Ordinals Definition in Crypto

Ordinals are digital assets that can be created or minted on the Bitcoin blockchain. Ordinals let people attach unique digital content to individual satoshis, which are the smallest units of Bitcoin. This means you can put images, audio, video, or other data right on the Bitcoin blockchain, turning each inscribed satoshi into a one-of-a-kind digital artifact.

Origins and background

Adding unique digital artifacts to Bitcoin became possible after upgrades like Segregated Witness and Taproot. These changes gave developers new ways to store data directly on the blockchain. The system known as “Ordinals” was introduced in early 2023 by Casey Rodarmor and became popular for creating NFT-like items on Bitcoin. Earlier projects tried to bring NFTs to Bitcoin differently, but ordinals focus on inscribing data onto individual satoshis.

How ordinals work (in simple terms)

Ordinals work by giving each satoshi its own identity and history. Every satoshi receives a number showing its place in Bitcoin’s supply. When you add extra data to a satoshi, it keeps that data as it moves between addresses. This makes the data permanent on Bitcoin, just like regular transactions. Ordinals are based on two main ideas: numbering and inscription. Numbering assigns each satoshi a spot in the full list of all Bitcoin satoshis. Inscription means adding extra data to a satoshi, so the data stays with it as it moves. This data is stored on the blockchain, making it part of Bitcoin’s history and protected by its security. The numbering follows the order satoshis were mined and how they are used in transactions.

How ordinals differ from typical NFTs

Most NFTs are on smart contract platforms, where tokens link to content stored somewhere else or use on-chain rules to manage ownership. Ordinals work differently. Here, the content is put directly onto Bitcoin satoshis, so the artifact is part of the blockchain itself, not just linked from a token contract. This means the data is on Bitcoin’s ledger, and ownership follows regular Bitcoin transaction rules.

Uses and practical benefits

People mostly use ordinals to make collectible art, time-stamped artifacts, and small projects that take advantage of Bitcoin’s lasting nature. Since ordinals organize data by order and attach it right to the blockchain, it’s easier to trace which satoshi holds certain data. This helps when you need to check which satoshi has a specific inscription.

Technical limits and user notes

Ordinals use features in Bitcoin that allow data to be written directly on the blockchain. They don’t add a new token layer like many smart contract systems do. How ordinals are numbered and moved depends on how Bitcoin transactions work, so wallets and tools must support ordinals to track inscribed satoshis properly. If a wallet or service doesn’t support ordinals, it can be harder to keep track of which satoshi has which inscription.