Jamil Dhanani is a co-founder of Gamma.io, a leading Bitcoin NFT marketplace that also boasts an Ordinals marketplace.
The past two months have been a turning point for Bitcoin, with a level of excitement and innovation not seen in several years — all catalyzed by a recent innovation called Ordinals. It’s a way of tracking and putting data on individual units of Bitcoin, allowing you to put digital assets directly on the Bitcoin blockchain.
Inscriptions represent a significant innovation in the world of blockchain and digital assets, allowing for the creation of Bitcoin-native digital artifacts without the need for a sidechain or separate cryptocurrencies. Inscriptions imbue each satoshi with unique, immutable content that can be tracked, transferred, and traded as one-of-a-kind digital assets.
Since Casey Rodarmor developed the Ordinals Protocol last year, we’ve seen inscriptions capture the imagination of thousands of BTC users, with over 800,000 inscriptions made in just the first few months of 2023.
Ordinals also open up the opportunity for Bitcoin to become a layer for web3; in the past, blockchains such as Ethereum, Stacks and many others have brought smart contract functionality, non-fungible tokens (NFTs), DeFi and decentralized apps to the blockchain. Ordinals allow for assets to be represented directly on the Bitcoin base layer, enabling many of the use cases we’ve seen on other platforms to be done directly on Bitcoin.
How Bitcoin Ordinals Took Over the Space
As soon as the Ordinals protocol was released, it captured the attention and imagination of thousands of Bitcoin users. Unlike Ethereum NFTs, with Ordinals, assets can be represented directly on the Bitcoin base layer, without the need for a separate sidechain or token. This means that assets can be created, transferred, and managed more seamlessly within the Bitcoin network, using existing Bitcoin infrastructure. The Bitcoin Taproot upgrade pushed this even further, allowing for larger assets to be inscribed directly on Bitcoin.
As the first and largest blockchain network, Bitcoin has a proven track record of security and reliability, with a robust mining infrastructure and a decentralized network of nodes. This makes it much more difficult for any individual or group to compromise the integrity of the Bitcoin network, compared to the more centralized governance model of Ethereum. People trust Bitcoin as a store of value for their non-fungible assets, just as they do their fungible, monetary assets.
It was only a matter of a few weeks before collections were launched on the network, compatible wallets were developed, and marketplaces such as Gamma started supporting Ordinals, pushing Bitcoin infrastructure forward.
As more artists and collectors adopt Ordinals, it has the potential to become the primary way to store high-value digital assets, unlocking new possibilities for creativity, ownership, and value transfer in the world of digital art and collectibles.
Ordinals Inscriptions Use Cases
Inscriptions and Ethereum NFTs both represent unique, one-of-a-kind digital assets that can be transferred and traded on their respective blockchain networks. However, there are several key differences between the two — making inscriptions more than just “Bitcoin NFTs”.
One of the most significant differences is the underlying technology used to create and manage these digital assets. Inscriptions are created and managed entirely on the Bitcoin network without the need for any other blockchain technology or infrastructure. Another difference is the way that these digital assets are serialized and stored on their respective networks. Inscriptions are serialized directly in Bitcoin Script, on the Bitcoin blockchain, which has few restrictions on its content and are relatively economical to store. Ethereum NFTs, on the other hand, are stored as smart contracts on the Ethereum network, which can be more complex and expensive to create and maintain.
In addition, inscriptions offer greater flexibility and customization options compared to Ethereum NFTs. The protocol allows for the creation of more complex and customizable content types, and the ability to inscribe satoshis with arbitrary content means that inscriptions can be used for a wide range of digital assets. This may seem surprising, considering the intricate and programmable nature of Ethereum smart contracts. Nonetheless, we have observed that there is a much wider range of content types being inscribed on Bitcoin, highlighting the versatility of ordinals as a tool for asset creation and management on the Bitcoin network.
Overall, while both inscriptions and Ethereum NFTs represent innovative approaches to creating and managing digital assets, inscriptions offer a number of advantages over Ethereum NFTs, including their integration into the Bitcoin network, and greater flexibility and customization options.
How Ordinal Inscriptions Will Shape the Future of Web3
Bitcoin’s core functionality allows for the flexible and secure management of fungible assets. Ordinal inscriptions add new capabilities to the chain and enhance its functionality beyond that, to non-fungible assets as well.
Ordinals have changed the ecosystem in several different ways already, contributing to both the market for web3 assets, and to the development of Bitcoin as a whole.
Ordinals offer artists and creators a way to store their work on the most secure and decentralized blockchain, while simultaneously contributing to the security and incentives of the Bitcoin network. Inscriptions have contributed to the increase in transaction fees and block size, incentivizing miners to secure the network. It is also possible more and more users will join the network and run nodes, making the Bitcoin network more sustainable in the future.
We believe Ordinals will help promote mass adoption of Bitcoin, and bring more value to the ecosystem. We see a future where digital assets on the Bitcoin chain will become more valuable than NFTs on other chains, and where the tools that are being built will enable a new generation of Bitcoin dApps and infrastructure. Bitcoin’s success is fundamental to the success of Layer 2 chains such as Stacks, and high demand will make for a stronger case for scaling layers, leading to increased adoption.
In just a few weeks, we’ve already seen thousands of artists and collectors joining the movement, inscribing their work on Bitcoin. Artists and creators are embracing this technology as a means to preserve their work and ensure its longevity, realizing the value in Bitcoin as the home for their work. Bitcoin wallets such as Hiro wallet and Xverse, and NFT marketplaces such as Gamma.io, have worked to support this functionality, at a pace we hadn’t seen in years. And it’s only the beginning.
In the upcoming weeks and months, excitement around Ordinals will continue, being the primary topic at events in New York and Miami. Gamma is sponsoring an exhibition at NFT.NYC, where we’ll be featured at the Ordinals panel hosted by Trust Machines. In Miami, Gamma, alongside Xverse Wallet, is hosting a dedicated space for showcasing the work of renowned visual artists who utilize Ordinals.
As we keep moving forward with the ethos of decentralization, and working toward a trustless world, the core values of Bitcoin will spread outside the walls of the crypto space. Ordinals have already had a significant impact on Bitcoin’s development, and we’re excited to see how it can continue to push the boundaries of digital ownership and digital assets, for the whole world.
For more on how Bitcoin Ordinals work and their impact on the Bitcoin community, you can also explore more of our Trust Machines 'Not Your Ordinary NFTs: An Exploration of Bitcoin Ordinals' series. We dive into how Ordinal inscriptions differ from traditional NFTs, how Ordinals wallets have changed since the protocol's inception, and how to inscribe your own Ordinals on-chain.
Our series also illustrates how Ordinals have impacted discussions about the Bitcoin ecosystem's future, including the Bitcoin block space debate and how Ordinals could impact the next Bitcoin halving event.
