Experts believe that Bitcoin’s introduction has impacted traditional monetary systems to establish a digital environment. Despite Bitcoin being viewed as “digital gold,” introduction of Ordinals protocol can permit developers to create Bitcoin blockchain-based innovations, as stated by Chainalysis.
According to Chainalysis, on January 21, 2023, Casey Rodarmor, a developer, unveiled Ordinals to bring additional functionality to Bitcoin blockchain. Sources suggest that Ordinals is a Layer 1 protocol which provides blockchain-backed features to ensure content and other functionalities for Bitcoin. Based on mathematical concept of ordinal numbers, Ordinals are inscribed on a Satoshi, the smallest unit of a Bitcoin. From March, 2023, supported wallets consist of Ordinals Wallet, XVerse, and Hiro Wallet. To mint Ordinals, Bitcoin users should download Bitcoin core and synchronise with blockchain nodes.
Based on information by Chainalysis, information around Ordinals are kept on Bitcoin blockchain whereas non-fungible tokens (NFTs) are stored off-chain. Ordinals are permanent and immutable. Reportedly, Ethereum-oriented NFT platforms clocked over $1.7 billion at the starting of 2022. Value went down at 2022’s end, on account of FTX debacle and “crypto winter” implications. On March 1, 2023, 15,981 text files, 8,817 image files, 23 applications, two audio files, one model, and one video were minted using Ordinals. Dune mentioned that fees spent to inscribe Ordinals have fallen since mid-February, with around $1.5 million cumulative fees.
Moreover, Chainalysis noted Ordinals protocol has created a market around Bitcoin NFTs. Investors suggest that Ordinals can be used to retrace stolen coins backed by serial numbers. However, concerns have been raised around increased strain Ordinals put on Bitcoin network through files being embedded in satoshis.
(With insights from Chainalysis)