Ordinals are Bitcoin NFTs an overview of inscriptions | NFT CULTURE | Web3 Culture NFTs and Crypto Art

by James · February 16, 2023

In February 2022, a proposal was sent to the Bitcoin developer mailing list to bring NFTs to the Bitcoin network. The idea is to assign each Satoshi (a unit of Bitcoin) an ordinary number, which will then be linked to additional information such as text, images, videos and games. This will create digital artifacts, or NFTs, that can be stored on the Bitcoin blockchain.

Table of Contents

💡Key extraction on ordinals and inscriptions for BTC NFTs💡

What is an inscription?
- An inscription is a type of digital asset stored on the Bitcoin blockchain that allows the creation and transfer of unique digital artifacts.
- It differs from traditional tokens as it is stored in the OP_RETURN field of a Bitcoin transaction, which can store a small amount of data.
- Inscriptions make it possible to create unique, non-fungible digital objects that can be used for various purposes such as art, collectibles, and more.
How does this compare to NFTs on Ethereum?
- Inscriptions differ from NFTs on Ethereum in that they are stored entirely on-chain, making them immutable and completely decentralized.
- NFTs on Ethereum, on the other hand, use token standards such as ERC721 or ERC1155 to create collections of tokens, each with a unique tokenID.
- Another difference is that creating or transferring an NFT on Ethereum can result in high transaction costs, while the transaction fee for sending Inscriptions is relatively low due to transaction fee optimizations with Taproot on Bitcoin.
- A potential downside to Inscriptions is that all content stored on the blockchain is permanent, including illegal or distasteful content.
Where can I find inscriptions?
- You can find all the ordinals by going here

What if I want to create ordinals and inscriptions?

Right now, the easiest way we’ve found is a tool called Gamma. You can see the tutorial for creating Gamma BTC NFTs here. Do your own research and take your own risk. This is a tedious but not complicated process. Good luck.

Origins of Ordinals and Bitcoin NFTs

The proposal has received mixed reactions from the crypto community, with some considering it an exciting new use for Bitcoin, while others believe that Bitcoin should remain as a digital cash system and not evolve into anything else. There are also concerns about the potential increase in transaction fees and resource demands on nodes.

The process of creating an NFT starts by creating a Bitcoin transaction that stores the additional information, called an “Inscription”, in one of the output addresses. This data can be text, images, SCG or HTML, and its size is limited only by the block size limit. Unlike traditional Bitcoin transactions that use an OP_RETURN to add extra data, the Ordinal approach stores the metadata in the transaction itself, using the 2021 segwit update that allows up to 3MB of witness data to be stored outside of the 1MB block limit.

To transfer an NFT, it is assigned a sequence number based on the first-in-first-out algorithm and then transferred in a Bitcoin transaction. Not all Ordinals have inscriptions assigned to them, so not all transactions may involve an NFT.

The proposal to bring NFTs to the Bitcoin network has sparked a debate in the crypto community, with some embracing the idea of digital artifacts on the Bitcoin blockchain and others worried about the potential ramifications. The technical process of creating and transferring NFTs involves creating a Bitcoin transaction with additional data, or an inscription, and assigning an ordinary number to each Satoshi involved in the transaction.

That’s great, so what are inscriptions?

In the context of Bitcoin Ordinals, an inscription is the metadata associated with a bitcoin (satoshi) in the form of additional data stored in a Bitcoin transaction. This additional data can be anything from text, images, audio files, HTML or other digital assets, and the size of the inscription is limited by the block size limit. The idea behind Inscriptions is to create non-fungible properties for bitcoin, so that each satoshi can have its own unique digital artifact.

The Inscription data is stored in the raw transaction data and is created by creating a Bitcoin transaction that stores the extra data (the Inscription) in one of the output addresses. The Inscription is created through a two-phase process, with the first phase committing the taproot output to a script containing the Inscription content. This content is serialized in the transaction in a form known as an “envelope”. The second phase involves creating another transaction to reveal the Inscription information, where the output created by the commit transaction is used, revealing the Inscription content on the blockchain.

The sequence number assigned to each satoshi is used to identify and link the inscription to a specific bitcoin, allowing the digital artifact to be transferred along with the bitcoin in a transaction. Not all Ordinals have inscriptions assigned to them, and it is up to users to create and attach inscriptions to bitcoins as they wish.

TLDR: Inscriptions are a new concept in the Bitcoin world that allow users to attach metadata and other digital assets to their bitcoins, creating unique digital artifacts. This opens up new possibilities for Bitcoin to be used in ways that go beyond its original purpose as a digital currency, and has the potential to bring new and exciting use cases to the world of cryptocurrency.

Here is an example of inscription and data

So how does this compare to ethereum NFTs?

Compared to NFTs on Ethereum, the creation and use of inscriptions on Bitcoin is a distinct approach. On Ethereum, NFTs are created using token standards such as ERC721 and ERC1155 and given a unique token ID to identify them, in addition to the account for the collection’s smart contract. The complexity of NFTs can lead to high transaction costs to mint or transfer them on Ethereum. However, with the transaction fee optimization of Taproot on Bitcoin, the cost of sending inscriptions is significantly lower.

Another difference between the two is that all inscriptions are stored directly on the blockchain, making them immutable and completely decentralized. This differs from NFTs on Ethereum where there have been concerns about metadata removal if the centralized storage solution goes offline or if the project manipulates the metadata. Despite the benefits of immutability, this also means that illegal or unwanted content in Inscriptions will remain on-chain forever. There have already been cases of obscene inscriptions and it is only a matter of time before illegal images are added. Sites that help visualize Ordinal data may block these images, but they will still exist on the blockchain. It is worth noting that this problem is not unique to Inscriptions and has been a problem with arbitrary data storage on blockchains since its inception.

Well, what about Stacks the BTC Layer 2 Solution?

Stacks Layer 2 NFTs and Inscriptions both relate to the creation and use of digital assets in a blockchain context. However, they differ in terms of their underlying technology, the way they are made and their functions.

Stacks Layer 2 NFT is built on the Stacks blockchain, which is a Layer 2 scaling solution for the Bitcoin blockchain. This allows NFTs to be created and stored more efficiently and cost-effectively than on the Bitcoin blockchain. Stacks Layer 2 NFTs can be used for a wide range of applications, including digital collectibles, game items, and digital art.

Inscriptions, on the other hand, are digital assets that are stored directly on the Bitcoin blockchain. They use Bitcoin’s scripting language to encode information about the digital artifact, and each inscription is given a unique symbol to refer to it. Unlike NFTs on smart contract blockchains like Ethereum, inscriptions are completely on-chain and therefore immutable and decentralized. However, this also means that their data cannot be edited or deleted, and any distasteful or illegal content stored as an inscription will be on the blockchain forever.

TLDR: Inscriptions are like curiosity cards