When people hear the term NFT, many people think of Ethereum-based NFTs. But now there is a new way to mint NFTs: Ordinal Bitcoin NFTs. What’s behind it?
• Inscriptions technology on the Bitcoin blockchain
• Explosive increase in Bitcoin transactions
• Bitcoin ordinals committed directly to the blockchain
The non-fungible tokens on the Ethereum blockchain are familiar to many. The term “non-fungible” stands for unique properties of an object. These can be either physical or digital. Especially the one that is progressing everywhere digitalization makes it mandatory to prove or depict ownership. Ownership is secured by the Ethereum blockchain.
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NFTs based on inscriptions
Only since this year can so-called Bitcoin ordinals, based on so-called inscription technology, be stored in the Bitcoin main network. Using the ordinal theory developed by Casey Rodarmor, Satoshis (the smallest unit of a Bitcoin) can be identified, traced and transferred via a serial number, as CoinDesk writes. This means that every Satoshi can be tagged with images, text or videos through a Bitcoin transaction. This process is called inscription. Bitcoin ordinals can be written on the Bitcoin blockchain and are therefore similar to “normal” NFTs that are stored as tokens on the Ethereum blockchain, for example. Mined transactions then become permanently part of the Bitcoin blockchain and can be read using Ordinal-enabled Bitcoin wallets and online Ordinal viewers.
A massive increase in Bitcoin transactions this year could be due to text-based inscriptions, as Rafael Schultze-Kraft, co-founder and CTO of Glassnode, points out on Twitter.
#Bitcoin daily transaction counts are approaching all-time highs, seeing an explosive uptick in 2023.
With the emergence of Inscriptions, analysts now need to assess how much of this is driven by Inscriptions vs monetary transfers.
A quick 🧵 to explorehttps://t.co/Kor7czbjda pic.twitter.com/v1cnr5GmZZ
– glassnode (@glassnode) April 30, 2023
The difference lies in data storage
The NFTs in the Bitcoin sector differ from the Ethereum blockchain mainly in data storage. Ethereum-based NFTs can be tracked on the Ethereum blockchain using the included metadata. These refer to the actual work of art, which is stored outside the Ethereum network and can therefore be changed. Ownership is managed through a unique ID and metadata that proves ownership.
In contrast, all the data of an ordinal NFT is on the blockchain – without metadata that describes the NFT. The immutability of NFTs reaches a new level in terms of security because they are actually committed to the blockchain.
Bitcoin ordinals offer both advantages and disadvantages over Ethereum-based NFTs. It remains to be seen whether this will be able to establish itself on the market.
Editorial team finanzen.net