An Ordinal inscription, what is it?
An ordinal inscription is simply the process of taking some data and writing to onto a Satoshi thus making this Satoshi unique. Note: a Satoshi is the smallest fraction of a single Bitcoin, each Bitcoin contains 100,000,000 Satoshi’s
Normally each Satoshi is pretty much identical to the next, similar to each dollar note being identical to the next. BUT by adding data to a Satoshi it’s like having someone famous like Elon Musk signing a dollar note, it’s still technically worth $1 but a fan of Elons would pay a lot more for it as it’s kind of unique.
In many ways Bitcoin Ordinals are better described as digital artifacts rather than Bitcoin NFTs.
SegWit and Taproot — Partners in crime
First, you need to know about SegWit and Taproot, two upgrades that made Bitcoin more flexible and efficient. SegWit, which happened in 2017, this upgrade made more room in each block by moving witness data, that was consuming up to 75% of block space, outside of the main transaction. And allowed to 4MB of data to be stored (1mb in the Tx and 3mb in the witness data). Taproot, which came out in 2021, and made it easier to use the witness with less technical hurdles.
What they are and are not:
Key take away: Data is stored on chain and not smart contracts:
- On-chain data storage Dirty little security time… Ethereum and other blockchain networks store NFT data off chain. (Shocker!) A Ethereum NFT is actually just a link as a piece of metadata to an (usually) immutable data store (usually a content based storage mechanism like IPFS store) where the data actually lives.
Bitcoin Ordinal data is stored 100% on the Bitcoin blockchain. No links off some place with the file eg. picture) being held separately.
- Not smart contracts Put simply Bitcoin Ordinal inscriptions are not smart contract they are simply files stored on the blockchain. They are not smarts contracts, they are not automated or self-executing code that that holds the agreement between two parties. They are just files stored on chain in bitcoin
Love it or hate it?
Pros: Bitcoin Ordinals, using the bitcoin network, are an example of how the protocol can be used to expand Bitcoin’s use beyond solely financial transactions thus broadening the use case for this technology and network.
Cons: Ordinals inscribed with data use greater block space than just moving bitcoin about, this can be thought of by some more “Bitcoin pure” people as inefficiently and will lead to increased Bitcoin transaction fees (paid to miners) and slower transaction times for all users on the network.
So.....
Love or hate them Bitcoin Ordinals have introduced a fascinating new use case for the Bitcoin network, transforming Satoshis into unique digital artifacts by inscribing data onto them. What most can agree on is that Bitcoin and the Bitcoin network continues to evolve, it’ll be interesting to see what other innovative applications will emerge from the Bitcoin network.