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NFTs on Bitcoin: Ordinals

Basics of Ordinals and How They Work

There are 100,000,000 Sats (Satoshi) in 1 Bitcoin. They are created in order and you can follow them individually from when they were mined all the way to where they currently are as an unspent transaction. You just need to set up a wallet that does this. Currently Sparrow is the main one but as Ordinals continue to takeoff, I'm sure more wallets will track the Sats (Ordinals.) It's also important to freeze transactions so that you don't send ordinals when transferring coins. Essentially the idea is that Sats can be individually tracked aka they're non fungible. By following their order from the 1st Bitcoin to the last.

The way you create an ordinal is by attaching a piece of content to a Sat. Referred to in the community as transcribing. Currently you need to be running a node so that you can sufficiently track all the Sats/Ordinals.

Transcribing an Ordinal: Taken directly from a slide in @Rodarmor video on Ordinal NFTs:

Hash: (Ordinal || content hash || public key)
1. Sign
2. Append Signature, Data, and then Bech32 encode
3. Voila: nft1( encoded string here) -> 1 is the separater, nft is the human readable portion to identify what the hash is. (This is how Bech32 encoding works.)

The most interesting thing about ordinals is that they basically work because everyone agrees to make them work. If everyone agrees to follow the scheme which is very simple. They are ordered from 1 to current. You could also hypothetically have another ordinal scheme on top of the base one. Where you follow every 10th ordinal. Of course this wouldn't work because of collision. One ordinal could be connected to something in the 1 ordinal scheme and something else in the 10th ordinal scheme. So if it could be valuable to two different communities for different reasons.

While it may seem that this is a weaker security guarantee, I think it's as strong as it gets. It's essentially a reminder that our entire society runs because we've agreed to a similarly arbitrary set of rules. Crypto just makes it easier to enforce. It's fascinating because it's so beautifully simple. It also exponentially increases security because after all the coins are mined, everyone wondered if the miners would continue to secure the network if they were only earning tx fees.

Now those fees are millions of ordinals. Potentially valuable as more things are transcribed and built with them. It's so elegant in it's simplicity. This is just the start and after 10 years, it's about time some innovation came from the Bitcoin community. That it's so novel and unique and simple is delightful. I'm delighted. I can't wait to see the implications of this system propagate throughout the crypto community. Even if it doesn't become anything more than a temporary novelty in the long run.