Decoding the Riddle of Bitcoin NFT Ordinals
With the advent of blockchain technology, the revolution in financial transactions has been phenomenal. From decentralized banking to cryptocurrency trading, we have witnessed spectacular advances. Another recent breakthrough was the emergence of non-fungible tokens (NFT), which have been exploited by a large number of people. Bitcoin, the most popular cryptocurrency, is making news again as it has found a new tool with the development of Bitcoin NFT tokens.
What are Bitcoin NFT Ordinals?
Bitcoin has evolved from being a lending and borrowing mechanism to host a number of DeFi protocols in recent years with the advent of Stacks (STX), Wrapped Bitcoin, etc. It has now found another use case to enable for people to create and store digital works of art such as images, audio, text or videos on the Bitcoin blockchain network. This has become possible because of the Ordinals protocol.
As exciting as it sounds, this new evolution has become very popular among the bitcoin community, and more than 100,000 ordinals have already been created.
This has not only increased the block size of Bitcoin, but has also resulted in more than 40 million new people joining the Bitcoin blockchain network. One may wonder how ordinal values differ from the already existing idea of NFTs.
The difference can be easily understood by knowing that bitcoins are quantified in ‘satoshi’ (rate), and ordinals are inscriptions in the form of sound, text, image etc. on the satoshis. Such an inscribed satoshi is termed a Bitcoin NFT ordinal, and these are stored on the Bitcoin chain. NFTs, on the other hand, are digital artworks regulated through smart contracts hosted elsewhere, such as decentralized storage. Also, NFTs have metadata, which allows for modifications and customization in the appearance of the artwork, while ordinals cannot be customized and cannot be changed. Also, one cannot receive royalties on ordinals, unlike NFTs who can earn money from the subsequent sale of the artwork.
Ordinals have also faced criticism from many, as it has resulted in an increased block size for Bitcoin, thus increasing the already massive energy consumption. Although the new technology has mostly received positive confirmation as it has increased the popularity of bitcoin and has also unlocked another potential revenue stream for miners who will get more transaction fees from mining. Thus, we can say that the innovation of ordinals has surely opened a new gateway towards the development of more use cases of cryptocurrency and has increased the popularity of the crypto universe.