Inscriptions are the metadata added or “inscribed” onto Bitcoin satoshis (sats), the smallest unit of the Bitcoin currency, which can include information attached to transactions. They exist solely as digital entries or “digital artifacts” on the Bitcoin blockchain, the public ledger of all bitcoin transactions.
Ordinals are the outcome of inscriptions made in Bitcoin transactions, which include inputs and outputs, where the inputs are the addresses from which the Bitcoin is being sent, and the outputs are the addresses to which the Bitcoin is being sent. Inscriptions are limited by block space allotment for each satoshi, with a ceiling of around 4 MB in size.
While satoshis themselves do not inherently have inscriptions, additional data in the form of transaction comments, messages, or assets can be inscribed onto a satoshi. This is what makes an inscription. The inscription can contain any information that the sender wishes to attach to the transaction so long as it satisfies the limit imposed on block size.
How Can Inscriptions be Used?
Inscriptions can be used for a variety of purposes, such as including context for a transaction, a payment reference or invoice number, providing a message to the recipient, or attaching a document or file to the transaction as an NFT. The versatility of inscribing or generating digital artifacts on Bitcoin satoshis is what adds to the functionality and usefulness of Ordinals.
Inscription Related Terms
BIP - Bitcoin Improvement Proposal.
Ordinals - The end result of a paired identifier inscribed along with a digital artifact on a Bitcoin Satoshi.
Ordinal Theory - Assigns sats with a numismatic value, allowing them to be collected and traded as objects like non-fungible tokens (NFTs).
Digital Artifacts - Essentially inscriptions, which can be NFTs. Immutable, on-chain, unrestricted digital artifacts are NFTs.
Satoshis (sats) - Smallest unit used in measuring Bitcoin, named after the anonymous creator of Bitcoin.