Bitcoin NFTs? Ordinals Inscriptions Explained (Finding, Buying, & More) on Şubat 14, 2023 at 6:03 pm

Bitcoin Ordinals have taken over Web3 — at least, that’s how it seems. The space has been buzzing since software engineer Casey Rodarmor launched the protocol on January 21, with some excited about the new upgrade and others swearing Ordinals off entirely. Despite all the notoriety, fewer than 90,000 Ordinals exist at the time of writing.

So why are Ordinals so scarce? The vast majority of people simply don’t yet know how to buy them, let alone create them. With higher barriers to entry, that means potential opportunities abound. But it also means higher risks. If you’re ready to take that chance and embrace the potential of Ordinals, we’re here to guide you on how to find, buy, and store them safely. First, it’s essential to understand a few critical points about Ordinals that the average NFT enthusiast might not know.

What are Ordinals?

Each Bitcoin is broken into 100,000,000 units called satoshis (or sats). The new Ordinals protocol allows people who operate Bitcoin nodes to inscribe each sat with data, creating something called an Ordinal. That data inscribed on Bitcoin can include smart contracts, which in turn enables NFTs. In rough terms, Ordinals are NFTs you can mint directly onto the Bitcoin blockchain.

But that’s not exactly right. That’s the short-hand understanding, but there are a few important differences between NFTs and Ordinals.

How are Ordinals different from NFTs?

NFTs on Ethereum (or an Ethereum Virtual Machine blockchain) often point to off-chain data on the Interplanetary File System (IPFS) — a decentralized file storage system, sort of like the Blockchain’s hard drive — that can be changed using dynamic metadata. To illustrate, some NFT projects update the metadata of individual NFTs to improve image quality. They might even ask their holders to click the “refresh metadata” button on OpenSea to get the new, higher-quality image.

This ability to change an NFT’s metadata alludes to a deficiency Rodarmor was trying to improve when he created the new protocol. In Rodarmor’s estimation, NFTs are “incomplete” because many require off-chain data. On the other hand, Ordinals are “complete” in that all the data is inscribed directly on-chain. That’s why Rodarmor refers to them as digital artifacts, not Bitcoin NFTs. Moreover, NFTs often have creator royalties attached to them, whereas digital artifacts do not. According to Rodarmor, an Ordinal “is intended to reflect what NFTs should be, sometimes are, and what inscriptions always are, by their very nature.”

All this to say that Ordinals on Bitcoin may not only signal a cultural change for Bitcoin—they may actually be a technical improvement on NFTs. With that as the backdrop, here’s how to buy, receive, and store your first ordinals.

The environmental impact of Bitcoin Ordinals

The energy consumption of large blockchains is simply massive in scale, and Bitcoin is the largest blockchain in the world by market cap. What’s more, Bitcoin uses a proof-of-work (PoW) consensus mechanism to validate transactions and add them to the blockchain, which is an extremely energy-intensive process. Due to its size and PoW consensus mechanism, Bitcoin is leagues beyond other blockchains when it comes to energy requirements.

In August 2022, a report from the U.S. government estimated that Bitcoin accounted for 60-77 percent of global crypto-asset electricity usage. How much energy does this translate to? It’s difficult to pin down exactly, but reports from Digiconomist indicate that the combined energy usage of Bitcoin and Ethereum (before the historic Ethereum merge of September 2022) was over 317 TWh of energy annually, putting the chains somewhere between Italy and the United Kingdom in terms of electrical energy consumed. 

Yes, that is a lot of energy. But the context is important.

Many companies and industries consume more energy than countries. Blockchain is far from unique in this regard. Ultimately, Bitcoin’s energy needs rank near the lower end of rather small mining industries like copper and zinc. Bitcoin’s total annual energy consumption is also less than what the world’s residential air conditioning units require and lower than the energy needs of the world’s data centers (looking at you, Apple, Google, and Amazon).

And before you say that artists should go back to selling their art on t-shirts to make a living, please note that, according to Ngan Le at Princeton, “the fashion industry is currently responsible for more annual carbon emissions than all international flights and maritime shipping combined.”

Of course, this doesn’t mean that blockchain and NFTs don’t impact the environment. But the searing criticism is often exaggerated and missing necessary context.

The most notable Ordinals inscriptions

The rise of Ordinals didn’t take long. Just weeks after going live, fascinating collections and eye-popping sales took shape, with some individual pieces selling for hundreds of thousands of dollars. Ordinal Punks is one of the most notable projects to emerge in these early days. Paying homage to CryptoPunks, Ordinal Punks is a set of 100 Bitcoin NFTs minted within the first 650 Inscriptions on the Bitcoin chain — the highest numbered Inscription in the collection takes up spot #642.

Credit: Ordinal Punks

Then there’s Taproot Wizards. Beginning with Inscription #652, this project is an Ordinal collection of hand-drawn NFT wizards created by Web3 developer Udi Wertheimer. Why is this project so notable? It is said to be the largest block and transaction in Bitcoin’s history, coming in at a staggering 4MB. 

On the other side of the coin is the Ethereum-based collection OnChainMonkey (OCM). With Inscription 20,219,  the team minted 10,000 Ordinals into a single Inscription, making it one of the first 10k collections on Bitcoin. The OCM team notes that the size of the Inscription is less than 20,000 bytes, making their method a scalable model for other collections to use to create NFTs on Bitcoin without clogging the network.

Yet, Ordinals inscriptions are still in their infancy. As the Ordinals market matures, we will likely see a host of other innovative collections emerge. Want to stay up-to-date? Head here for a running list of the most innovative Bitcoin NFT artists and projects to watch.

How to buy and trade Ordinals

Step 1: Get the right wallet

You can’t yet hold Ordinals in a browser wallet like MetaMask. You must set up a Bitcoin wallet that allows enough customization to receive Ordinal inscriptions. Sparrow fits that bill.

To start, go to Sparrow Wallet.Click on the download link associated with your computer’s operating system.

Step 2: Set up your wallet(s)

Sparrow wallet is a desktop application that requires a handful of steps to make it compatible with Ordinals. Once you’ve downloaded Sparrow, follow this detailed tutorial on Github to make an Ordinal-compatible wallet. If you follow this guide, you should not send BTC to or from this Ordinals wallet. This wallet is only for receiving Ordinals. If you send BTC from this new Ordinals wallet, you may accidentally send both your BTC and your Ordinal(s).

Now that you have your wallet set up, you have three options for getting an Ordinal:

Run a node and inscribe an Ordinal yourself.Find an Ordinal owner and buy directly from them.Use a service to inscribe an Ordinal without running your own node.

We won’t go into the technical details of running a Bitcoin node. If you already run your own node, we can reasonably infer you can figure this stuff out for yourself. Let’s focus on the other two options, keeping in mind that this is all very new and risky. There are no major Ordinals marketplaces yet, so a great deal of trust and caution is required to proceed.

Step 3a: Find Ordinals to buy

The Ordinals market is purely OTC (meaning over-the-counter or peer-to-peer) trading right now.

To find Ordinal projects, join the Ordinals Discord channel.Go to the link-your-project channel and see what projects are out there.In that channel, collection creators link their Discords where you can buy their Ordinals.

An important note: Buying Ordinals OTC will require you to break almost every rule you’ve ever heard about not getting scammed in Web3: you might have to connect with people on Discord, send money before receiving an Ordinal, conduct direct transactions with other people, etc. We cannot emphasize enough how much caution is required here. Remember, only ever risk what you can afford to lose.

Step 3b: Use a service to inscribe an Ordinal for you

If you’d like to create your own Ordinal but don’t want to run a Bitcoin node, several services have already popped up to inscribe Ordinals for you.

The Satoshibles NFT collection team has created Ordinals Bot, which will inscribe an Ordinal on your behalf.Gamma also has an Ordinal inscription service.

These services will ask you to provide the BTC address where you’d like to receive your Ordinal. You’ll use your address from the new Ordinal wallet you created in Sparrow. They’ll also provide you with the number of sats you owe for the transaction plus a service fee, as well as an address for you to send the BTC to. The transactions can range from less than $50 in BTC to several hundred dollars, depending on your file size.

If you send the BTC, and this trust-heavy transaction goes according to plan, you won’t receive your Ordinal in your wallet in seconds or minutes. It could take hours or days.

Tedious, risky, and full of potential 

As you can see, if you want to be early in the Ordinals market — like “out of bed before the rooster crows” early — you’ll have to string together a web of tedious tasks to make it happen. But that opportunity could be worth it. Just be careful and learn what you can before venturing forward. Ready to dive deeper? We recommend going directly to the source: Rodarmor’s Ordinal Theory Handbook.

The post Bitcoin NFTs? Ordinals Inscriptions Explained (Finding, Buying, & More) appeared first on nft now.

​