What are the Bitcoin NFT Ordinals of the BRC-20 standard

Bitcoin NFT technology, and especially the BRC-20 standard, is definitely generating interest and is likely to become the number one topic in the cryptocurrency markets.

The improvement of Bitcoin NFT market infrastructure creates the basis for the growth of the ecosystem. So Bitcoin NFT registration activity continues to grow, and the launch of new BTC-specific trading platforms could lay the groundwork for the next cycle of hype. The infrastructure to facilitate NFT trading on Bitcoin is taking shape, and this is happening alongside the creation of wallets and marketplaces that support the Ordinals solution.

NFT marketplaces Gamma and Magic Eden have added support for Bitcoin NFT.

Let's understand what Ordinals is - it's a numbering scheme for satoshis on the Bitcoin network that allows you to track and transfer them. All satoshis receive their numbers according to the order in which they appear and move from transactional inputs to outputs.

Using Ordinals' ability to identify and tag individual satoshis, the protocol gives users the ability to attach satoshis to a digital file and transfer it to the Bitcoin blockchain. The solution was found because of the Taproot update activated in 2021.

The update removed the restriction on adding arbitrary data using Bitcoin's transaction codes (the amount of data is limited solely by the block size).

In the current implementation of NFT on various blockchains that support smart contracts, the file and the NFT are stored in two different locations. The file can be hosted on a cloud-based minting tool such as OpenSea or on an open file system such as IPFS. Regardless of where the file is stored, a reference to the path to the file can be added to the NFT.

If the cloud storage service deletes the image, crashes, or the file becomes corrupted, the file path will be compromised and the NFT will no longer be able to reference the relevant file. The NFT is a hashed link in the blockchain that leads to a file stored elsewhere. This is exactly where Ordinals differ. Ordinals store text, images, SCG or HTML on the main chain, and can be authorised via a transaction; they can also be bought, stored or gifted. Information added to the blockchain via Ordinals cannot exceed 4 megabytes. That said, they are not links to an image, a pdf of a Bitcoin white paper, or a video. They are direct files - whether a whitepaper or a video - that are an integral part of the Bitcoin blockchain, which means full Bitcoin nodes are obligated to preserve them.

Dune's dashboard shows that Ordinals registration activity remains high, with nearly 580,000 NFTs registered in less than three months.

While daily Ordinals registration activity is high, the trading volume of such NFTs remains low, primarily due to the lack of Bitcoin wallets and supporting marketplaces (Magic Eden and NFT Gamma are exceptions).

Ordinals require a specially designed Bitcoin wallet that recognises content files in distinguishable satoshis, the smallest unit of Bitcoin, and facilitates their transfer. Hiro and Xverse are leading wallet providers in this space and have added support for Bitcoin NFT.

Overall, the Bitcoin blockchain-based NFT phenomenon opens up a new class of NFT assets for us and sets a precedent for their value growth, showing that vectors for technology development within the Bitcoin ecosystem still exist.