Ordinals: the new NFTs on the block(chain) - a beginner's guide

Are you tired of boring digital collectibles? If so, now's your chance to add some pizzazz to your collection with BTC digital artifacts. The world of NFTs became much more interesting with the introduction of ordinal theory — a newly emergent protocol that's creating plenty of buzz in 2023. The concept allows each satoshi, the smallest unit of Bitcoin, to be ranked, ordered, inscribed, and individually transferred. But that's not all. Individual satoshis can also be inscribed with unique, immutable data stored entirely on the blockchain.

Even if a satoshi isn't inscribed, its rarity can still be determined by its ranking within the blockchain. And with the most secure, time-tested, and decentralized blockchain of them all — Bitcoin — keeping these little gems safe, the possibilities for digital treasure are endless.


  • Ordinal theory: Ordinal numbers based on mining and transfer order introduce a unique way to number and track satoshis.

  • Inscription process: Allows for unique, immutable data inscriptions onto individual satoshis, creating digital artifacts similar to NFTs entirely on the Bitcoin blockchain.

  • Recursive inscriptions: Arriving in June 2023, the launch of these tools enabled users to break through data constraints. Now, users can connect multiple data sources and use complex on-chain applications on the Bitcoin network.

  • Market impact: Bitcoin tokens are becoming increasingly popular, exhibiting the potential to contend with Ethereum's NFTs regarding sales and buyer market share.

  • Community divide: The Bitcoin community is split over the impact of ordinals, with debates around their alignment with Satoshi Nakamoto's original vision and concerns over network capacity and transaction fees.

What is ordinal theory?

Ordinal theory is a way of numbering and tracking individual satoshis (the smallest unit of Bitcoin) using a numbering system called ordinal numbers. These numbers are assigned based on the order in which the satoshis are mined and transferred in transactions. Ordinal numbers, such as integer, decimal, degree, and percentile notations, can be represented differently.

One key aspect of ordinal theory is its potential for creating rarity levels for satoshis based on the timing of certain events in the Bitcoin network, such as block mining, difficulty adjustments, and halvings.

These rarity levels are defined as...

  • Common: This applies to any satoshi, not the first sat of its block. These are the most common sats in Bitcoin and can be found in almost every transaction.

  • Uncommon: The first satoshi of each block. These sats are relatively rare since only about 144 new blocks are added to the Bitcoin blockchain daily.

  • Tare: This is the first satoshi of Bitcoin's difficulty adjustment period. It occurs every 2016 blocks, or every two weeks.

  • Epic: The first satoshi of each halving epoch. A halving epoch occurs every 210,000 blocks, or approximately every four years.

  • Legendary: The first satoshi of each cycle. A cycle is a longer term Bitcoin market cycle that spans from one halving to the next.

  • Mythic: The first satoshi of the Genesis block. This is the very first Bitcoin transaction, which was included in the first block of the Bitcoin blockchain. Mythic sats are the rarest of all, occurring only once in the entire history of Bitcoin. On December 14th, 2022, artist and programmer Casey Rodarmor, who launched the Bitcoin ordinals protocol, inscribed pixel art of a skull as the genesis ordinal.

One phrase you may read a lot is 'degree notation'. This refers to a way of representing an ordinal number that makes it easy to see the rarity of a satoshi at a glance. The notation includes block height, difficulty adjustment period, halving epoch, and cycle information.

How do ordinal inscriptions work?

Imagine you have an awesome video you want to share with the world. You can now "inscribe" it onto the Bitcoin blockchain using ordinal inscriptions. This creates a unique digital artifact, like an NFT, but it's entirely built on the Bitcoin network without needing a separate token or sidechain.

Once your digital content is inscribed onto the blockchain, it becomes a permanent record that can't be changed or deleted. This means you can trust that your content is genuine and original, as can anyone who wants to buy or sell it. You can even send it to other Bitcoin addresses like regular Bitcoin transactions.

Inscriptions work based on ordinal theory, where each sat has a specific order and value. This makes sending and receiving inscribed sats possible, but it also means that transactions must be carefully constructed to follow the rules of ordinal theory.

The inscribed content is stored entirely on the blockchain using "taproot script-path spend scripts". It doesn't sound effortless, but it's a way of storing your digital content efficiently and economically. It also means your content can be returned from a web server, like regular web pages, and remixed with other inscriptions to create a new artifact.

You must undergo a two-phase commit/reveal procedure to make an inscription. This means you first create a taproot output that commits to a script containing your inscription content, then spend that output to reveal the content on the blockchain. Next, the content is serialized using "envelopes", which are a way of wrapping up the content and metadata so that other users can easily read it. We'll provide the steps in the next section if you're a programmer, but don't worry if you're not — we've got a solution for you.

How do I create an ordinal inscription?


If you're a no code/low code type of person, a good starting point would be OrdinalBots. This platform does all the programming for you; all you have to bring to the table is your creativity and imagination.


If you're comfortable with coding, explore Ordinals API on GitHub. Hiro creates developer-friendly APIs for Bitcoin, and they have a great dev community.


If coding is a second language to you, and if you understand the rules of the ordinal theory, follow the steps below to immortalize your masterpiece on the Bitcoin blockchain.

  • Choose the content you want to inscribe, such as a video, artwork, or text document.

  • Use an editor or coding tool to create an "envelope" for your content, which wraps up the content and metadata.

  • Create a taproot output using a Bitcoin wallet or software that supports the ordinal protocol. This output commits to the script containing your inscription content. Remember to construct the transaction following the rules of ordinal theory carefully.

  • Broadcast the taproot output to the Bitcoin network, making your inscription "live" on the blockchain.

  • Spend the taproot output to reveal the inscription content on-chain, making it visible to everyone. Again, ensure the transaction follows the rules of ordinal theory.

  • Your inscription is now stored permanently on the blockchain using taproot script-path spend scripts, meaning it can't be altered or deleted.

The launch of recursive inscriptions

June 2023 saw new groundbreaking advancements in the field of inscriptions that have generated a great deal of excitement. One particular innovation that captured widespread attention is the concept of recursive inscriptions. But what exactly are recursive inscriptions?

Recursive inscriptions were launched to address ongoing challenges related to transaction fees and block space limitations. These inscriptions empower on-chain software on the Bitcoin blockchain, enabling developers to create sophisticated applications that can operate entirely within the Bitcoin ecosystem. This is made possible through a technique known as daisy-chaining, where data is interconnected through a series of calls.

Before the introduction of recursive inscriptions, inscriptions in general, could store up to 4MB of data. However, recursive inscriptions go beyond this limitation by allowing developers to establish a network of interconnected data sources.

By extracting and integrating data from existing inscriptions into new ones, recursive inscriptions break free from the rigid 4MB constraint. This breakthrough empowers developers to execute software fully on-chain by linking data through a sequence of calls.

The advent of recursive inscriptions holds immense potential for enhancing interoperability within the Bitcoin network. As this technology is still relatively new, acquiring a comprehensive understanding of recursive inscriptions is crucial before engaging with them.

Could Bitcoin surpass Ethereum NFTs in market dominance?

As of June 2024, the latest statistics from CryptoSlam reveal an interesting dynamic. Although Ethereum leads the way for total NFT sales with a mighty $43.8 billion worth of collectibles sold at the time of writing, Bitcoin has outperformed Ethereum for NFT sales across some recent time periods.

The Ethereum team will likely be carefully watching the rise of Bitcoin ordinals, which has gained significant traction within the buyer and seller community. Although opinions differ in the Bitcoin community about the future of ordinals, Ethereum can't afford to overlook this emerging trend.

On August 1, 2023, more than 21 million Bitcoin ordinals inscriptions were logged, a huge accomplishment for the developers behind it. The team responsible for the Bitcoin ordinals protocol also launched the Open Ordinals Institute. This California-based non-profit funds the chief developers of the ordinals protocol, including the project's lead maintainer, Raph, who's anonymous.

Bitcoin DeFi Projects

With Bitcoin continuing its bullish path in 2024, inscriptions and ordinals have also stepped into the spotlight. Could they be leveraged in some capacity for Bitcoin DeFi projects? Over the years, we've seen a rise in Bitcoin DeFi projects from the Lightning network to wBTC. Some community members are feeling optimistic that inscriptions could be used within the Bitcoin DeFi space.

A divided bitcoin community

The Bitcoin community remains divided on ordinals. While one side welcomes them and believes the protocol will offer more financial use cases for Bitcoin, the other side believes it goes against Satoshi Nakamoto's original vision of Bitcoin as a peer-to-peer cash system. Skeptics of ordinals also believe the rarity structure will continue to take up valuable space on the Bitcoin network and drive up transaction fees. Given the relative infancy of the protocol, if you choose to jump in, we recommend, as always, doing your research before looking for valuable satoshis to stack.

What's new?

The Phantom wallet is now compatible with ordinals, and one highlight is the support for recursive inscriptions, such as those from Gamma. Meanwhile, ledger devices can now be connected to the wallet's mobile app and browser extension. This means users can keep their Bitcoin, ordinals, and BRC-20s in a single account. The Phantom wallet helps to simplify address management. You can enable Native Segwit, Taproot, or both to view detailed ordinals metadata, including information like the sat number and inscription ID.

Meanwhile, major Bitcoin bag holder MicroStrategy has revealed plans to built a decentralized identity service using ordinals inscriptions. Called MicroStrategy Orange, the service will provide trustless and tamper-proof decentralized identities using the Bitcoin network.

The final word

Curious about the latest in digital collectibles? BTC digital artifacts, using ordinal theory, are revolutionizing NFTs. This approach uniquely identifies each satoshi in Bitcoin, allowing for creative inscriptions like artwork or videos to create unique digital treasures. From the numerous kinds of rarity, ranging from common to the unique 'mythic satoshi' from the Genesis block, each has its own distinct value.

The introduction of recursive inscriptions in 2023 expanded the potential for complex on-chain applications. Despite rising market interest, the Bitcoin community is divided on these developments. However, with Phantom Wallet adding recursive inscriptions in 2024, it's opening doors to different communities.

Although many commentators stress the need to balance innovation with concerns over network capacity and Satoshi Nakamoto's original vision, the opportunity from ordinals deserves attention.

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