Key Takeaways
Bitcoin Ordinals allow users to attach data to individual satoshis, creating digital artifacts similar to non-fungible tokens (NFTs) directly on the Bitcoin blockchain.
Each satoshi can be numbered and tracked using the Ordinals protocol, and rare satoshis are ranked by a rarity system based on when they were mined.
Ordinal inscriptions store data fully on-chain, meaning they do not rely on external storage or a separate token standard.
The Ordinals ecosystem expanded with BRC-20 tokens in 2023 and the Runes protocol in April 2024, both of which enable fungible tokens on Bitcoin.
By the end of 2024, over 70 million inscriptions had been created on Bitcoin, though inscription activity declined significantly from its peaks from 2025 onwards.
Introduction
Bitcoin Ordinals are a method of attaching data to individual satoshis, the smallest denomination of bitcoin. Launched in January 2023 by developer Casey Rodarmor, Ordinals introduced a new use case for the Bitcoin blockchain beyond simple value transfer.
Before Ordinals, most blockchain-based digital collectibles lived on other networks. Ordinals changed this by making it possible to store images, audio, video, and other data directly on Bitcoin, without needing a sidechain or a separate token. This gave rise to what many call "Bitcoin NFTs."
What Are Bitcoin Ordinals?
The Ordinals protocol assigns a serial number to every satoshi in the order it was mined. This numbering system is called "ordinal theory." Because each satoshi can be uniquely identified, users can attach data to a specific satoshi in a process called "inscription."
A satoshi is the smallest unit of bitcoin (BTC). One bitcoin equals 100,000,000 satoshis, which means each satoshi is worth 0.00000001 BTC. The satoshi is named after Bitcoin's pseudonymous creator, Satoshi Nakamoto.
Satoshis are numbered in the order they are mined and tracked as they move between wallets. The first satoshi in the first block has ordinal number 0, the second has ordinal number 1, and so on. These ordinal numbers act as stable identifiers for any data attached to a satoshi.
How Do Ordinal Inscriptions Work?
Inscriptions became possible thanks to two Bitcoin network upgrades: Segwit and Taproot. SegWit (Segregated Witness), activated in August 2017, introduced the witness data structure and a discount on witness data size. This made it more practical to include larger amounts of data in a transaction.
Taproot, which activated on November 14, 2021, built on this further by removing a 520-byte limit on script data pushes, making it possible to embed large files such as images, audio, and video directly in a Bitcoin transaction.
Unlike many NFTs on other blockchains, ordinal inscriptions are stored entirely on the Bitcoin blockchain. They do not rely on external storage services or separate token contracts. This means they inherit Bitcoin's security and permanence.
Each inscription is tied to a specific satoshi. When that satoshi moves in a transaction, the inscription travels with it. Users need a Bitcoin wallet that supports "coin control," which lets them choose which satoshis to spend, so they don't accidentally spend an inscribed satoshi on transaction fees.
Ordinal Theory and Rarity
Ordinal theory allows satoshis to be ranked by rarity based on when they were mined. The rarity categories are:
Common: any satoshi other than the first satoshi of its block (total supply: approximately 2.1 quadrillion).
Uncommon: the first satoshi of each block (supply: 6,929,999).
Rare: the first satoshi of each difficulty adjustment period (supply: 3,437).
Epic: the first satoshi after each halving event (supply: 32).
Legendary: the first satoshi of each cycle, defined as when a halving and a difficulty adjustment coincide (supply: 5; first expected in 2032).
Mythic: the first satoshi of the genesis block (supply: 1).
Collectors refer to rare satoshis as "rare sats." The rarer the satoshi, the more collectors may be willing to pay for it, though market prices vary based on demand.
BRC-20 Tokens and Runes
In March 2023, an anonymous developer known as domo proposed the BRC-20 token standard. BRC-20 uses ordinal inscriptions to deploy, mint, and transfer fungible tokens on Bitcoin. The tokens are defined by JSON-formatted inscriptions that indexers read and track. BRC-20 gained significant attention in 2023, generating high transaction volumes and elevated network fees.
In April 2024, Casey Rodarmor launched the Runes protocol in the same block as the fourth Bitcoin halving. Runes is a more efficient approach to fungible tokens on Bitcoin. It uses Bitcoin's UTXO model directly rather than relying on external indexers, which reduces the amount of "junk" data left in the UTXO set. Many developers have moved to Runes for new token launches, while BRC-20 continues to operate for existing tokens.
Both BRC-20 and Runes represent experiments in expanding Bitcoin's functionality. Whether they represent durable use cases or transient trends remains to be seen.
Advantages and Controversies
Ordinals have added a new use case to Bitcoin beyond value transfer. They have brought developers, artists, and collectors into the Bitcoin ecosystem who were not previously active there. Some argue that ordinal-driven transaction fees provide an additional incentive for miners, which may become more important as block rewards continue to decrease over time.
Critics argue that inscriptions compete for block space with regular Bitcoin transactions, which can push up transaction fees for all users. There is an ongoing debate within the Bitcoin community about whether adding non-financial data to the blockchain aligns with Bitcoin's original design principles.
This disagreement reflects a broader tension: some participants view Bitcoin primarily as a monetary network, while others see it as a platform for any kind of permissionless data storage. Ordinals have made this debate more visible and active.
How to Create a Bitcoin Ordinal Inscription
Creating an ordinal inscription requires some technical steps. The most direct method involves running a full Bitcoin node and using a compatible wallet. A simpler approach is to use no-code inscription services that handle the technical steps on your behalf. For a detailed walkthrough, see our ordinal inscriptions guide.
Regardless of the method, you need enough bitcoin to cover the network transaction fee, which varies based on how congested the Bitcoin network is at the time of inscription.
FAQ
What is a Bitcoin Ordinal?
A Bitcoin Ordinal is a satoshi that has had data attached to it through a process called inscription. The Ordinals protocol gives each satoshi a unique serial number, allowing it to carry an image, text, audio, or other file type permanently on the Bitcoin blockchain.
Are Ordinals the same as NFTs?
Ordinals and NFTs share some similarities: both involve unique digital assets tied to ownership. However, ordinals differ in that the data is stored entirely on the Bitcoin blockchain, not on an external server or a separate token contract. Most NFTs on other blockchains store their metadata or media files off-chain.
What are rare sats?
Rare sats are satoshis that occupy a special position in the Bitcoin mining history, such as the first satoshi of a block, the first satoshi after a halving, or the first satoshi of the genesis block. Ordinal theory assigns these satoshis rarity rankings, and collectors may pay a premium for them.
What is the difference between BRC-20 and Runes?
Both are ways to create fungible tokens on Bitcoin using ordinal theory. BRC-20 uses JSON inscriptions and requires external indexers to track token balances. Runes, launched in April 2024, uses Bitcoin's built-in UTXO model and is generally considered more efficient and less wasteful of block space.
Closing Thoughts
Bitcoin Ordinals introduced a new layer of functionality to the Bitcoin network, making it possible to store digital collectibles, images, and tokens directly on-chain. After rapid growth in 2023 and 2024, inscription activity has moderated, and the ecosystem is still finding its long-term shape.
Whether ordinals become a permanent part of Bitcoin's utility or remain a niche interest depends on how the community balances innovation with the network's core purpose. As with any new development in crypto, staying informed and evaluating projects independently is the best approach.
Further Reading
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