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How do Ordinals Marketplaces Work in 2024?

Ordinal inscriptions, also known as Bitcoin NFTs, are the latest development in the Bitcoin ecosystem. Thanks to inscription tools, users can inscribe metadata of any kind on satoshis without having to run a full Bitcoin node.

The Ordinal protocol that created the Bitcoin Ordinal stretches Bitcoin’s use case beyond a pure P2P cash system and towards a digital art marketplace. If you’re interested, we’ve previously discussed how you can create a Bitcoin Ordinal and the Ordinals-compatible wallets that you should have to store your Bitcoin NFTs.

In this article, we will:

  • Focus on what Ordinals marketplaces are
  • Explore the underlying PSBT protocol that powers them
  • Give you a list of the top Ordinals marketplaces for trading your digital assets

What are Bitcoin Ordinals?

Bitcoin ordinals, born out of the Ordinals protocol, are satoshis (atomic Bitcoin units) inscribed with any kind of metadata (text, images, video games, songs) that become Ordinal NFTs and get directly stored on Bitcoin blockchain.

Ordinal inscriptions have numerous benefits, including, but not limited to:

  • Immutability
  • Simple sale process due to no NFT royalties
    • However, note that some marketplaces, like Gamma’s, have implemented royalties for creators. This allows them to independently manage their collections and define the royalty percentage they wish to receive from secondary sales. 
  • Being stored on the most valuable crypto ecosystem, the Bitcoin blockchain

How to trade Ordinal inscriptions?

To start buying and selling Ordinals, you need to have any of the following Ordinals-compatible wallets:

  1. Xverse Wallet
  2. Hiro wallet
  3. Ordinals wallet
  4. Sparrow wallet
  5. Unisat wallet

Next, you should use one of the inscription services – Gamma.io, Ordinals Bot, Ordinals Wallet, etc. – to create an Ordinal inscription. Then, after paying the inscription fee from your Bitcoin wallets, your inscription will be sent to your wallet address.

If you want to create a new inscription and hold it, you don’t necessarily need to interact with an Ordinals marketplace solution.

What is an Ordinals marketplace?

An Ordinals marketplace, like an NFT marketplace, is a platform that enables creators and collectors to browse, find, buy, and sell inscriptions. Ordinals marketplaces (i.e. Bitcoin NFT marketplaces) have their unique Ordinals collections and specific wallet compatibility.

As Bitcoin Ordinals steadily rise in price and popularity and receive new updates, like BRC-721E that turns Ethereum NFTs into Bitcoin Ordinals, an Ordinals marketplace becomes more important for enabling a larger audience to monetize and trade digital artifacts.

As of June 2023, the top1 Ordinals marketplaces according to trade and market volume are (Figure 2):

  • Unitstat
  • Magic Eden
  • Ordinals wallet
Time series graph of trade volume done on Ordinals marketplaces.
Figure 2: The top marketplaces by trade volume. Source: Dune.com

How do Ordinals marketplaces work?

Most Ordinal marketplaces use a PSBT (Partially Signed Bitcoin Transaction) solution for trading Bitcoin NFTs.

The PSBT solution, introduced by the Bitcoin Improvement Proposal (BIP) 174, streamlines and simplifies multi-party transactions. A multi-party transaction is when the sale of non fungible tokens needs authorization by more than 1 signee before being broadcasted to the Bitcoin network.

The PSBT solution, specifically, works as follows:

1. Transaction creation

A member of the group creates a PSBT file. This contains all the details of the transaction, such as the inputs (which UTXOs are being spent), and outputs (where the UTXOs are going), but it lacks the necessary signatures.

2. Transaction signing

The creator of the transaction sends the PSBT to other members of the group for approval and signing.

3. Transaction finalization

Once the PSBT file has all required signatures, it is considered ‘final’ and is ready to be broadcast to the Bitcoin network. The final signer transforms the PSBT into a fully signed transaction that can be understood by the Bitcoin network.

4. Broadcast

The fully signed transaction is broadcast to the Bitcoin network, and the transaction is confirmed, completing the process directly on the Bitcoin blockchain.

How are Ordinals marketplaces different from traditional NFT marketplace solutions?

A traditional NFT marketplace sale and a PSBT-enabled transaction for trading Ordinals differ primarily in the way transactions are handled, signed, and confirmed. 

In a traditional NFT sale, the process is often facilitated by smart contracts on a blockchain like Ethereum, involving a straightforward transfer between a buyer and a seller. The smart contract automatically processes the transaction, handling the exchange of assets with no further approval.

On the other hand, PSBTs are designed for more complex scenarios, typically on the Bitcoin network. These usually involve: 

  • Multiple parties
  • Additional layers of security
  • Situations where more than one party must sign off on a transaction before it can be confirmed, such as multi-signature wallets. 

This process involves creating an unsigned transaction, getting it signed by all necessary parties, finalizing it, and then broadcasting it to the network.

For more on Ordinal Inscriptions

To learn more about Ordinal Inscriptions, read:

Access Cem's 2 decades of B2B tech experience as a tech consultant, enterprise leader, startup entrepreneur & industry analyst. Leverage insights informing top Fortune 500 every month.
Cem Dilmegani
Principal Analyst
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Cem Dilmegani
Principal Analyst

Cem has been the principal analyst at AIMultiple since 2017. AIMultiple informs hundreds of thousands of businesses (as per similarWeb) including 60% of Fortune 500 every month.

Cem's work has been cited by leading global publications including Business Insider, Forbes, Washington Post, global firms like Deloitte, HPE, NGOs like World Economic Forum and supranational organizations like European Commission. You can see more reputable companies and media that referenced AIMultiple.

Throughout his career, Cem served as a tech consultant, tech buyer and tech entrepreneur. He advised businesses on their enterprise software, automation, cloud, AI / ML and other technology related decisions at McKinsey & Company and Altman Solon for more than a decade. He also published a McKinsey report on digitalization.

He led technology strategy and procurement of a telco while reporting to the CEO. He has also led commercial growth of deep tech company Hypatos that reached a 7 digit annual recurring revenue and a 9 digit valuation from 0 within 2 years. Cem's work in Hypatos was covered by leading technology publications like TechCrunch and Business Insider.

Cem regularly speaks at international technology conferences. He graduated from Bogazici University as a computer engineer and holds an MBA from Columbia Business School.

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