Ordinals NFT: A Comprehensive Guide on Bitcoin NFTs

Ordinals NFT is the newest development in the ever-evolving landscape of non-fungible tokens (NFTs) within the Bitcoin blockchain ecosystem.

Launched on the Bitcoin mainnet on January 20, 2023, by developer Casey Rodarmor, Ordinals NFT has gained significant traction, with more than 200,000 of these NFTs minted since their inception. But what makes these NFTs unique, and how do they contribute to the existing Bitcoin-based NFT architecture?

Ordinals NFT
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Understanding Ordinal Inscriptions

Ordinals NFT refers to a unique way of creating Bitcoin NFTs.

Unlike their predecessors, these NFTs are completely native to the Bitcoin blockchain, eliminating the need for additional layers for their operation.

Ordinals NFT leverages the concept of ‘ordinal theory,’ enabling each individual Bitcoin satoshi to have a unique number, thus creating a non-fungible asset that is fully compatible with the Bitcoin protocol.

To comprehend the significance of this development, we need to delve into the history of Ordinals NFT. Of course, it can also be useful to know what a non-fungible token is.

The Evolution of Ordinals NFT

The concept of Ordinals NFT wasn’t born overnight. It was a gradual process that became possible with significant updates to the Bitcoin Protocol – Segregated Witness (SegWit) and Taproot in 2017 and 2021, respectively.

These updates, while not specifically designed for NFT enablement, inadvertently created the perfect environment for Ordinals NFT to thrive.

Segregated Witness (SegWit)

Implemented in 2017, SegWit led to a soft fork of the Bitcoin blockchain. This update enabled the segregation of a Bitcoin transaction into two sections, introducing the ‘witness data’ section that allowed for the transmission of arbitrary data.

This development was a stepping stone for Ordinals NFT as it expanded the limits of arbitrary data inclusion in a transaction.


The Taproot upgrade of 2021 was instrumental in improving Bitcoin’s privacy, scalability, and security. More significantly for Ordinals NFT, it created a simpler system for storing arbitrary witness data and eased the restrictions on the volume of arbitrary data that could be integrated into a Bitcoin transaction.

This update paved the way for ‘ord’ standard creation and led to the possibility of storing diverse media types on-chain, thereby providing the backbone for Ordinals NFT.

how to create nfts
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How Do Bitcoin NFTs Work?

To fully grasp the mechanics of Ordinals NFT, we need to differentiate between two key terms: ‘ordinals’ and ‘inscriptions’.

In essence, ‘ordinals’ establish the ‘non-fungible’ nature necessary to generate NFTs, while ‘inscriptions’ are the content within the Ordinals NFT – the image, text, video, or any other arbitrary data that we typically associate with an NFT.

Ordinal Theory as TokenID

In the context of Bitcoin, which is fungible by nature, the ordinal theory provides a system to number each satoshi uniquely, thus generating a unique ID for every single satoshi in the Bitcoin blockchain.

This system of assigning unique numbers to individual satoshis is preserved through a first-in, first-out method based on the order of transactions.

Inscriptions as Metadata

In contrast to non-Bitcoin blockchains, Ordinals NFT doesn’t have a designated spot for metadata. Instead, the metadata is embedded within the transaction’s witness data, which is also referred to as the ‘inscription’.

To create an Ordinals NFT, users send a transaction of a single satoshi to a Taproot-compatible wallet and include the desired metadata as part of the transaction. We can say that this is a way of minting this particular type of NFT.

why are NFT so expensive

Bitcoin Ordinals vs. Standard NFTs

The core difference between Bitcoin Ordinals and traditional NFTs is their inherent fluidity, stemming from several unique characteristics.

Here is a more in-depth comparison.

Fluidity and Ownership

Unlike standard NFTs, Ordinals can switch between being fungible or non-fungible depending on the owner’s recognition and preference.

If the owner doesn’t attach any significance to the ordinal or the data linked to it, it can be treated like any other Bitcoin, maintaining its fungibility.

This versatility sets Ordinals apart from conventional NFTs, which remain non-fungible regardless of the owner’s viewpoint.

Inherent Characteristics

Standard NFTs typically derive their value from being associated with a particular piece of data or content, such as artwork or digital assets. Sometimes figuring out why NFTs are so expensive isn’t easy. These NFTs are permanently non-fungible due to the specific data tied to them.

On the other hand, Ordinals have an arbitrary numbering system attached to each individual satoshi. Even though the data or content can be inscribed on an Ordinal, the Ordinal itself remains inherently fungible due to its nature as a Bitcoin satoshi.

Protocol Acknowledgement

Standard NFTs are officially recognized by the blockchain protocols they are built upon. For instance, Ethereum’s ERC-721 and ERC-1155 standards formalize the creation and handling of NFTs.

In contrast, the Bitcoin protocol does not formally recognize Ordinals. The ordinal system is an agreed-upon standard within a community of users, making it more of a social convention than a protocol mandate.


Ordinals can be transferred like regular Bitcoin without considering the attached ordinal or data, providing a level of flexibility that standard NFTs do not possess. Once an NFT is created on most blockchains, it remains an NFT and cannot be transferred or spent as a standard cryptocurrency token.

It will be interesting to see how NFT marketplaces will handle this.

Platform Dependence

Ordinals are native to the Bitcoin blockchain, providing an entirely Bitcoin-dependent solution. They do not require additional layers or platforms for their creation or exchange. On the other hand, standard NFTs often rely on secondary platforms or layers atop the base blockchain, such as Ethereum’s various token standards and the related decentralized marketplaces.

In summary, the fluidity of Ordinals, rooted in their nature as Bitcoin satoshis, their community-driven recognition, and their Bitcoin-native existence, makes them a unique proposition in the realm of NFTs.

what is minting NFT
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The Debate Surrounding Ordinals NFT

The advent of Ordinals has stimulated fervent discussions within the Bitcoin community. Some members argue that Bitcoin should be limited to secure financial transactions, citing concerns about the potential overloading of Bitcoin’s blockspace and the resultant increase in transaction fees. Conversely, others are enthusiastic about the cultural and memetic value Ordinals NFT can bring to the Bitcoin blockchain, as well as the expansion of Bitcoin’s immutable, decentralized database beyond financial transactions.

As the ability to create Ordinal inscriptions is currently valid within the Bitcoin software, the future of Ordinals NFT ultimately lies in the hands of the Bitcoin community.

Future of Ordinals NFT

While it is still early to predict the long-term impact of Ordinals NFT, it’s clear that they have already started transforming the Bitcoin NFT landscape. By introducing a native way to create NFTs on the Bitcoin blockchain, Ordinals NFT potentially ushers in a new era of decentralized art and collectibles.

Furthermore, the emergence of Ordinals NFT could significantly boost Bitcoin’s blockchain use cases. With the ability to attach arbitrary data to individual satoshis, Bitcoin could potentially become a platform not only for financial transactions but also for a wide range of applications including decentralized digital art, collectibles, in-game assets, and more.

Challenges and Limitations of Ordinals NFT

While Ordinals NFT brings innovation and adds value to the Bitcoin ecosystem, it’s worth noting that there are challenges and limitations.

The fungibility of Ordinals, for example, could become a double-edged sword. On the one hand, it offers flexibility as these tokens can be used as regular Bitcoin. On the other hand, it could lead to loss or destruction of an Ordinal NFT if a user unknowingly spends the satoshi attached to the NFT.

Additionally, creating an Ordinals NFT can be technically complex due to the need to use a Taproot-compatible wallet and to handle witness data. Although tools are being developed to simplify this process, it still represents a barrier for non-technical users.

Finally, there is the ongoing debate within the Bitcoin community about whether the Bitcoin blockchain should be used for more than secure financial transactions. Critics argue that the creation of Ordinals NFT could increase transaction fees and bloat the blockchain, straying from Bitcoin’s original purpose. However, proponents of Ordinals NFT see it as a valuable expansion of Bitcoin’s capabilities, bringing cultural and memetic value to the blockchain.

NFT ideas
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Ordinals NFT represents a new frontier in the world of Bitcoin NFTs. By providing a native, layer-less way to create NFTs on the Bitcoin blockchain, they open up a plethora of opportunities for artists, developers, and enthusiasts alike.

However, like any technological innovation, they come with their own set of challenges and debates. As the Bitcoin community navigates these issues, it will be interesting to observe how the landscape of Ordinals NFT continues to evolve.