Even though the first NFT “Quantum” was created back in 2014, NFT was consistently not widely recognized and used before the ERC-721 standard came out in January 2018. Since then, we have seen a large number of NFT projects, such as Bored Ape Yacht Club (BAYC), Doodles, Azuki, etc., and many more NFT-based GameFi projects have been applied and promoted in the market.
However, while these projects are typically deployed on public chains like Ethereum, BNB Chain, Solana, and have since emerged as public chains built for NFT like Flow, there is one most famous chain that is typically not part of the discussion in the NFT market — the Bitcoin network.
Ordinals: Brings NFT to Bitcoin Network
On January 30 2023, a NFT protocol named Ordinals, created by former Bitcoin Core contributor named Casey Rodarmor, was launched on Bitcoin network. This protocol allows users to explore, transfer, and receive individual satoshis, which may include unique inscripted data such as images and videos. According to Rodarmor, users are able to put content in a Bitcoin transaction and assign it to a satoshi — which is the smallest unit of Bitcoin through the process called inscription. The inscriptions are stored in a Bitcoin transaction’s signature.
According to the documentation, all contents written in”satoshi” can be saved or transferred to other Bitcoin addresses, and the transactions will display the inscriptions on the Bitcoin blockchain, where the Ordinals protocol turns the content into tamper-proof “digital artifact”, allowing users to track, transfer, store, and trade them.
The inscriptions will be minted on the Bitcoin mainnet without the need for sidechains and other tokens — in short, users will be able to insert large amounts of “data/content” into transactions through the Ordinals protocol, including the creation of collectible images on the Bitcoin network.
The Impact of Ordinals
According to the data from a Dune dashboard, the average fee per Bitcoin block and the average size of the blocks have increased since January 30. About 1,400 NFTs are minted daily through Ordinals on the network. Over 9,000 NFTs have been minted since the launch of Ordinals.
The fear of missing out sentiment (FOMO) is also spreading in the community during the heat. The CEO of Forgotten Runes Wizard’s Cult NFT dotta spent 0.2 BTC on an Ordinals’-inscribed Bitcoin Rock on Feburary 1, which later was offered for over 1 BTC. Ordinal Punk was offering 100 units at 0.01 BTC, and the latest sale price reached 1.92 BTC.
Controversy Stirred up in Community
There are currently two voices in the Bitcoin community: some believe that the NFT protocol does more than simply introduce NFT, but can provide more financial use cases for Bitcoin for other needed scenarios.
Others, however, say that NFT deviates from Satoshi Nakamoto’s vision of Bitcoin as a peer-to-peer cash system. Also, the import of NFT will take up block space on the Bitcoin network. Still another segment of Bitcoin NFT opponents argue that the NFT is a privileged status symbol that is typically only available to wealthy investors, and that a significant increase in network fees would inevitably exclude more people from the Bitcoin network, to the detriment of driving crypto adoption.
Future Development of Bitcoin Network
The Ordinals protocol is still in its early days, with lightweight wallet applications, NFT trading markets, and other “infrastructure” still to be built. But the Ordinals NFT project protocol and the high participation in the launch illustrate the number of developers still building on the Bitcoin network. The recently launched decentralized social apps Damus and Amethyst, based on the Nostr protocol, also prove it.
Overall, protocols such as Nostr, Ordinals and others are a positive development for the Bitcoin network, and it is up to the community and users to decide whether BTC will always be a “peer-to-peer electronic currency”, and it is unrealistic to limit Bitcoin use cases. In fact, people have been exploring and experimenting with Bitcoin since its inception, otherwise there wouldn’t be a Layer 2 solution like the Lightning Network — after all, in a decentralized world, nothing is impossible.
