Top 9 Benefits of Ordinal Inscriptions in 2024

In late January of this year, Casey Rodarmor released the ordinals protocol. This development enables the bitcoin community to create bitcoin NFTs (non fungible tokens) on the Bitcoin blockchain. Bitcoin ordinals have quickly caught on: By February 8th, there already were 13,000 ordinal NFTs on the chain (Figure 1).

Ordinal inscriptions are popular because they bring NFTs directly to the Bitcoin network, previously possible only through the Stacks Layer 2 programming network that allowed the creation of bitcoin-secured NFTs and smart contracts. NFTs are also most popular on blockchains such as Ethereum. In this article, we will be discussing the top 9 benefits of NFTs on Bitcoin for users, creators, and the Bitcoin community.

Clarification:

We will be using these terms interchangeably, as is the case in the media:

• Ordinal inscriptions
• Digital artifacts
• Bitcoin NFTs
• Ordinal NFTs
• Bitcoin inscriptions

What are ordinal inscriptions?

Ordinal inscriptions are inscriptions directly on individual satoshis stored on the Bitcoin blockchain. These bitcoin inscriptions can be at a maximum size of 4mb, in any format. These transformations would change each host satoshi into bitcoin NFT (Figure 2).

The ordinals protocol is an important discovery because until now, digital art could only be stored on networks that supported digital collectibles. An example is the Ethereum blockchain with its “ERC-721 standard” for creating and managing NFTs.

But Rodarmor found a loophole in the Taproot scripts. It allows users to inscribe satoshis, the smallest unit of bitcoin, which already have an ordinal number and are stored on the bitcoin network, with witness data of images, videos, PDFs, audios, etc.

How to create ordinal inscriptions?

To create ordinal inscriptions:

• Build an ordinals-compatible wallet to house your inscriptions
• Use a no-code ordinals inscription tool, like Gamma.io, Ordinals Wallet, Ordswap, etc. to create an inscription and send it to your wallet

Read our in-depth article on creating ordinal inscriptions.

What are the benefits of ordinal inscriptions?

For Users

1. Secure

Inscriptions are stored on the Bitcoin blockchain directly, not on sidechains. This is in contrast to Ethereum NFTs, where the data  can be stored off-chain, which makes the digital assets more centralized and mutable.

But thanks to the Bitcoin protocol, bitcoin users can store their digital artifacts on the chain and use it as a digital currency immediately.

2. Liquid

Bitcoin outranks all other cryptocurrencies in transaction volume, market cap, etc. Bitcoin’s popularity makes bitcoin inscriptions more liquidable than traditional NFTs sold elsewhere. Besides, Bitcoin has always been lauded as a pure P2P cash payment system. This adds to the attractiveness of the bitcoin ecosystem for housing your next digital artifact.

3. Exclusive

Ethereum doesn’t have a fixed maximum supply, but bitcoin’s is 21M. And inscription data can only go on existing sets, or those that will be created in a limited amount, and at a diminishing rate, until 2140 (Figure 4). So the unique feature of the bitcoin ecosystem makes Bitcoin native digital artifacts rarer than traditional NFTs.

4. Ready-to-use

The Bitcoin blockchain is already a well-established and widely used network. This means inscriptions can be made and traded right now.. Moreover, Bitcoin blockchain’s economy of scale can also reduce the costs and time associated with transferring bitcoin NFTs.

5. Clear royalty model

Creator royalties can complicate traditional NFT sales on the secondary markets. That’s because it’s not always clear on which marketplace an artist’s NFT will end up, and whether or not that marketplace supports creator royalties. Therefore, an artist could receive royalties on the first sale, but perhaps not on any other. Since ordinal inscriptions don’t have smart contracts, they don’t support royalties and take the guesswork out of the equation. 

For Bitcoin Community

6. Expands bitcoin use cases

Bitcoin purely used to be for P2P transactions. But with Bitcoin NFTs, artists can now use Bitcoin to sell their digital artifacts. So the monopoly of Ethereum and other networks for selling digital art might no longer exist. This attracts new users and enables them to use bitcoin for creative or entertainment purposes, which could fund a growing ecosystem. 

7. Encourages more miners to participate

When there is a high demand for block space, miners can earn more transaction fees by including more transactions in their blocks. This can incentivize more miners to participate in the network, as they have a greater chance of earning more rewards. This, in turn, can improve the security of the network, as it increases the total hashing power of the network and makes it more difficult for attackers to carry out a 51% attack.

This is particularly important since bitcoin’s chain receives less fees compared to other networks, such as Ethereum, Uniswap, BNB Smart Chain, and GMX (Figure 6). So having more demand for block space and increased participation makes Bitcoin’s blockchain more sustainable. 

8. Provides complete digital artifacts

Ordinals’ protocol creator claims that digital artifacts are “complete” in the sense that they are stored on chain and on the Bitcoin blockchain, as opposed to side chains and off-chain storage systems. The other implication is that creating unique digital artifacts on bitcoins is immutable and thus complete. 

9. Prioritizes valuable inscriptions

Transaction fees prioritize which bitcoin transaction is processed first. With a higher transaction fee, users prioritize which transactions they’d want processed first. This helps prevent network overload, and ensures that those involving large sums of money or that deal with valuable inscriptions are processed quickly and securely. This can discourage lower value inscriptions and prioritize valuable inscriptions.