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Ordinal theory is a methodology for individually identifying (via a serial number), and tracking each individual satoshi throughout the Bitcoin coin supply. The satoshi is the smallest unit of account within the Bitcoin blockchain, equal to 0.00000001 BTC, or one-one-hundred-millionth of a bitcoin
Ordinal Theory is a theoretical concept and methodology overlaid into Bitcoin UTXO set at the social layer. It has no on-chain footprint.
In Aug 2017, Segwit upgrade introduced a split data structure for Bitcoin transactions which acted to both improve transaction data efficiency, and increased the design space for Bitcoin scripts
In Nov 2021, the Taproot soft fork was activated, which removed several SegWit guardrails that had imposed a constraint on the maximum per-transaction witness data footprint. This led to the introduction of inscriptions.
In simpler terms, this is the method to insert images, audio files, and even software into a portion of a transaction. These Inscriptions are best described as digital artifacts, not NFTs per se. NFTs found on Ethereum or Solana are a unique token which contains a reference pointer to the target file, which is hosted elsewhere
However, Inscriptions on the other hand actually contain the raw file data, written directly into the Bitcoin blockchain, making them somewhat unique in character. Ordinals have seen a steady rise in popularity recently, with some even calling it a direct replacement for Ethereum and Solana NFTs. There are already two marketplace ORDX and ORDSWAP which are currently live now where you can buy/sell inscriptions or create an inscription by paying BTC.
Inscription has seen an insurmountable growth in recent days. According to @dataalways in Dune Analytics, the cumulative count of ordinals at the beginning of the month was just 675 and have seen a meteoric rise to 163898 inscriptions as of today.
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<source: Dune>
A jump in Bitcoin activity. The average transaction fees on the Bitcoin blockchain are increasing. BTC started the year with $0.629 as the average transaction fee and grew significantly by 158%, because of increase in inscriptions and stood at $1.62 as of 22nd February.
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<source: Into The Block>
Gamma.io provides the portal where people come together to create and collect inscriptions. Hero systems provides Developer tools that bring Web3 to Bitcoin recently announced that it is rolling out support for Odinals on its Hiro Wallet.
Xverse, a Bitcoin-based web wallet, also launched support for Bitcoin NFTs. Other new marketplaces such as ordex, order swap has been launched. This could have a direct impact on BTC prices and could lead to a thriving community.
These NFTs are fully stored on-chain on the Bitcoin network, unlike the majority of NFTs on other smart contract chains with image data typically stored off-chain on IPFS for scalability reasons.
One of their major aspects is that they are cheaper. According to Eric Wall | Taproot Wizard #2, A byte of CALLDATA in ETH L1 is 16 gas. 360kb = 5,760,000 gas. Current gas cost is 15 gwei. 5,760,000 * 15 = 86,400,000 gwei = 0.0864 ETH = 140 bucks compared to $20 for BTC ordinals vs $140, 7x difference
On Feb. 18, an Australian software engineer by the name of Anthony Guerrera posted a repository to GitHub that forked the Bitcoin Ordinals protocol to Litecoin. This allowed for nonfungible token (NFT)-like assets on the Litecoin network in much the same way it had made it to Bitcoin earlier in the year. Although as of now this could only work in LTC apart from bitcoin network as they have its soft forks of the SegWit and Taproot technology, there are possibilities where this could be developed for other blockchains.
If this becomes successful, other POW blockchains could fork inscriptions and have their own NFTs that could create a snowball effect with multiple marketplaces and developer tools being built for their respective ecosystem.
BTC.US provides crypto domains with .BTC ending. They are created on the Stacks blockchain which is secured by Bitcoin. With rising interest for ordinals, we could see a surge in .btc domains.
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<source: coingecko>
The Stacks chain (a L2 for BTC network) connects to the Bitcoin network through a Proof of Transfer consensus algorithm. Stacks native STX token also surged as Ordinals inscriptions revives interest in the Bitcoin NFT space. In a span of just 2 weeks, the price skyrocketed from ₹26 (8th Feb) to ₹ 67.42 as of today.
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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.