By Landon Manning
A new project has appeared on the crypto scene, creating a new use case for Bitcoin; a system for tracking individual satoshis on the Bitcoin blockchain, effectively enabling Bitcoin NFTs.
This project, led by a former Bitcoin Core developer Casey Rodarmor, is essentially a protocol for assigning numbers to specific satoshis that can allow them to be tracked and specifically transferred. Representing one hundred-millionth of a single bitcoin, the satoshi is the smallest unit of bitcoin that can be used in transactions. By using the Ordinal protocol, users can assign content to a satoshi that they please, essentially opening the door for NFTs to run directly on Bitcoin’s blockchain.
NFTs (non-fungible tokens) can be a contentious issue, not only in the greater world of traditional finance but also among crypto advocates and Bitcoiners in general. The launch of this program immediately saw pushback from within the Bitcoin community, with people claiming that such an asset has little to do with Bitcoin adoption or daily usage for most people, and might even take up valuable resources. Still, there has been significant interest in Ordinals, as more than 90,000 inscriptions have been minted over the course of about a month.
For many, the purpose of an NFT is to create a speculative financial instrument, allowing users to provide a specific tracker for a piece of code, typically a piece of artwork, that cannot be replicated even if the art itself is copied. The first generation of NFTs, largely based on Ethereum’s blockchain, bubbled to widespread popularity in 2022 before popping spectacularly in the year’s subsequent crypto crash. If NFTs are to slowly return, finding use cases in things like online stores for video games or social media, it seems reasonable to believe that a Bitcoin infrastructure will provide many distinct advantages over an Ethereum one. Because each Ordinal inscription is tied to a satoshi, this will make their verification system “on-chain” at a fundamental level, instead of previous attempts that have a third-party workaround to merely align with an existing blockchain.
Although there is certainly skepticism about the viability of Ordinals in the long term, the buzz of excitement from its nascent community can definitely be seen as a positive for Bitcoin. As Fortune pointed out, bitcoin’s price bounce in early 2023 is largely correlating with the emergence of Ordinal. It quotes Jon Wong from the Solana Foundation as saying, “As Ordinal mints have increased, the minters have been willing to pay the miners, the computers that run and secure Bitcoin’s blockchain, more and more in transaction fees.” In other words, then, the increased frenzy could be one of the reasons behind bitcoin’s recent price increase.
Although the long-term staying power of Ordinals is unclear at the moment, it can’t be denied that ideas like this are a prime example of the endless iterations and innovations made by a strong Bitcoin community. The emergence of new ideas and technologies like Ordinals have provided many of the great use-cases of Bitcoin over the years, and both successful and failed projects can stimulate interest and activity in Bitcoin itself. Potential investors will have to choose carefully before deciding to put money into this new project, but for those who already have exposure to NFTs, it seems a no-brainer to bet on Bitcoin.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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