For most of Bitcoin’s history, the only thing you could do on the Bitcoin blockchain was send and receive bitcoin. Then, in January 2023, Casey Rodarmor launched the Ordinals protocol, enabling the inscription of arbitrary data — images, text, code — directly onto individual satoshis (the smallest unit of bitcoin). Bitcoin NFTs and even fungible tokens were suddenly possible on the world’s most secure blockchain.
What Are Ordinals?
The Ordinals protocol assigns a unique number to every satoshi (100 million satoshis = 1 BTC) in the order they were mined. These numbers are called “ordinal numbers” — hence the name. Because satoshis now have unique identities, you can track their movement across the blockchain.
The second component is inscriptions: data (images, text, code, audio, video) can be embedded directly into Bitcoin transactions using the SegWit and Taproot upgrades. An inscription attached to a specific satoshi creates a de facto Bitcoin NFT — that satoshi carries unique data wherever it travels.
How Inscriptions Work Technically
Bitcoin’s Taproot upgrade (November 2021) allowed larger amounts of data to be included in the “witness” portion of a transaction at a discounted fee rate. Ordinals exploits this to embed data up to 4MB into a single Bitcoin transaction.
Importantly, inscriptions are stored on-chain — unlike many Ethereum NFTs where the image is stored on IPFS or a centralised server and only a pointer is on-chain. An Ordinal inscription is fully on-chain, making it as permanent as Bitcoin itself.
Bitcoin NFT Collections
The Ordinals launch triggered a wave of Bitcoin NFT collections:
- Bitcoin Punks: The first major Ordinals collection, inscribed within the first 650 inscriptions. Extremely rare by virtue of their low inscription numbers.
- Ordinal Punks: 100 punk-inspired images inscribed early, now some of the most valuable Ordinals.
- Bitcoin Frogs: 10,000 pixel frog PFPs that became one of the highest-value collections.
- NodeMonkes: 10,000 hand-drawn monkey PFPs, among the most traded collections.
Inscription number matters enormously — lower numbers are rarer and more valuable. The first 1,000 inscriptions (sub-1k) are considered extremely collectible.
BRC-20 Tokens: Fungible Tokens on Bitcoin
In March 2023, a pseudonymous developer named Domo created the BRC-20 standard — an experimental fungible token standard for Bitcoin using Ordinals inscriptions.
Unlike Ethereum’s ERC-20 tokens (which use smart contracts), BRC-20 tokens are created by inscribing JSON text onto satoshis that follows a standard format. The protocol tracks deploy, mint, and transfer operations by reading these inscriptions in order.
How BRC-20 Works
- Deploy: Inscribe a JSON deploying a new ticker, max supply, and mint limit
- Mint: Users inscribe mint operations until the max supply is reached
- Transfer: Create a transfer inscription, then send the satoshi to the recipient
The most notable BRC-20 token: ORDI — the first BRC-20 token deployed. ORDI reached a market cap of over $1 billion during the peak Ordinals mania of late 2023, becoming the first BRC-20 listed on Binance.
Other significant BRC-20 tokens: SATS (tickers representing satoshis), MEME, PEPE (BRC-20 version).
The Ordinals Controversy
Ordinals have been deeply divisive within the Bitcoin community:
Critics argue:
- Inscriptions bloat the blockchain with “junk” data, increasing storage requirements for full nodes
- High inscription activity congests the mempool, raising fees for regular Bitcoin transactions
- Bitcoin was designed for financial transactions, not NFTs and meme tokens
- The use of Taproot data discounts (designed for legitimate purposes) to store images is an exploit of block space discount rules
Proponents argue:
- Higher fees are good for Bitcoin’s long-term security (miners need fee revenue as block subsidy decreases)
- Data in witness space is technically legitimate — the protocol allows it
- The additional demand for block space creates a fee market that sustains Bitcoin post-halving
- Bitcoin’s permissionless nature means no one can or should prevent valid transactions
Market Impact
Ordinals drove Bitcoin transaction fees to multi-year highs in early-to-mid 2023, briefly exceeding block rewards as miners’ primary income. During peak mania, inscription fees cost $30–$100+ per inscription. The Ordinals market cooled significantly in 2024 but established a permanent new use case for Bitcoin block space.
Where to Buy and Trade Ordinals
- Magic Eden: The largest NFT marketplace expanded to Bitcoin Ordinals
- Gamma.io: Bitcoin-native Ordinals marketplace
- OKX NFT Marketplace: Major exchange with Ordinals support
You need a compatible Bitcoin wallet to hold Ordinals: Xverse, Unisat, and Leather (formerly Hiro) are the most popular.
Conclusion
Bitcoin Ordinals represent one of the most surprising and contentious developments in recent crypto history — native NFTs and tokens on a blockchain many considered too conservative to support them. Whether they become a permanent significant use case or fade as a curiosity remains to be seen. What is clear is that Ordinals demonstrated Bitcoin’s flexibility under Taproot and reignited debate about what the world’s most secure blockchain should be used for.