented, a large number of NFTs began to be created on the Bitcoin network. Significant amounts of collection sales were carried out. These transactions substantially increased the size of Bitcoin blocks and caused the number of pending transactions in the memory pool (mempool) to multiply.

The chart below shows the number of transactions waiting for confirmation in the memory pool. The left side of the graph shows the period before the Ordinals craze began, while the middle shows the period when NFTs were launched one after another.

Bitcoin’s block sizes remained under 1.5 MB for years. After the emergence of Bitcoin NFTs, blocks between 2 MB and 2.5 MB were produced. A few blocks even approached 4 MB in size. The chart below shows the change in block sizes over time. The surge seen on the right side of the graph is entirely due to Ordinals NFTs.

There Are Already NFTs Sold for Tens of Thousands of Dollars

Among the many NFT collections produced on the Bitcoin network so far, Bitcoin Rocks, Taproot Wizards, and Ordinal Punks have stood out. Some NFTs from these collections have already sold for tens of thousands of dollars.

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