Bitcoin NFTs | What You Should Know
Ordinals digital artifacts and NFTs on Bitcoin have been polarizing within both the NFT and crypto communities. As more collectors seek to gain exposure and inscribers flock to Bitcoin to make their mark, many are wondering: what are Ordinals, the latest Bitcoin NFTs, and where did they come from?
Since they came around the NFT scene in January, the cumulative number of Ordinals inscriptions is skyrocketing, and they are driving massive demand for Bitcoin block space. It’s early days for this iteration of Bitcoin NFTs, and buying, selling, and creating them is currently a very manual and difficult process.
Will the 2023 Ordinals craze be just the beginning of a massive Bitcoin NFT market? Or instead, will it be remembered as a blip on the radar in a world dominated by ETH NFT volume?
Learn more about Ordinals, how to buy Bitcoin NFTs, nuances of Ordinals, and top Ordinals collections in our guide below.
What Are Ordinals?
Ordinals have stolen the show of late, but Bitcoin does have a history with NFTs.
History of NFTs on Bitcoin
The history of NFTs on Bitcoin is an interesting one. Counterparty, founded in 2014, is an "L2 solution" for Bitcoin that was built on top of the blockchain. It provides additional functionality to mint, buy, sell, and transfer digital assets.
Counterparty helped produce 300 Rare Pepe cards in Sep. 2016, horing the supposed Bitcoin creator, Satoshi Nakamoto. Honered as the "first" Bitcoin NFT, Rare Pepes have traded hands for as much as $500,000.
But Bitcoin NFTs were thought of way earlier than that– Hal Finney first conceived of the idea as “crypto trading cards” in 1993.
Rare Pepe Cards
Ordinals
The next wave of Bitcoin NFTs is being led by Ordinals. Ordinals were introduced by founder Casey Rodarmor on Jan. 21, 2023. Ordinals uses “inscriptions” to create on-chain NFTs on Bitcoin.
The Ordinals docs explain, “Inscribing is done by sending the satoshi to be inscribed in a transaction that reveals the inscription content on-chain. This content is then inextricably linked to that satoshi, turning it into an immutable digital artifact that can be tracked, transferred, hoarded, bought, sold, lost, and rediscovered.”
Simply put, users create NFTs on Bitcoin by etching or "inscribing" text, images, audio, applications, or video on a single unit of Bitcoin - called a satoshi. Each inscription happens in order, hence the name "Ordinals."
Ordinals were made possible by the Taproot upgrade to Bitcoin. This upgrade allowed much more data to be processed in every transaction, which opened up the door for JPEGs on the blockchain itself, rather than on another layer of it.
The Ordinals inscriptions are actually called “digital artifacts,” but we’ll call them NFTs for the purpose of this article. On the Ordinals website, it states: “The definition of a digital artifact is intended to reflect what NFTs should be, sometimes are, and what inscriptions always are, by their very nature.”
Instead of an Ordinals NFT being “minted” by the collector (like on ETH), it is “inscribed” by the project founder. So when “minting” an Oridinals NFT is referenced, it normally means buying an already-inscribed NFT from a founder.
The gold rush for early inscription Ordinals escalated as the number neared 10,000 - the size of most notable ETH NFT collections. Of course, the 10,000th inscription was just the number 69, in true degenerate fashion. At the time of this post, there are 5,000-10,000 Ordinals inscribed per day, and the pace is picking up, as more people discover how to inscribe.
How To Inscribe a Bitcoin NFT
There are several ways to inscribe an Ordinal and get yourself a Bitcoin NFT. More technical users can set up their own Bitcoin Node (advanced, takes about 3 days, guide here) and inscribe. Or, you can use a website like OrdinalsBot or Gamma.
The latter option costs about $25-150 per inscription, with the completion time varying depending on the Bitcoin network.
How To Buy and Sell Bitcoin NFTs
At the time of this post, there is no marketplace for Ordinals. Every Bitcoin NFT trade is performed “over-the-counter” (OTC), meaning done directly between people instead of using a UI. Part of the reason for this is that there are no smart contracts on Bitcoin like you would find on Ethereum. Many Ordinals NFTs are auctioned off in groups or one by one, and other collections are allocated on a first-come-first-serve or reserve basis.
Punk3700 created a “first draft” of an Ordinals marketplace, but keep in mind it is early.
It’s important to remember that participants in this ecosystem are at high risk of getting scammed during a trade. This is due to the fact that buyer and seller need to trust each other, or use a trusted middleman to facilitate transactions in escrow.
Bitcoin NFT collections often just use a simple Google Doc to gather offers and asks, which is a throwback to the early days of Ethereum NFTs like Curio Cards. These OTC trades are often done in ETH instead of BTC– the irony isn’t lost.
Buying and selling is made more difficult because transferring isn’t possible without a Bitcoin node, and also Bitcoin wallets can’t really recognize Ordinals well.
Without going into deep technical detail (not a dev, here), because Ordinals are merely inscriptions on a satoshi (unit of BTC), wallets like Electrum and Sparrow have a risk of using an Ordinals digital artifact to pay the gas fee when attempting a transfer. If this happens, the Ordinal will be lost forever.
There are also sometimes issues with placing multiple Ordinals on one Bitcoin address, so collectors usually keep each one in a separate wallet.
So how do trades currently take place if the buyer or seller doesn’t have a Bitcoin node, you may ask? Here are two ways, which both require a high level of trust and manual processes:
- The original inscriber (with a Bitcoin node) never actually transfers the Ordinals NFT to the buyer’s wallet. While this puts a burden on the inscriber to hold onto it, it helps the buyer be more liquid when they want to sell it. They can use the inscriber as an escrow to facilitate the transaction. Fees for these types of services range from 2.5-10 percent.
- Sellsers can also send a trusted escrow (who is running a Bitcoin node) the private keys of the wallet which contains their Ordinals NFT (high risk, do not recommend as an option). The escrow with the node can then import the seller’s wallet and attempt to send the Ordinals NFT to the buyer. Once it’s complete and successful, then the escrow can exchange funds between parties. This method also involves 2.5-10 percent fees which the escrow takes for the service.
The TLDR is: right now, it is a complex, risky, time-consuming mess trying to buy or sell Bitcoin NFTs. It truly depends on trusting strangers on the internet, going against nearly all security advice that we’ve been given as NFT collectors. But the Ordinals community is working feverishly on trustless trade processes, marketplaces, and more to make it easier to trade Ordinals safely.
Ethereum NFT Projects Take on Bitcoin
Ethereum NFT projects have taken notice of the interest in Bitcoin NFTs and have already taken some action to experiment with the Ordinals protocol.
- On Thursday, Feb. 9, OnChainMonkey (OCM) announced that every Genesis OCM holder will be able to claim an “official collection” Ordinals digital artifact to match their ETH NFT. OCM is known for being the first on-chain ETH collection produced within a single transaction. They did the same for inscribing OCM Ordinals on Bitcoin, all in one transaction.
- Purrnelope’s Country Club is another popular ETH project that is looking into providing holders with an Ordinals version.
- “On The Edge of Oblivion” is a 555-piece project which was inscribed as Ordinals, but has a bridge to ETH. The floor price increased from 0.015 ETH all the way up to 3.6 ETH (and back down to 0.5 ETH) as collectors seek to get Ordinals exposure through ETH.
- Popular NFT photographer Justin Aversano dropped a photography collection on Ordinals for 0.2 BTC. “Colin In the Car” will be his only BTC collection, and they each come with a signed print.
For some new Ordinals collections, they are using mint passes on ETH and OpenSea to facilitate sales. This is yet another way to access liquidity on ETH while making use of Ordinals on Bitcoin.
Bitcoin NFTs: No On-Chain Royalties
One of the biggest ongoing debates in NFTs is about on-chain royalties on popular blockchains. Royalties are a crucial aspect for artists who want to make a consistent living selling their work as NFTs.
But marketplaces have been in a race to the bottom (0% royalties), since Ethereum smart contract enforcement of royalties is difficult, if not impossible. This has caused projects and artists to reimagine their mechanics and business models.
The Ordinals docs site spells its stance out clearly: “The Ethereum NFT ecosystem is currently grappling with confusion around royalties, and is collectively coming to grips with the reality that on-chain royalties, which were messaged to artists as an advantage of NFTs, are not possible, while platforms race to the bottom and remove royalty support. Inscriptions avoid this situation entirely by making no false promises of supporting royalties on-chain, thus avoiding the confusion, chaos, and negativity of the Ethereum NFT situation.”
The fact that royalties are unavailable from the very beginning makes it an easy choice for many artists to not choose Ordinals for their work. It will be interesting to see if more top artists and projects experiment with Bitcoin.
Bitcoin NFT Collections
It’s challenging to identify the top Ordinal collections by volume, due to the lack of a secondary marketplace. Each project currently keeps sales records differently, usually within a “confirmed sales” channel in Discord or a Twitter feed.
There is no OpenSea, Cryptoslam, or any analytics data like that (at the time of this post). So instead, this section will be a bit subjective, detailing some of the most talked-about collections, low-inscription collections, and collections with top sales.
OrdinalsDirectory.com shows many collections, but please note that some of these may be paid promotions (use caution). Just like on other blockchains, there have been many NFT projects copying art without permission.
Ordinals collections are normally around 50 to 100 supply. This low number is because inscribing can be slow and costly, so doing a collection of 10,000 (like on ETH) could be cost-prohibitive.
These low supplies make communities even more exclusive and lead to more competition between collectors to secure them. Of course, this also means that unique collector numbers are low, which can become a challenge for liquidity.
From left to right: Ordinal Punks, Bitcoin Toadz, Bitcoin Shrooms, Bitcoin Rocks, Inscribed Pepes
- Bitcoin Rocks were the first project on Ordinals, and are within the first 250 inscriptions with 100 supply. They have sold for as much as 10 BTC.
- Timechain Collectibles are within the first 377 inscriptions, but only have a supply of 21. These have sold for around 3 BTC.
- Ordinal Punks are in the first 650 inscriptions. They have had sales of up to 11.5 BTC.
- Inscribed Pepes have a 69 supply within the first 2,189 inscriptions. They have auctioned for over 1 BTC each.
- Bitcoin Shrooms are a 210 supply within the first 1,075 inscriptions. They haven’t been sold to the public at the time of this post.
- Ordinal Loops are being sold in Chapters; the current one has 7 supply. They are inscription numbers up to 641. These have sold up to 7.1 BTC.
- Bitcoin Punks (not to be confused with Ordinal Punks) are 10,000 of the first 34,400 Ordinals inscriptions, based exactly on the classic CryptoPunks collection on ETH.
Many people who own Bitcoin NFTs are wrapping them using Emblem Vault to put them back on ETH and sell them on OpenSea. These currently go for a couple of ETH each… on OpenSea. The confusion is real.
Learn More About Ordinals
Though Ordinals have been controversial to the NFT community, it seems like they are here to stay. Improvements to the protocol to make it easier to access are in the works. These necessary upgrades include Ordinals-compatible wallets, so that people can safely transfer Ordinals without risk, and also a marketplace, which would introduce some trustlessness to the buying process.
There are even new features being introduced like “teleburn,” where an ETH NFT is burned to create an Ordinals inscription.
While Ordinals are not the very first iteration of NFTs on Bitcoin, they are the first ones at a Layer 1 level and not a sidechain. Inscriptions of these digital artifacts are permanently on-chain. To some, this is a true demonstration of the power of Bitcoin and decentralization. To others, it is graffiti on a blockchain that was designed mainly for financial transactions.
Demand seems to be there for select Ordinals collections, with sales reaching as high as 11.5 BTC for one at the time of this post. For the time being, the demand is more concentrated to include inscription numbers that are as close to zero as possible. As Ordinals reach 100,000 inscriptions and beyond, we will see if NFT artists and collectors continue to flock to Bitcoin.
It is also yet to be determined if NFT collections native to ETH will embrace Ordinals, or if they will remain single-chain communities. As with any new development in the NFT world, there is controversy over supply, IP rights, and liquidity which all play a big factor.
Here are some direct links to Ordinals resources. By the time you read this, there will probably be many more, as they are popping up each day.
Please be on high alert and beware of scams when joining Discords or transacting in OTC deals for Ordinals. Do your due diligence if choosing to use an escrow.
