The latest innovation in Bitcoin is the ability to use it as a platform for non-fungible tokens (NFTs). This new feature has some unexpected side effects, and some are saying Ordinals aren’t a feature, but a bug.
First, some background
When you think of an asset, you probably picture something like a house or a car. You can see it, touch it and feel it. In the crypto world, however, assets aren’t always quite so tangible.
In fact, the term “asset” doesn’t necessarily apply in every situation–and sometimes even when it does apply it doesn’t mean what you might expect. For example: A token might be considered an asset by some people but not others; an NFT can also be considered an asset (or not); even though bitcoin has been around for 10 years now as its own form of currency/currency pair/currency pair with other currencies…it is still being debated whether or not bitcoin should be classified as money at all.
Non-fungible tokens (NFTs) are an exciting new technology that could have enormous implications for the future of digital economies. NFTs are digital assets that remain unique and unalterable, allowing for efficient and secure transactions between peers. Now is the time to be aware of NFTs and their potential benefits, as they are set to revolutionize the way we do business. This article will explore the concept of NFTs and provide an overview of how they work. As you read, be sure to keep an eye out for future developments that could further disrupt the worlds of finance and commerce.
What is a Bitcoin ordinal?
A Bitcoin ordinal is a unique identifier for a bitcoin transaction. It’s used to prevent double spending and it’s also used to create new types of assets, like non-fungible tokens (NFTs).
Ordinals are the reason that you can’t send the same bitcoin twice; they make sure that no one can spend their coins more than once by assigning each transaction an ordinal number. This means that if your wallet software doesn’t support ordinals yet and tries to send your funds twice in quick succession, it will fail because of this error: “The transaction cannot be submitted because its output value exceeds its inputs.”
Side effects of Ordinals
The controversial new project Ordinals, which lets users put NFT-like media assets on the Bitcoin blockchain, has seen surging activity this week. On Thursday, it recorded its largest number of single-day mints yet–but network fees are apparently growing as a result.
According to public blockchain data curated by Dune, more than 1,000 total NFTs have been minted via Ordinals, topping that total on Thursday as 420 new “inscriptions” were made on the blockchain. That’s more than three times the amount of NFTs minted on Bitcoin via the process on Wednesday. This increase in demand of the onchain blockspace has made all transaction fees go up, not just Ordinals, increasing the cost of anyone transaction on the Bitcoin blockchain. At the time of this writing, Bitcoin (BTC) next block transaction fees are around $1.50 per transaction according to BitcoinFees.cash.
It is possible to create your own NFTs in new ways with the help of Bitcoin
Now, you might be thinking, “I want to make my own NFTs! How can I do this?”
Well, it’s not as simple as just buying a piece of art and putting it on the blockchain. You will have to create your own artwork first, which is no small feat by itself. Then you need to take that artwork and turn it into an actual token (NFT). To get started, you will have to run a full node for bitcoin and then run custom software on top of that to update the correct settings so that you can insert NFT transactions into the Bitcoin blockchain.
From the Ordinals website, it says:
Ordinals are a numbering scheme for satoshis that allows tracking and transferring individual sats. These numbers are called ordinal numbers. Satoshis are numbered in the order in which they’re mined, and transferred from transaction inputs to transaction outputs first-in-first-out. Both the numbering scheme and the transfer scheme rely on order, the numbering scheme on the order in which satoshis are mined, and the transfer scheme on the order of transaction inputs and outputs. Thus the name, ordinals.
Working with inscriptions requires a Bitcoin full node, to give you a view of the current state of the Bitcoin blockchain, and a wallet that can create inscriptions and perform sat control when constructing transactions to send inscriptions to another wallet. Bitcoin Core provides both a Bitcoin full node and wallet. However, the Bitcoin Core wallet cannot create inscriptions and does not perform sat control.
I think that this is a really exciting development for the future of digital assets and blockchain technology in general. It’s also important to remember that there are some side effects of Ordinals, so you should be careful when using them if you want your NFTs to stay safe. But if you understand what these side-effects are then they won’t stop you from being able to create new kinds of digital property!