An Introductory Guide to Bitcoin NFTs
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The Bitcoin Ordinals protocol lets you create non-fungible tokens (NFTs) directly on the Bitcoin blockchain. It has gained attention in the world of digital currencies since its launch in 2021. More than 10 million Ordinals have been created as of now.
However, if you’re new to NFTs, knowing your way around Bitcoin NFTs might be challenging. If you’d like to explore Ordinals, this blog discusses key things about Bitcoin NFTs that will help you find, make, and buy them on Ordinals marketplaces.
What Are Bitcoin NFTs?
Bitcoin NFTs, also called Bitcoin Ordinals, are special tokens in the Bitcoin ecosystem. They’re made using the Ordinals protocol, giving each digital item a unique number on the lowest denomination of a Bitcoin (BTC) named satoshi. This makes them rare and valuable and protects the creator’s intellectual property (IP).
These special tokens were created because the Bitcoin network got better with upgrades like SegWit and Taproot. These upgrades make complicated transactions easier and hide signatures, making the system work better.
Bitcoin is divided into small units called satoshis, and the Ordinals protocol lets people inscribe data on each satoshi, turning them into Ordinals or NFTs on the Bitcoin network. However, there are notable differences between Ordinals and NFTs.
Bitcoin NFTs can be used for all sorts of things like digital art, music, videos, or even intellectual properties in the online world. They’re like special certificates for digital assets.
A Short History of NFTs on Bitcoin
The idea of NFTs on Bitcoin dates back to 2012 when the Colored Coins project began. Colored coins are special bitcoins marked differently from regular ones. It was the first step toward having NFTs on the Bitcoin blockchain.
Making NFTs on Bitcoin was harder than on other networks like Ethereum. That’s because Bitcoin has fewer smart contract abilities and no set way (like Ethereum’s ERC-721) to make NFTs.
Recently, people have become more interested in Bitcoin NFTs, especially after the Ordinals protocol was launched in January 2023. This upgrade made it possible to create NFTs directly on the Bitcoin network. Yuga Labs then launched the TwelveFold collection a month later.
How Do Bitcoin NFTs Work?
Every Bitcoin NFT has a special satoshi with its own number, which makes each NFT unique and easy to trade or keep track of.
To make a Bitcoin Ordinal, you need to use Bitcoin Core and connect to a Bitcoin node. Then, you create an Ordinals Wallet and add satoshis to it. You also need to install the “ord” client on the Bitcoin node to inscribe the satoshis and make Ordinal NFTs. If you don’t want to use code, you can also create a Bitcoin NFT using OrdinalsBot or Gamma.
Ordinals are like NFTs, but they have something special—they’re inscribed on a satoshi, which is the smallest part of Bitcoin. This became possible with Bitcoin’s Taproot upgrade in 2021.
Unlike NFTs that you can find on different platforms, Ordinals are only on Discord, Telegram, and a few other places.
When a Bitcoin NFT is inscribed, its details get written into a special signature during a Bitcoin transaction. This signature, called a “witness,” happened because of the SegWit upgrade in 2017. These inscriptions are part of the blockchain and use the Ordinals protocol, unlike many other NFTs that work “off-chain.”
Why Should You Invest in Bitcoin NFTs?
You can choose Bitcoin NFTs for a few reasons.
First, you can own unique digital assets that are valuable to you and the parties engaged in creating and buying the NFTs.
Another reason is that the system is secure. The Ordinals system uses a secure method called Partially Signed Bitcoin Transaction (PSBT). When you trade with Ordinals, there’s no middleman, and the cost is only a small 2.7%. Soon, creators of Bitcoin NFTs will get a 4.2% fee, which will likely make them even more popular.
How Do You Buy, Create, Sell, and Trade Bitcoin Ordinals NFTs?
You’ll first need to get an Ordinals wallet if you are interested in creating and trading Bitcoin Ordinals NFTs. Since not all wallets support Ordinals, ensure your wallet’s compatibility before setting it up. Some excellent examples include Xverse, Sparrow, Hiro, and the Ordinals wallets.
You’ll then need to choose an Ordinals marketplace to connect your wallet. There are various Ordinals marketplaces, which we outline in the section below. Browse through the marketplace of your choice to find Bitcoin NFTs you’d like to purchase.
Proceed to load your wallet with BTC, which you will need to pay for the Ordinals, as well as the marketplace inscription fees. Once you’ve made the payment, the marketplace will send the inscribed satoshi to your wallet, where you can find your new Ordinals. Selling your digital collectibles is also just as straightforward.
Discord groups are also an excellent place to trade Bitcoin Ordinals NFTs. The platform uses escrow services to ensure traders aren’t duped. However, trading Ordinals on Discord can be a bit technical and is more appropriate for advanced collectors.
Best Marketplaces to Trade BTC Ordinals
The new Bitcoin Ordinals tech is just getting started, and some places make it easy for people to trade Ordinals.
Ordinals Market is one of the top marketplaces for BTC ordinals right now. It works on the Ethereum network and uses digital vaults to keep Bitcoin information. These vaults hold Bitcoin inscriptions, letting users trade their Bitcoin stuff on the Ethereum network. But if users claim their inscriptions and open the vaults, they can’t sell on the regular market.
Another good option is Ordswap. It lets people buy, sell, or make ordinals easily. Ordswap has features that let users connect with the Bitcoin network and create BTC ordinals without leaving the platform. It also has simple search options and stats for active traders.
For artists, Magic Eden is the go-to place to make BTC ordinals. It makes the inscription process smooth for artists so they can turn their creations into BTC ordinals and sell them quickly. However, Magic Eden doesn’t allow for royalties from re-sales.
How Are Bitcoin Ordinals NFTs Different From Other NFTs?
The new Bitcoin NFTs are different from Ethereum NFTs in some significant ways. NFTs on Ethereum sometimes store data off-chain in IPFS, a decentralized system. Rodarmor thinks NFTs are “incomplete” as they need outside data. In contrast, Ordinals on Bitcoin is “complete” with all data on the blockchain.
Bitcoin NFTs are like special digital items on the Bitcoin blockchain, and they can’t be changed. This is because of the Ordinals protocol that keeps the data on Bitcoin NFTs safe. Information on Bitcoin NFTs is stored on the blockchain, unlike Ethereum NFTs, which are often not on the blockchain and can be changed or lost.
Rodarmor calls Bitcoin Ordinals digital artifacts and prefers them over NFTs. This shift in Bitcoin may indicate an improvement over NFTs.
Another difference is that you can trade Bitcoin NFTs directly without a third party needing someone else in the middle. But with Ethereum NFTs, you usually need a platform in the middle to trade them, and there are no limits on who can use it.
Some Popular Bitcoin NFT Collections
Bitcoin now hosts various NFT projects like TwelveFold, Degods, and MegaPunks. Originally from Ethereum, these collections are part of the rising Bitcoin NFT trend, prompting developers to consider migrating their projects to the BTC network.
- TwelveFold : Yuga Labs, a renowned NFT creator, presents TwelveFold, showcasing generative art with intricate cylindrical lines or spheres. The collection comprises 300 NFTs, and Gamma’s secondary market sees trading volumes surpassing 10 BTC.
- Bitcoin Rocks : A set of 100 limited-supply NFTs capturing the essence and style inspired by Ether Rocks, a pioneering collectible project on the Ethereum blockchain.
- Taproot Wizards : A special group of hand-drawn wizards in the Ordinal collection by Udi Wertheimer on Bitcoin. Right now, there are only a few Taproot Wizards on the blockchain.
- Ordinal Loops : A special group of Bitcoin Ordinals, starting from Inscription 452. One NFT, called Object 0, shows a spinning math shape. It’s part of the first set of animations by the Ordinal Loops team, and there are more series planned.
- MegaPunks : A special group of 10,000 NFTs on BTC. It first started on Ethereum but moved to Bitcoin and did really well. People have traded these NFTs a lot on the second market.
Bitcoin Ordinals are becoming really popular, and that is a big deal for non-fungible tokens (NFTs) on the Bitcoin blockchain. People are excited and sometimes unsure about this new way of doing things. As more Ordinals are created, it’s important for those interested to learn about the risks and opportunities.
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Please note that the Content may have been generated with the Help of AI. The editorial content of OriginStamp AG does not constitute a recommendation for investment or purchase advice. In principle, an investment can also lead to a total loss. Therefore, please seek advice before making an investment decision.
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