Bitcoin and Ordinals

In January 2023, a developer named Casey Rodarmor launched the Ordinals protocol on Bitcoin.

Ordinals allow individual satoshis to be “inscribed” with data — text, images, code, or any digital content. Because each satoshi is individually numbered (ordinal numbers, hence the name), inscribed satoshis carry their content permanently on the Bitcoin blockchain.

The effect was immediate and polarising. Within weeks, people were inscribing images onto satoshis — creating what became known as Bitcoin NFTs. The most famous early collection, Bitcoin Punks, was inscribed directly onto the base chain. Digital art, documents, even entire video game code was inscribed.

The Bitcoin community divided. One camp argued that Ordinals were a creative use of Bitcoin’s properties, introduced new demand for block space, and increased miner revenue — an important consideration as block rewards continue to halve. The other camp argued that storing arbitrary data on the Bitcoin blockchain bloated it unnecessarily and undermined Bitcoin’s purpose as a monetary network.

The debate continues. What Ordinals unambiguously demonstrated: the Bitcoin blockchain can carry more types of data than most people had assumed, and the community’s discussions about what Bitcoin should be are far from settled.

For investors, Ordinals matter primarily as a signal about Bitcoin’s evolving use cases and the fee market that will sustain miners after block rewards diminish. They’re a footnote in Bitcoin’s monetary story — but an interesting one.

Tomorrow: the people who sold too early — and what they learned.

— The Daily Bit