Bitcoin Ordinals: Store value on the Bitcoin blockchain

As other ecosystems grow rapidly, can Ordinals ride the wave of development on the Bitcoin network?

Ordinals has features consistent with the nature of Bitcoin such as immutability and offers real innovations such as numbering to help keep track of sats.
BRC-20, Bitcoin NFT are the main applications of Ordinals. Bitcoin NFT is the offshoot that attracts a lot of value for Ordinals
Ordinals has a limited existence but there are also many opportunities with many new products in development. A typical example is the Rune ecosystem

When value is permanently stored on the Bitcoin blockchain

Since its launch, Bitcoin has always been the representative face of the crypto market. $BTC is the coin with the largest market capitalization and is considered "digital gold". However, sticking to the idea of “digital gold” with an application just for storing, sending and receiving has limited Bitcoin to its own circle.

The ecosystem surrounding Bitcoin is almost stationary while others develop rapidly. Some people even begin to believe that Bitcoin will lose its leading position in the market.

Faced with that situation, many developers have tested solutions to bring new breeze to the Bitcoin network. Most prominent among them is Ordinals with the ability to engrave data into sats*, Bitcoin's smallest currency unit.

*1 BTC = 100 million sats

The unique features that Ordinals brings to the Bitcoin network include:

Engrave data onto sats

Ordinals helps inscribe data no larger than 4mb per SATS. The data here can be images, text/JSON/, even games or smart contracts,... The engraved data will become an inseparable part of sats and is stored directly and protected. confidential by the Bitcoin network. Thanks to this characteristic, Ordinals has opened the way to many new applications. The most prominent currently are Bitcoin NFT and BRC-20.

Unlike other blockchains where data is stored offchain or on storage networks like IPFS and there are potential risks involved.

For example, a PFP NFT is on-chain but the image data is stored on a centralized server. If the server crashes, the displayed image will also be lost.
Data stored directly on Bitcoin has integrity along with the Bitcoin network, as long as the network is active, the data is still available. Thanks to that immutable characteristic and the large available community, the Bitcoin NFT and BRC-20 projects gradually attract a lot of value.

Collection NodeMonkes on the Bitcoin network

Serial numbering for sats

Ordinals helps number sats based on the order in which they were mined and entered into circulation. This helps identify and track sats on the Bitcoin blockchain. With consensus from the community, sats with special serial numbers become rare sats.

These sats themselves have a higher value than regular sats and the data engraved on these sats are also more special. Currently the majority of Bitcoin's top NFT collectibles are those engraved on rare sats.

Outstanding parameters

overview

The number of transactions related to Ordinals is accounting for a significant proportion of the Bitcoin network. However, the above rate has a large fluctuation range, sometimes only a few % but sometimes up to 30-40%. Proves that the current Ordinals market is highly speculative and unstable.
There were over 64.1 million data engraved on sats and generated 6,434 $BTC (~430 million USD) in fees.
The type of data engraved is mainly text followed by images. This is the main generation method for BRC-20 tokens and Bitcoin NFTs.

Users & trading volume

Bitcoin NFT trading volume grew strongly. Magic Eden with its move to support the Bitcoin network has attracted a large amount of market share in a short period of time. On average, Magic Eden processes about 15-30 million USD in transaction volume per day, equivalent to the Blur exchange on the Ethereum network.
Compare user distribution with transaction volume. Bitcoin NFT has a lower number of users but trades at a higher volume. From there, it can be deduced that the current Bitcoin NFT segment belongs to the high value segment.

Bitcoin Ordinals ecosystem

Ordinals helps create new asset classes on the Bitcoin network. Projects are accordingly developed to solve the problem of asset turnover for users. In less than a year, the Ordinals ecosystem has made significant progress with many product launches.

The essence of Ordinals is to engrave data onto sats and users will trade those sats. This form is quite similar to trading NFTs.

BRC-20 essentially engraves text containing token name information, token number and other related parameters on the sat. The value of the sat now depends on the token name and the amount engraved inside.

Therefore, looking at the Ordinals ecosystem structure, we can see that the most developed project branch is the tool to help engrave data on sats and marketplaces to buy and sell different sats. There are gradually new branches being developed such as launchpad, DeFi. However, with the high cost and slow processing speed of the Bitcoin network, users will not have a good experience when using products that require a lot of interaction.

BRC-20

Although the number of BRC-20 tokens is the majority, most of them are meme coins. Trading volume is mainly focused on the $ORDI token, the first token created by the Ordinals team. There are very few current BRC-20 projects with products, and even fewer projects with good products.

As stated above, the Bitcoin network is not suitable for products that require a lot of interaction. Projects in the BRC-20 group are currently struggling with developing products that provide a good enough user experience.

Unlike other ecosystems, Bitcoin does not have a foundation to support capital, technology, etc. Therefore, fields that are difficult to bring value or require a lot of resources for research and development are often not included in projects. priority project.

Bitcoin NFTs have properties that match the advantages that Ordinals brings. Users who own NFTs have a lower transaction frequency than BRC-20, so are also less affected by restrictions from the Bitcoin network. The top NFT collections on Bitcoin are currently large in value.
Each collection has its own special features such as Ordinal Maxi Biz, Bitcoin Frogs engraved on rare sats, NodeMonkes running Bitcoin nodes, Runestone developed from the Ordinals team,...

The number of new Bitcoin NFT projects is gradually increasing as the Bitcoin Ordinals trend grows. This leads to demand for rare sats and trading of rare sats is also happening in the market.

Runes Protocol developed by the Ordinals team brings a new token standard to Bitcoin Ordinals, ARC-20. The project aims to solve the limitations of the BRC-20 standard, making transactions more convenient from the user's perspective.
Currently, pioneering exchanges supporting Bitcoin Ordinals such as Magic Eden and OKX have announced support for the Runes token standard. There have been projects launching tokens applying this new standard, but most of them are meme coins.

To attract more users to the Runes ecosystem, the Ordinals team has airdropped Runestone NFT to those who own more than 3 ordinals. 112,383 Runestone Ordinals were airdropped. Owning Runestone NFT will help users receive Runes Protocol's fungible token airdrop, expected to take place at Bitcoin Halving (April 20).
The first projects in the Runes ecosystem also quickly followed the Runes Protocol and announced airdrops for those holding NFT Runestone. This has caused NFT value to grow strongly in recent times.

What to expect with the upcoming Bitcoin Ordinals?

The attraction of Bitcoin NFTs

With the characteristics of the Bitcoin network and the advantages created by Bitcoin ordinals, Bitcoin NFTs have a lot of potential to attract value following the growth of $BTC. The Bitcoin network platform is limited for regular transactions but is suitable for collectible values.

For example, chains like Solana are suitable for fast transactions in the low to mid-priced NFT segment. Bitcoin ordinals are more suitable for collectible purchases with the high-value NFT segment.

The revenue pie from trading Bitcoin NFTs will create more value for whichever NFT marketplace dominates the market share, similar to how Magic Eden is at the top in terms of revenue generated currently. This project is also having a points program and users can collect diamonds to exchange for future rewards.

It should be noted: The current Bitcoin NFT market share is quite concentrated as most of the value revolves around the top names. With the appearance of new collections, the level of competition between them will gradually increase and it is not guaranteed that the current leading names can maintain their position. The fact that Tensor surpassed Magic Eden on Solana in the past is proof of this.

Bitcoin Ordinals and restrictions

Bitcoin Ordinals bring many unique features to the Bitcoin network, but they also come with disadvantages.

Carving more data means the network capacity will be heavier, making node operating conditions more difficult. Transactions on Bitcoin are likely to be frequently congested due to sudden increases in transaction volume. All will affect network maintenance and user experience.

The future Runes ecosystem

Being developed by the Ordinals team, the Rune ecosystem is expected by many to grow strongly. However, the current Runes ecosystem is still too young, the projects with tokens in the ecosystem are mostly meme coins.

NFT Runestone prices have increased in recent times depending heavily on news of airdrops. With the current capitalization value, buying Rune in the short term is potentially risky, especially after the airdrop takes place.

The new token standard has many improvements, but success depends on the project representing that token. In the long term, with the Ordinals team's understanding of the Bitcoin network demonstrated through past products, it is likely that the Rune ecosystem will have products that take advantage of the strengths of the Bitcoin network.

summary

Ordinals brings a breath of fresh air to the Bitcoin network with unique features that take advantage of the platform's characteristics and strong community elements. Despite its limitations, Bitcoin Ordinals still has the potential to develop products with its own identity, helping to bring value to the Bitcoin network in the future.