If you follow the cryptocurrency ecosystem closely, it is impossible to miss the new phenomenon on Bitcoin: Ordinals. This new protocol allows data to be written on the Bitcoin blockchain and has notably enabled the development of NFTs on the queen blockchain of cryptocurrencies.
What is the Ordinals Protocol?
Ordinals is a protocol launched in January 2023 by developer and artist Casey Rodarmor. This protocol allows data such as art, text or video to be written on the Bitcoin blockchain.
The first NFT Ordinals to emerge was a pixel art skull inscribed on the Bitcoin blockchain by Rodarmor in December 2022.
In practice, the excitement around NFT Ordinals took a month after their launch in February 2023. Since then, the enthusiasm around Bitcoin NFTs has been growing steadily. Thus, more than 350,000 NFTs have been issued at the time of writing.
This trend has been reinforced in particular by the arrival of giants from the NFT world. So Yuga Labs, the studio behind the iconic Bored Ape Yacht Club, quickly jumped at the chance.
The studio thus revealed a collection of 300 NFTs, titled Twelvefold. The auction of this collection enabled Yuga Labs to generate $16.5 millionwith some of the NFTs purchased at over 7 BTC.
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Under the hood, the Ordinals protocol can be seen as a new iteration of a concept as old as Bitcoin: Colored Coins. In short, the objective behind this process is to alter the fungibility of satoshis (sats).
Thus, the objective is to mark a satoshi so that it is traceable and distinguishable from othersas explained in the Ordinals documentation:
“Ordinals is a satoshi numbering system that tracks and transfers individual satoshis. »
Ordinal theory
In practice, Ordinals are based on a theory called ” Ordinal theory“.
This theory aims to number each satoshi that composes a BTC, starting with index 0 and going in the order in which the coins are mined. This numbering is called ” ordinal number ” Or ” ordinals », which refers to the mathematical sense of the term which allows to specify the rank of an object belonging to a set.
The most interesting thing is that the Ordinals protocol does not need any additional tokens, no blockchains and no modification of the Bitcoin protocol to work.
Registrations: the heart of Ordinals
Numbering satoshis is fine, but how do you create NFTs then? The entire logic of creating and storing NFTs on Bitcoin relies on the registration concept.
“Satoshis can be inscribed with arbitrary content, creating digital artifacts unique to Bitcoin. »
In practice, for register one must send the satoshi to be registered in a transaction that reveals the contents of the on-chain registration. Therefore, the content of the transaction is now linked to the satoshi in question, turning it into an NFT.
Subsequently, satoshis that present an inscription can be transferred via a classic Bitcoin transaction. However, to send individual satoshis, these transactions must imperatively control the order and the values of the inputs and outputs so that they conform to the ordinal theory.
In fact, the registrations are stored on-chain in expense scripts Taproot. Indeed, the Ordinals were enabled by the deployment of the Taproot update on the Bitcoin network in November 2021. Coupled with SegWit, this increases the size of the data that can be stored in a Bitcoin transaction to 4MB .
Due to the design of Taproot, extensions of Taproot scripts can only be made from existing taproot outputs. Therefore, registrations are done in two steps called commit/reveal.
“First, during the pass operation, an output from the root passing a script containing the contents of the registration is created. Then, in the reveal transaction, the output created by the transmit transaction is spent, revealing the content of the on-chain inscription. »
Create and trade NFTs on Bitcoin
Create an NFT on Bitcoin
Now that we have covered the theory, we can move on to practice. In the early days, Ordinals registrations could only be created by holders of a full Bitcoin Core node.
Fortunately, several more user-friendly interfaces have since emerged. Thus, applications such as Gamma or Ordinals Bot.
In practice, these user interfacesallow to submit image or video contentand make one registration on bitcoin .
However, these services have a somewhat particular four-step mode of operation:
- Upload an image to the site;
- Pay the Lightning invoice offered to you (it includes a registration fee of 0.00025 BTC + %10 per file);
- Registration will then be minted by serving;
- The registration will be automatically sent to the BTC address provided on the site.
Note that the service can store your registration for you if you have not entered a BTC address. However, you will have to think about creating one and recovering your registration in order to be fully the holder. Yes, not your keys, not your Ordinals.
Trading and selling NFTs
Now that you have created your own NFT, you will no doubt want to sell it. In the early days of the Ordinals, sales were mainly made OTC (Over The Counter) in particular via Discord.
I guess we don’t need to go into detail about how OTC transfers via Discord with a stranger you meet in a chat are a extremely bad idea .
Fortunately, developers quickly tried to solve this major problem. Thus, we have seen the emergence of several platforms allowing the purchase and resale of NFT Ordinals.
For example, the Ordinalswallet site acts as an exchange platform for NFT Ordinals. You can find the different existing collections there and buy or sell your NFTs on Bitcoin.
We can also mention the Xverse and Hiro wallets which have both natively added support for Ordinals.
The Future of the Ordinals Protocol
In just a few months of existence, the Ordinals protocolalready has changed the game on bitcoin. Indeed, it has refocused attention around Bitcoin. Attention that had been diverted by the various trends in cryptocurrencies, from ICOs to DeFi.
Nevertheless, Ordinals may well bring much more than NFTs to Bitcoin. Whether directly, through the use of the protocol or indirectly by simply having shown the way for new applications.
The case of Rollkit
Thus, developers of Celestia Labs have recently unveiled the Rollkit project . In practice, Rollkit is a framework for creating modular rollups. In other words, Rollkit is a suite of tools that facilitate the development as well as the deployment of rollups. These are fully customizable.
Finally, two weeks after the first announcement, Rollkit announced support for sovereign rollups on Bitcoin.
Thus, said rollup will use Bitcoin as a data availability layer:
“Today we are proud to announce that Rollkit is the first rollup framework to support sovereign rollups on Bitcoin. A first research implementation allows Rollkit rollups to use Bitcoin for data availability. »
Once again, this solution is possible by the Taproot update. Indeed, just like the Ordinals, Rollkit takes advantage of the increase in the size of the data storable in a block to function.
Sovereign rollups are not real rollups
Note, however, that thesesovereign rollupsmade more than one jaw cringe. Indeed, unlike rollups traditionally used on Ethereum (Optimistic or zk), sovereign rollups do not inherit the security of the underlying chain. Thus, the state of the chain is managed and determined internally by the rollup nodes. A feature that bringsmany observersTo declare that this type of rollupare not real layers 2,but rather a kind ofside chain.
Be that as it may, this development remains extremely interesting all the same and allows us to consider numerous applications.
Thus, the Ordinals seem to have paved the way for a new wave of Bitcoin innovation. It’s a safe bet that in the years to come, the few MB of storage freed up by SegWit and then Taproot will allow the emergence of a complete ecosystem of applications on top of the Bitcoin network. Will such a transition cause the other layers 1 to be abandoned? Only the future will tell us.
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