Yuga Labs held its TwelveFold auction in early March, launching the company’s first Bitcoin-based non-fungible token (NFT) collection with Ordinals inscriptions. According to Yuga Labs, 3,246 total bidders generated 735.7 BTC, which is about $17.8 million at the time of writing, establishing the auction as one of the biggest NFT events of all time.
And at the center of the action: Web3 wallets.
The Twelvefold auction is just one example of how Ordinals have encouraged crypto wallets and, in particular, Bitcoin-based wallets, to expand their use cases. After all, how will the 288 bid winners store their new NFTs? With wallets.
Let’s dive more into how they work.
How do wallets work?
Cryptocurrency wallets are digital versions of your wallet used to store cryptocurrency. They primarily come in two forms: software or hardware, and they have a public address for receiving virtual assets. Owners have private keys for accessing and managing their assets.
Software wallets store cryptocurrencies on an internet-connected device while their hardware counterparts keep a user’s cryptocurrency offline.
Ultimately, users must also decide between a custodial or non-custodial wallet. As their name implies, this determines whether a user has sole control over their private keys, or whether a users' keys are controlled by another party.
Why Bitcoin Ordinals wallets are essential
Wallets are the biggest gateways for people who want access to cryptocurrencies. Given the role they play in providing entry into the digital asset market, it is only natural that they have also become prime gateways for Ordinals.
That's why the biggest BTC wallets moved quickly to include Ordinals support shortly after the Ordinals protocol launched on mainnet.
As a reminder, the protocol was developed by software engineer Casey Rodarmor and refers to ascribing a number to each satoshi (the smallest unit of a bitcoin) on the Bitcoin blockchain. Ordinals inscriptions on the Bitcoin blockchain (inscribing satoshis with content to make digital artifacts) really allowed Ordinal NFTs to take off and, subsequently, motivated multiple parties to create the best Bitcoin Ordinals wallet with which they can interact with marketplaces.
However, all wallets that wanted to offer an Ordinals-related service needed to have Taproot support. That's because two major upgrades made the existence of Ordinals possible.
One was the Taproot upgrade that occurred in 2021. The Taproot upgrade combines multiple signatures and transactions together in batches, which makes it faster and easier to verify Bitcoin transactions. It scrambles transactions with multiple signatures together, which improves privacy on the network by obscuring transactions. The second was SegWit, which enabled faster, more efficient transactions by moving some data from each transaction to be outside of the main blockchain and allowing more transactions per block. One of its most notable features was also increasing the Bitcoin block capacity to 4MB.
From Xverse Wallet to Hiro Wallet and more: a look at Bitcoin Ordinals wallets
Sparrow was the original wallet to support Ordinals as it had Taproot support to begin with. But now, Sparrow is far from being the only one to help users store and manage Bitcoin Ordinals.
It didn't take long for other Bitcoin wallets to integrate Taproot support to begin offering Ordinals support. Let's look at three wallets that have been among the most prominent.
Currently, the Xverse wallet is one of the most advanced wallets with Ordinals support. When Xverse launched Ordinals support mid-February, they emphasized that their wallet removed the need for users to run a full Bitcoin node. Instead, users just needed to purchase bitcoin to pay a transaction fee, and their inscriptions would be made via Gamma. This gave users a beginner-friendly approach to storing inscriptions and satoshi.
The Hiro wallet also offered explicit support for Ordinals inscriptions shortly after the protocol's mainnet launch. Users can inscribe an Ordinal via Gamma, OrdinalsBot, and others while also storing as many inscriptions as they'd like in the wallet's collectibles gallery, where they can also view their collection of NFTs and Ordinal inscriptions. The team has also added the ability for users to send inscriptions to others, as well as the ability for them to trade their Bitcoin NFTs on marketplaces like OpenOrdex.
And of course, there is Ordinals Wallet, which was designed specifically to support inscriptions. The wallet gives people a way to manage, store, access and view their digital assets from a software app. However, some users have criticized the wallet as of late, pointing out that in their experience, minting NFTs using the Ordinals Wallet involves sending money directly to the company and waiting several days before creating the NFT.
Looking to the future
The constant innovation we've seen with Ordinals is yet another example of why Web3 is exciting. While wallets have already played a key role in utilizing Ordinals to facilitate the Bitcoin NFT marketplace, their teams are still looking to help users find even more creative – and easier – ways to buy and sell Ordinals.
From offering first-class support for Ordinals to making sure that users can create Bitcoin Ordinals NFT inscriptions without running a full Bitcoin node, wallet apps have contributed to the wider NFT ecosystem via the protocol.
So what’s next?
Well, not only can you expect more wallets to build on top of already existing Bitcoin Ordinals services, you can also count on Ordinals to continue to change how we're interacting with the Bitcoin blockchain beyond NFTs on Bitcoin. If anything, the protocol has already helped the Bitcoin chain realize a lot of its potential that hadn't previously been possible due to limitations with transaction sizes and speed.
As more and more builders continue to pool their resources into exploring the capabilities of Ordinals, we are sure to see even more developments in this space.