What are Ordinals and Inscriptions

 

What are Ordinals and Inscriptions?

The terms ‘ordinals’ and ‘inscriptions’ are closely linked with the BRC-20 token standard, which is gaining popularity in the cryptocurrency ecosystem. Ordinals are a method of inscribing data into individual satoshis (100 million sats make 1 BTC) on the Bitcoin network, while inscriptions are the actual data that is inscribed onto these satoshis.  In other words, ‘ordinals’ means you order and label each individual satoshis; while ‘inscriptions’ means attaching a digital asset like jpeg or text to each Satoshi. 

Within Bitcoin, ordinals serve as unique identifiers attached to each transaction. They verify digital assets' authenticity, ownership, and distinctiveness, including inscriptions like Non-Fungible Tokens (NFTs) and BRC20 tokens (the Bitcoin equivalent of ERC-20 tokens). These ordinals enable the tracking and validating the transfer and ownership of digital assets on the Bitcoin blockchain. By leveraging the security and immutability of the Bitcoin network, inscriptions ensure the integrity of transactions and the assets associated with them. They enable tokenization, transfer, and verification of digital assets within the decentralized framework of Bitcoin.

Ordinals are the way to keep track of the Satoshi that are there in the Bitcoin network, equivalent to keeping the track of the ‘series’ of the traditional fiat currency note. That being said, by using a logical ordering system called ordinal theory, each individual Satoshi can be assigned a unique number. This allows the inscription of arbitrary data (inscription as discussed below) such as images, video, or text – into each Satoshi, creating a wide range of potential applications for the technology.

Ordinals have enabled the creation of NFTs on Bitcoin network (similar to the Ethereum network). NFTs do not require layer-2 solutions or changes to the Bitcoin protocol, and are backward compatible with the network. This has led to a surge of interest in using the Bitcoin network for storing immutable data.

Inscriptions are the data such as jpeg, texts, videos, audio files, or even the entire applications. embedded into satoshis using the ordinal protocal. Read more about inscriptions in https://docs.ordinals.com/inscriptions.html or https://ordinals.com/

Thus, the combination of ordinals and inscriptions allow Bitcoin to support a wide range of applications, from NFTs to fungible tokens like BRC-20. These innovations shows that the Bitcoin network could support complex use cases, which is beyond its role as a digital currency.

What costs do ordinals and inscriptions have on the block?

These inscriptions (assets) sit on the bitcoin blockchain itself. But each block is still capped at approximately 4 MB, thus you cannot put an unlimited number of inscriptions on the blockchain. Block may contain traditional financial transactions or with inscription transactions or the mixture of both.  While blocks were not full before the inception of ordinals, now the blocks are near to full or completely full. Segwit (https://immtalimm.blogspot.com/2023/07/what-is-segwit-in-blockchain.html ) which was invented in 2017, the upper limit with 4 MB was fine even with the inception of the ordinals.