29 Mar 2023
A Deep Dive into Stacks NFT's and Bitcoin Ordinals
The differences between Stacks NFT's and Bitcoin ordinals. The takeaways that you need to know.
Crypto moves fast. In order to maximize opportunity one has to learn about the latest developments before the rest of retail does. Take NFTs for example, most of retail hadn’t heard of NFTs until January 2022 when the total market cap was somewhere in the neighborhood of $17,000,000,000. Even now what most people know about NFTs is either wrong, outdated, or misunderstood (no, one cannot “right click save” an NFT).
Here at Flagship we endeavor to keep our community up to speed with all of the latest developments in this space. With that in mind I want to use this article as an opportunity to discuss Stacks NFTs, Bitcoin ordinals, and what they mean to the world of tomorrow.
Non Fungible Tokens (NFTs) are a one of a kind digital asset, they are unique and irreplaceable. So while the uninformed might think that a NFT is just a jpeg, in reality that NFT is its own one-of-a-kind token recorded on a blockchain. In essence NFTs are digital assets, and this means that Stacks NFTs are digital assets that are secured by the Bitcoin blockchain.
Because Stacks NFTs are made with smart contracts, that means that Stacks NFTs can be programmed to perform different commands when specified conditions are met. So while an NFT can be art, it can also have utility. As this space matures we are seeing more NFT projects bringing real world use case to the Stacks blockchain.
Massive industries such as gaming, music, sports memorabilia, and even digital identity/reputation are going to be disrupted by NFT technology. Stacks builders know this, and already there are teams that have launched/are launching projects covering all of these real world use cases. Gaming alone is an industry valued in excess of $100,000,000,000 USD. By using NFTs creators and retail find themselves in a win:win situation. Creators have more say over their creation, and earn more profit by eliminating the middleman; while the users have control of their assets and the opportunities that come with said ownership.
Suffice to say that NFTs are far more than monkey JPEGs, and are destined to play a bigger role in our digital lives.
If you want to learn more about NFT investing, this article from Captain Khristian is a great place to start.
Remember what I said earlier about being ahead of the curve? Well, if you know about Bitcoin ordinals right now, congratulations you are far ahead of the curve. If the term Bitcoin ordinal means nothing to you, that’s ok…that’s why you’re here.
One Bitcoin can be subdivided into 100,000,000 Satoshi’s. So it is helpful to think of Bitcoin as the network, and Satoshi’s (aka Sats) as the unit of currency for the network. Bitcoin Ordinals allow for individual Satoshi’s to be cataloged, and even allow for the transferring of individual Satoshis. As such individual Satoshis can be inscribed with data, such as text or pictures and stored forever on the Bitcoin blockchain.
So while an ordinal can be a JPEG on the Bitcoin blockchain, an ordinal is not a NFT. Unlike a Stacks NFT, a Bitcoin ordinal cannot be programmed with smart contract functionality. While a NFT is a unique, programmable, digital asset, an inscribed ordinal is still a Satoshi, it just has data attached to it.
In the span of two months we have witnessed over 600,000 Satoshi’s inscribed with everything from popular NFT collections, to original works of literature. The use case for this new development in Bitcoin is truly astonishing, and goes far beyond investing. That said, due to the nature of ordinals, many crypto natives are currently interested in collecting “rare” sats, especially those from the Genesis Bitcoin block.
While both the Stacks NFT and the Bitcoin ordinal can contain JPEG imagery, at the end of the day the difference is that one is a smart contract and one is a Satoshi. So while I may soon be purchasing concert tickets, or trading a rare item from a game via NFTs, I would be more inclined to record an important event, original work, or sentimental artifact on the Bitcoin blockchain as an inscription.
As you can imagine it would be quite difficult to manipulate sats as a non-technical crypto enthusiast. However, thanks to the work from Stacks teams such as: Satoshibles, Hiro, Gamma, NeoSwap, and Xverse the Stacks community was quickly given tools, and on boarded into this entirely new way to interact with Bitcoin.
While the investment narrative currently surrounding Bitcoin ordinals is one of being early and finding the rarest/oldest Satoshi’s, the narrative for Stacks NFTs will continue to be that of providing use case and value to its owner.
While narratives have a habit of changing over time, one thing remains perfectly clear: Both Bitcoin ordinals and Stacks NFTs further Bitcoin utility and adoption of Bitcoin. As Stacks continues to grow and add more layers of functionality to Bitcoin we will see more builders bring new concepts to fruition, and more value added to the Bitcoin network.
Thank you so much for reading, I hope you found the piece informative and enjoyable to read. If you have anything you would like to see me write about, or if you just want to chat about Stacks in general, drop by the Flagship Discord and come chat in the Stacks outpost. That’s it for now, Captain Jack signing off.
Disclaimer: Nothing on this site should be construed as a financial investment recommendation. It’s important to understand that investing is a high-risk activity. Investments expose money to potential loss.