Bitcoin Ordinals Explained

and the Bitcoin and crypto space things move fast there's always some new idea that's catching on like AI or the metaverse or nfts and now it has become Bitcoin ordinals so what exactly are Bitcoin ordinals ordinals are a type of digital asset that exists on the Bitcoin blockchain each ordinal is inscribed on a Satoshi the smallest denomination of a Bitcoin and consists of any type of media but are most commonly images ordinals have been called nfts on bitcoin as they are somewhat similar to nfts on other blockchains ordinals were introduced into the Bitcoin Network in January 2023 and instantly gained a lot of publicity the popularity of nfts has risen a lot over the last several years and the fact that Bitcoin didn't have its own non-fungible tokens was seen as a limitation by some wouldn't also have the goal of filling this Gap but not everyone is happy about their inclusion in the Bitcoin Network ordinals work by inscribing Rich data such as an image onto a single Satoshi each Satoshi has a unique serial number based on when it was mined this means any inscribed Rich data can be transferred to someone by sending the specific Satoshi that it is attached to ordinals are largely possible because of the Taproot upgrade that was implemented onto the Bitcoin Network in November 2021 this soft Fork upgraded several aspects of the Bitcoin Network including its efficiency and privacy it also allowed for data up to four megabytes the maximum possible size of a Bitcoin block to be put onto the blockchain this is important because ordinals are stored directly on the Bitcoin blockchain which means that they are limited by the amount of room on each block while the Taproot upgrade made it possible for ordinals to exist it wasn't an intentional part of the upgrade which technically makes ordinals an exploit of the Taproot upgrade so the real question is are ordinals bad for Bitcoin the debate over ordinals has become extremely heated some think that ordinals are a welcome addition to the Bitcoin Network While others believe that they are an outright attack on it let's take a look at both the pros and cons that they bring to the network first let's look at the pros they are another use case for Bitcoin Originals being on the Bitcoin Network provide another use case for it and therefore make Bitcoin more valuable also provides additional revenue for miners ordinals compete for Block space with traditional Bitcoin transactions this means that the network becomes more congested and therefore the transaction fees increase transaction fees pay miners so they end up making more money and this in turn can't increase the security of the network increased profits for Bitcoin miners could potentially attract more miners to the network therefore enhancing its overall security however there are a lot of negatives first it does make the Bitcoin Network more congested since as we mentioned ordinals compete with other transactions they take up room on the network that could have been used for regular Bitcoin transactions this competition and congestion on the network leads to higher fees these higher fees can make some transactions too expensive to be worth making and could in some ways maybe devalue the original use of the Bitcoin Network which was to make you know transaction monetary transactions with Bitcoin as a currency ordinals also result in Bitcoin having larger blocks with the introduction of ordinals the average block size has increased this will lead to the Bitcoin blockchain growing at a faster rate than initially intended this is notable as it is a very contentious part of the debate on bitcoin scalability if ordinals are an overall good or bad thing really depends on how you look at it on one hand they do increase the incentives for miners as well as add another use case to the network however they can cause transaction fees to Skyrocket and they have little to do with the original intent of the Bitcoin Network so if they are really a good or bad thing is up to the overall Community to decide and while we have mentioned nfts and ordinals are very similar in a lot of ways they aren't exactly the same thing the main difference is that ordinals actually live on the Bitcoin blockchain while nfts don't this means that ordinals forever become a part of the Bitcoin blockchain but nfts usually just point to what is being transferred rather than actually containing it so in that way ordinals are potentially more permanent than nfts ordinals are also different in that they are attached to a Satoshi an actual piece of Bitcoin nfts such as the one on the ethereum Network are tokens this means that they are their own thing on the network and aren't tied to another item like a currency so while the general concepts are the same the way that they are executed is entirely different ordinals on the Bitcoin network has resulted in a lot of interesting things happening on the Bitcoin network over the last few months since they've been introduced so I want to talk about a few of those things and I'm calling this section interesting ordinal Oddities the biggest block ever was mined on the Bitcoin Network and it happened because of an ordinal this ordinal was an image of a wizard called the Taproot Wizard and as a parody of the famous magic internet money wizard beam the transaction was 3.96 megabytes large and was intentionally meant to take up as much of the individual Bitcoin block as possible the total block only contains 63 transactions while the average block has close to 3 000. in order to make sure that this ordinal was recorded on the blockchain ud wertheimer teamed up with Luxor mining pool to put the transaction into a Blog this block made a lot of people who are against ordinals very upset while a lot of people who love ordinals thought it was a cool thing ordinals have also resulted in video games being playable on the Bitcoin Network kind of and yes Doom the famous video game was put on the Bitcoin Network through an ordinal it works by putting the code of the game on the Bitcoin Network through an ordinal and then compiling it in a web browser it is fully playable and I'll put a link to that in the description if you want to try it out the big catch here is that it isn't the original version of Doom instead it is a doom clone that is much smaller in size only around 31 kilobytes and last but certainly not least we have BRC 20 tokens brc20 tokens are another controversial way to use ordinals and are built on top of them they are modeled after ethereum's erc20 tokens hence the name that is very similar brc20 tokens are much less sophisticated than their ethereum counterpart as they only support minting deploying and transferring the tokens popular main coins have been born on the brc20 protocol and have caused major controversy in May 2023 brc20 transactions clogged up the Bitcoin Network resulting in high transaction fees and hundreds of thousands of transactions waiting to be confirmed on the network brc20 renewed both interest and concerned about the existence of ordinal on the Bitcoin blockchain so yeah ordinals are a very interesting concept and a very interesting idea and one of the biggest things that happened on the Bitcoin Network in a long time and definitely one of the most controversial potentially the most controversial since the block size War years ago some people love them some people despise them it seems unlikely that they're gonna be going away anytime soon considering how hard it is to make a change to bitcoin's protocol you have to have a lot of people on board you have to get a bunch of people to implement the code so I just don't know if there's enough support for that right now because there is a lot of support for ordinals even though there's a lot of backlash against them as well so it's likely that ordinals will be sticking around for some time if you like this video then why not go check out my video on five essential things that everyone should know about Bitcoin