Why Bitcoin NFTs Make no sense — but they’re probably here to stay

No one’s ready for Bitcoin NFTs, not even Bitcoin itself, and here’s my attempt at trying to see the sense in this.

Let me start by explaining what Ordinals are —

The implementation of Ordinals, a new protocol on the Bitcoin network, has generated quite a bit of controversy lately. The protocol makes it possible to add non-fungible tokens (NFTs) to Bitcoin transactions, enabling the use of NFTs on the Bitcoin blockchain. They’re not technically tokens, and have nothing to do with fungibility. NFTs on Bitcoin are actually metadata added to transaction details. Yes they are immutable. No, nobody really owns them.

The Ordinals protocol was introduced in January and allows various forms of data such as images to be directly encoded onto sats, the smallest units of Bitcoin that have a value of 0.00000001 BTC, on the Bitcoin blockchain. Unlike other methods that use a separate sidechain or token, Ordinals doesn’t require such resources. Different types of data like JPEG images, digital art, new profile picture (PFP) projects, and even an old video game called DOOM from 1993 have already been encoded onto the Bitcoin blockchain using the Ordinals protocol.

Each inscription made using Ordinals is considered a “digital artifact” that is believed to be permanent and permanently stored on the Bitcoin blockchain. This sets it apart from many other NFT projects on Ethereum, Solana, and Stacks, where metadata can be modified or removed by the creator of the smart contract. While some types of mutable data can be changed, like the linked image, description, category, or contract identifier, especially if stored on a centralized database, Ordinals store the entire image or content directly on the blockchain, not just a link to an external server.

So far, more than 50,000 ordinals have been created on the Bitcoin blockchain, and some of them have already been sold for high prices. The Ordinal Punk project is a spinoff of the original Ethereum-based CryptoPunks NFT collection. The record sale so far is 9.5 BTC (about $218,000) for Inscription 620.