A Game-Changer for Bitcoin and NFTs: A Look Into The Ordinals Protocol

Introduction

As the top cryptocurrency in the market, Bitcoin has long been seen as the ultimate store of value. Bitcoin's capabilities have been limited to serving as a mere digital currency. That all changes with the recent development of Ordinals. A protocol that integrates the concept of Non-Fungible Tokens (NFTs) onto the Bitcoin blockchain, which might represent a major shift in the crypto world and opens up new avenues for innovation and growth in Bitcoin and the NFT sector.

With projections estimating the NFT market to reach a whopping USD 211 billion by 2030, it's clear that NFTs represent valuable opportunities for creators and collectors. In the past two years, we've witnessed an increasing number of organizations and individuals raising significant capital through NFTs on blockchains like Ethereum, Polygon, Solana, and Cardano. However, one notable absence in the NFT landscape has been the lack of support for the leading cryptocurrency, Bitcoin. Although the Stacks protocol, a layer 2 for Bitcoin, does support NFTs, these are not fully native to the blockchain protocol. Now, thanks to software engineer Casey Rodarmor and the launch of the Ordinals protocol, the doors have been opened for NFTs on the Bitcoin blockchain, taking the NFT market to an even broader audience.

Read this if you want to know more about the difference between the Stacks NFT and the Bitcoin ordinal.

Why is Bitcoins NFTs Important for the Market?

With a vast number of individuals invested in Bitcoin, including millionaires and billionaires who possess substantial amounts of BTC, there is an excellent opportunity to introduce these individuals to NFTs without switching to another blockchain. This presents an untapped wealth source that could flood the NFT sector and have a massive impact on the market as technology progresses.

The integration of NFTs on the Bitcoin network opens up a new world of possibilities, allowing for the creation and storage of NFTs directly on the base layer of Bitcoin.

For Bitcoin holders, introducing NFTs into the network could boost the price of bitcoin. The introduction of the Ordinals' protocol could increase the demand for bitcoin if NFT projects become interesting enough to attract investors from other blockchains.

Let's Break it Down…

For those unfamiliar with Non-Fungible-Tokens (NFTs). NFTs are unique tokens that can be easily identified within a blockchain network. This is now possible on the Bitcoin blockchain thanks to the recent launch of the Ordinals Protocol.

A Satoshi is the smallest denomination of Bitcoin, equivalent to 100 millionth of a full Bitcoin. The Ordinals Protocol works by making Satoshis unique through embedded inscriptions. To give you a simple analogy, think of two identical dollar bills. Neither bill has any special characteristics, but if a celebrity were to sign one of the bills, that bill would become unique and distinguishable compared to the other (and possibly more valuable because it would be a collector's item).

The same idea applies to NFTs on the Bitcoin blockchain. The Ordinals Protocol marks Satoshis to make them unique and identifiable. This marking process is referred to as an inscription, and it can embed any image, text, or other data under 4 MB (the current storage limit for a block). Once an inscription is embedded into a Satoshi, it becomes immutable and remains on the network forever. In short, the Ordinals Protocol allows for the creation of NFTs on Bitcoin by marking Satoshis with unique inscriptions to make them distinct and identifiable.

What is the Difference between Ethereum NFTs and Bitcoin NFTs?

Ethereum has long been the go-to blockchain for NFT collectors, but with the introduction of Bitcoin NFTs, it's essential to understand the critical differences between the two largest blockchains. On the Bitcoin network, NFTs are permanently stored on-chain, with the entire image or data saved directly on the base layer of the blockchain. However, the limited ability to create extensive NFT collections and the cost of minting absorbed by the creator rather than the collector sets Bitcoin NFTs apart from those on Ethereum. Additionally, while Ethereum NFTs can be dynamic and manipulated through the use of smart contracts, Bitcoin NFTs are mainly static and permanent. This makes Bitcoin NFTs better suited for certain use cases, such as showcasing a static art piece rather than a complex gaming NFT.

How Will This Affect the NFT Market?

The introduction of the Ordinals protocol expands the audience for NFTs and will drive growth in the market. Many cryptocurrency investors primarily hold Bitcoin. With the ability to store NFTs on the Bitcoin blockchain via the Ordinals Protocol, more traders will likely start collecting NFTs. However, it's important to note that acquiring NFTs on Bitcoin is still quite complex for the average user. Developers will create solutions that simplify creating and collecting Ordinals as the technology and market evolve. Meanwhile, the potential for growth in the NFT market remains exciting and promising.

Acquiring a Bitcoin NFT: The Current Process

As of now, the process of buying and selling NFTs on the Bitcoin blockchain requires technical know-how. To begin, you'll need to have a full node. Then, you'll need to attach the ORD software, which indexes all ordinal transactions and creates a computer index that allows you to send and receive transactions. This process can be intimidating for those without a technical background, but advancements and solutions will likely emerge as the market evolves. Gamma.io is a marketplace that exponentially simplifies creating an inscription and minting an NFT on Bitcoin.

Top Bitcoin NFT Projects to Watch:

• Ordinal Punks: They are a set of 100 NFTs minted within the first 1000 inscriptions in the Bitcoin Network. The Punks are 192×192 pixel images that were created using an open-source algorithm. They are selling at quite a high price. Last week somebody paid 9.5 BTC, roughly $214,000 for an Ordinal Punk NFT.

• Taproot Wizards: handcrafted NFT wizards created by the Web3 programmer Udi Wertheimer. A unique fact about this project is that it represents the largest block and transaction in Bitcoin’s history at 4 MB, the current maximum storage size of a block.
• Bitcoin Shrooms: This is one of the earliest inscriptions in Bitcoin, being stored in inscription 19. The first 17 pixelated mushrooms spell the phrase 'The Shrooms R Coming'. This project represents crypto culture for being there early. Their discord is closed and trading of these Ordinals is not yet out.
• OnChainMonkey: This collection is primarily held in the Ethereum blockchain. It's the first collection of 10K NFTs stored OnChain, on a single transaction. The collection minted 10K ordinals in one single inscription. What's impressive is that the team was able to create the whole collection under a file size of under 20,000 bytes, minted in one single transaction, and the total costs were just a few dollars. The collection is available in both Ethereum and bitcoin, and users can optionally select their desired blockchain. The project focuses on building a community of people who want to have a positive social impact in the world, and it's currently one of the top collections in Ethereum.
• Inscription 0: A black pixelated skull is the first Ordinals inscription ever created. This item represents the beginning of NFTs on Bitcoin and will remain on-chain forever. There's not much else to say about this inscription besides marking this historic moment on the bitcoin blockchain.
• 1337 Skulls: It's a project inscribed 69 individual pixelated skulls, most under the first 10K inscriptions on Bitcoin. The team behind this project will be airdropping them to holders of their original collection on Ethereum.

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