What are Ordinals?

Imagine you could single out a specific euro cent across all the transactions it passes through. The Ordinals approach allows something similar for satoshis, the smallest units of Bitcoin. Each satoshi gets a number based on the order in which it was created through mining and is tracked as it moves, according to specific rules.

Content records known as inscriptions build on this approach. An image, a text or another digital file is written into the data of a transaction on the Bitcoin blockchain and linked to a specific satoshi. This doesn’t mean the file “fits inside” the coin. The link is recognized by software that follows the Ordinals rules, without changing the satoshi’s face value.

Why it matters

Ordinals opened up a way to create digital collectibles on Bitcoin itself. They are often described as “NFTs on Bitcoin,” but their mechanism differs from typical NFTs issued through smart contracts on other networks. With an inscription, the content itself can be recorded on the blockchain, not just a link to some external server.

For anyone using Bitcoin, there is also a practical consequence: inscriptions take up space in blocks. When demand for that space rises, they can intensify competition for transaction confirmations and push fees higher. We find this use of the technology interesting, but the added burden on ordinary payments is a genuine point of debate.

What to watch out for

To manage them you need a wallet that supports Ordinals. A regular wallet may treat the satoshi in question like any other and spend it in a payment or as a transaction fee. Also, owning an inscription doesn’t automatically transfer copyright over the image or file. And the fact that something has been recorded on Bitcoin guarantees neither its authenticity nor that a buyer will be found.