In February 2022, a proposal was sent to the Bitcoin dev mailing list to bring NFTs to the Bitcoin network. The idea is to assign each Satoshi (a unit of Bitcoin) an ordinal number, which would then be linked to extra information such as text, images, videos, and games. This would create digital artifacts, or NFTs, that can be stored on the Bitcoin blockchain.
💡Key Takeaways on Ordinals and Inscriptions for BTC NFTs💡
What is an Inscription?
- An Inscription is a type of digital asset stored on the Bitcoin blockchain that allows the creation and transfer of unique digital artifacts.
- It is different from traditional tokens as it is stored in the OP_RETURN field of a Bitcoin transaction, which can store a small amount of data.
- Inscriptions allow the creation of unique, non-fungible digital artifacts that can be used for various purposes such as art, collectibles, and more.
How does this compare to NFTs on Ethereum?
- Inscriptions are different from NFTs on Ethereum in that they are stored fully on-chain, making them immutable and fully decentralized.
- NFTs on Ethereum, on the other hand, use token standards such as ERC721 or ERC1155 to create collections of tokens, each with a unique tokenID.
- Another difference is that creating or transferring an NFT on Ethereum can result in high transaction costs, while the transaction fee for sending Inscriptions is relatively low due to transaction fee optimizations with Taproot on Bitcoin.
- A potential disadvantage of Inscriptions is that all content stored on the blockchain is permanent, including any illicit or unsavoury content.
Where can I find Inscriptions?
- You can find all the ordinals by going here
What if I want to make Ordinals and Inscriptions?
Right now the easiest way we have found is a tool called Gamma. You can see the guide to create Gamma BTC NFTs here. Please do your own research and assume your own risk. This is a tedious but not complicated process. Good Luck.
Origin of Ordinals and Bitcoin NFTs
The proposal has received mixed reactions from the crypto community, with some considering it an exciting new use case for Bitcoin, while others believe that Bitcoin should remain as a system for digital cash and not be evolved into something else. There are also concerns about the potential increase in transaction fees and resource demands on nodes.
The process of creating an NFT starts with creating a Bitcoin transaction that stores the extra information, called an “Inscription,” in one of the output addresses. This data could be text, images, SCG, or HTML, and its size is only limited by the block size limit. Unlike traditional Bitcoin transactions that use an OP_RETURN to add extra data, the Ordinal approach stores the metadata within the transaction itself, making use of the 2021 segwit update that allows up to 3MB of witness data to be stored outside of the 1MB block limit.
To transfer an NFT, it is assigned an ordinal number based on the first-in-first-out algorithm and then transferred in a Bitcoin transaction. Not all Ordinals have Inscriptions assigned to them, so not every transaction may involve an NFT.
The proposal to bring NFTs to the Bitcoin network has sparked a debate in the crypto community, with some embracing the idea of digital artifacts on the Bitcoin blockchain and others concerned about the potential consequences. The technical process of creating and transferring NFTs involves creating a Bitcoin transaction with extra data, or an Inscription, and assigning an ordinal number to each Satoshi involved in the transaction.
Thats great so what are Inscriptions?
In the context of Bitcoin Ordinals, an Inscription is the metadata that is attached to a bitcoin (satoshi) in the form of extra data stored within a Bitcoin transaction. This extra data could be anything from text, images, sound files, HTML, or other digital assets, and the size of the Inscription is capped by the block size limit. The idea behind Inscriptions is to create non-fungible properties for bitcoin, allowing each satoshi to have its own unique digital artifact.
The Inscription data is stored within the raw transaction data and is created by creating a Bitcoin transaction that stores the extra data (the Inscription) in one of the output addresses. The Inscription is created through a two-phase process, with the first phase committing the taproot output to a script containing the Inscription content. This content is serialized within the transaction in a form known as an “envelope”. The second phase involves creating another transaction to reveal the Inscription information, where the output created by the commit transaction is spent, revealing the Inscription content on the blockchain.
The Ordinal number assigned to each satoshi is used to identify and link the Inscription to a specific bitcoin, allowing the digital artifact to be transferred along with the bitcoin in a transaction. Not all Ordinals have Inscriptions assigned to them, and it is up to the users to create and attach Inscriptions to their bitcoins as they see fit.
TLDR: Inscriptions are a new concept in the world of Bitcoin that allow users to attach metadata and other digital assets to their bitcoins, creating unique digital artifacts. This opens up new opportunities for Bitcoin to be used in ways that go beyond its original purpose as a digital currency, and has the potential to bring new and exciting use cases to the world of cryptocurrency.
Here is an example inscription and data
So how does this compare to ethereum NFTs?
In comparison to NFTs on Ethereum, the creation and use of Inscriptions on Bitcoin is a distinct approach. On Ethereum, NFTs are created using token standards such as ERC721 and ERC1155 and are given a unique token ID to identify them, in addition to the account for the collection’s smart contract. The complexity of NFTs can lead to high transaction costs to mint or transfer them on Ethereum. However, with the transaction fee optimization of Taproot on Bitcoin, the cost of sending Inscriptions is significantly lower.
Another difference between the two is that all Inscriptions are stored directly on the blockchain, making them immutable and fully decentralized. This differs from NFTs on Ethereum where there have been concerns about the removal of metadata if the centralized storage solution goes offline or if the project manipulates the metadata. Despite the benefits of immutability, this also means that any illegal or undesirable content in Inscriptions will remain on the chain forever. There have already been instances of obscene Inscriptions and it is only a matter of time before illegal imagery is added. Websites that help visualize Ordinal data can block these images, but they will still exist on the blockchain. It’s worth noting that this issue is not unique to Inscriptions and has been a problem with arbitrary data storage on blockchains since their inception.
Well what about Stacks the BTC Layer 2 Solution?
Stacks Layer 2 NFTs and Inscriptions both relate to the creation and use of digital assets in a blockchain context. However, they have differences in terms of their underlying technology, the way they are created, and their features.
Stacks Layer 2 NFTs are built on the Stacks blockchain, which is a Layer 2 scaling solution for the Bitcoin blockchain. This allows for NFTs to be created and stored more efficiently and cost-effectively than on the Bitcoin blockchain. Stacks Layer 2 NFTs can be used for a wide range of applications, including digital collectibles, gaming items, and digital art.
Inscriptions, on the other hand, are digital assets that are stored directly on the Bitcoin blockchain. They use Bitcoin’s scripting language to encode information about the digital artifact, and each Inscription is given a unique token to reference it. Unlike NFTs on smart contract blockchains like Ethereum, Inscriptions are fully on-chain and therefore immutable and decentralized. However, this also means that their data cannot be edited or deleted, and any unsavory or illegal content that is stored as an Inscription will be on the blockchain forever.
TLDR: Inscriptions are like curio cards
Where can I find a technical walkthrough?
Tara Annison has a great medium article that goes into more detail here