Bitcoin Ordinal NFTs: New Innovation or Just a Fad?
Buzz around Bitcoin Ordinal NFTs has been starting to spread recently as more and more people from the NFT community begin looking at it more closely with interest. Unlike most NFTs that reside on the Ethereum and Polygon blockchains, ordinal NFTs are a unique type of inscription that is inscribed into the Bitcoin network; and while they don’t entirely operate the same way as their web3 counterparts, still offer an interesting path towards innovation in the blockchain industry.
What are Ordinal NFTs?
To start, ordinal NFTs are native to the Bitcoin network and are not supported by unique token standards like 751 or 1155 on the Ethereum blockchain. Instead, they are inscriptions that are inscribed on individual sats (the atomic unit for bitcoin). Essentially, it is like etching symbols into a metal coin or drawing an image on a dollar.
One fundamental difference is that ordinal NFTs aren’t minted the same way as an NFT collection on Ethereum which creates an entirely new set of tokens for the blockchain to host. Miners are still necessary to mint bitcoin.
Instead, node operators are the ones that are given the ability to transcribe digital information onto sats because they can broadcast the inscription across the entire network for a nominal gas fee. However, that is one of the older methods for creating ordinal NFTs. As blockchain development has expanded, newer options such as Gamma allow non-node operators to create inscriptions as well.
Further, because ordinal NFTs are such a new concept right now, there aren’t very many marketplaces to trade them. So, it’s hard to measure how interested the NFT community is seeing as the demand for NFTs has significantly dropped while also residing on a separate network.
Examples of on-chain messages
Interestingly, ordinal NFTs are not the first thing to be transferred on the Bitcoin network that is not currency. Using the blockchain for more than transferring bitcoin has been going on for some time now.
Julian Assange, the founder of WikiLeaks, has been known to use the Bitcoin network in the past to send messages and prove that he is alive. In 2017, he made headlines when he left a message on the Bitcoin network, which led to even newer headlines in 2023 when a 7zip file named Julianassange.txt was discovered on the network.
While these are not the same as an ordinal NFT, it shows that there is still some flexibility that can be executed on the Bitcoin network, which could spur innovation going forward as more people continue placing their trust in bitcoin following the crash of multiple banks in 2023 including Silicon Valley Bank and Silvergate.
Are ordinal NFTs fungible?
The primary question on most people’s minds in the NFT community is: how valuable are ordinal NFTs? They still lack utilities and are not interoperable with other networks that are more connected to web3.
However, the bigger question should be focused on their fungibility. As mentioned earlier, ordinal NFTs are not entirely new sets of tokens added to the network via smart contracts. They are sats that have already been mined and given additional digital information.
Although the sats are unique by carrying more data, they still act the same as every other sat on the network and could be difficult to manage. If the NFT community wants to explore ordinal NFTs more seriously, it will have to develop a system that can distinguish between ordinal NFTs and regular sats.
