What are Bitcoin Ordinals? A Guide to Blockchain Block Heights

what are Bitcoin ordinals? The image displays a bitcoin with text explaining what is bitcoin ordinals

Bitcoin enthusiasts, investors, and traders alike have gone wild over the recent ordinals storm, but what are they, and why are they creating all this buzz in the crypto space?

As the forerunner and flagbearer of the cryptocurrency revolution, Bitcoin remains distinctive in the constantly changing cryptocurrency ecosystem. Beyond its volatile pricing and speculative appeal, the blockchain, the underlying technology of Bitcoin, harbours many intriguing ideas that await exploitation. Bitcoin ordinals are one such idea that has drawn interest from traders, investors, and fans alike. 

The recent buzz surrounding Bitcoin ordinals has sparked curiosity and speculation within the crypto space. But what exactly are these ordinals, and why are they causing such a stir?

Understanding Blockchain Block Heights

Before unveiling Bitcoin ordinals, we must understand the underlying blockchain block heights technology. A blockchain is an immutable, decentralized ledger that logs every transaction sequentially. A collection of transactions, which are connected in an ongoing chain, is contained in each blockchain block. 

The term ‘block height’ refers to the position of a particular block within the blockchain. It is the block’s numerical identifier, indicating its sequential order in the chain. The first block in any blockchain, the genesis block, has a block height of 0. Subsequent blocks are assigned increasing block heights, with each new block adding to the chain’s height. A block’s height on a blockchain is determined by the number of confirmed blocks before it. A blockchain’s current block height can reveal its size and duration.

What are Bitcoin ordinals?     

Now that we are familiar with the fundamentals of blockchain block heights let’s examine the idea of Bitcoin ordinals.  Bitcoin ordinals are the equivalent of non-fungible tokens denominated in satoshis —a satoshi is Bitcoin’s network’s smallest unit. After mining, each satoshi is inscribed with a unique identifiable number based on its mining time. These unique numbers are called ordinals and aid in the blockchain’s tracking of each satoshi’s location and owner. More importantly, additional content (images, texts, graphics, and more) can be added to Satoshi’s through the inscription process. Adding data to Satoshis creates distinct and scarce digital assets, similar to NFTs. 

Casey Rodarmor, the developer of the Bitcoin ordinals protocol, integrated it on the Bitcoin mainnet on Jan. 20, 2023. Before then, bitcoins were interchangeable, meaning one satoshi from the blockchain could not be differentiated from the rest. Rodarmor’s protocol capitalized on two significant updates on the Bitcoin blockchain: Segregated Witness (SegWit) and the Taproot. 

After the update, Taproot introduced a new type of Bitcoin address format used by the Bitcoin Ordinals protocol to identify specific satoshis. In contrast, the Segregated Witness update enabled witness information, also called witness script, to be separated from transaction data and stored in a distinct data structure within the blockchain. With this modification, users could now include image and video data in the witness script in addition to digital signatures and other validation data, increasing the size of Bitcoin blocks.

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How do Bitcoin ordinals work? 

Bitcoin ordinals operate as unique identifiers assigned to each block within the Bitcoin blockchain, reflecting their sequential order in the chain. These ordinals serve as a chronological framework, ensuring transactions are processed in the correct sequence while safeguarding the integrity of the blockchain’s transaction history. 

By referencing block heights and ordinals, participants in the network can verify transaction validity and confirm the ledger’s integrity. Additionally, Bitcoin ordinals bolster the security of the blockchain, as any attempt to alter transaction records would necessitate tampering with the entire chain, a computationally infeasible task. Thus, ordinals play a vital role in maintaining the decentralized and secure nature of the Bitcoin network.

How to mine Bitcoin ordinals

Mining entails participating in the Bitcoin network’s process of validating and adding new blocks to the blockchain, which involves solving complex mathematical puzzles through high-powered computational hardware. However, contrary to the regular Bitcoin mining process, Bitcoin ordinal mining involves data inscription directly to the blockchain. This process ensures the chronological order of blocks within the blockchain, as each block is assigned a unique ordinal representing its position in the chain.

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Comparing Bitcoin ordinals and NFTs 

An image representing a comparison between Bitcoin and NFTs

Bitcoin ordinals and conventional NFTs differ primarily in how they handle data storage. Ordinals set themselves apart by directly storing content on the blockchain through inscriptions. In contrast, traditional NFT standards on alternative crypto networks usually just save metadata or a URL reference pointing to off-chain material.

In contrast to traditional NFTs, ordinals diverge in their approach to determining rarity and value. While conventional NFTs often rely on the artwork’s attributes or the supply’s scarcity to set prices, they introduce additional factors. Beyond mere attributes and scarcity, Ordinals may also consider significant moments in Bitcoin’s history associated with specific satoshis when assessing their value. This broader range of considerations in determining value sets Bitcoin ordinals apart from traditional NFTs, offering a unique perspective on digital asset valuation within the blockchain ecosystem.

What does the future hold? 

Since the inception of ordinals, they have ignited considerable debate within the cryptocurrency community. Critics contend that using inscribed satoshi ordinals results in inefficient use of block space, potentially culminating in heightened Bitcoin transaction fees and slower transaction times for all network users. On the contrary, proponents of the technology are intrigued by the protocol’s potential to broaden Bitcoin’s utility beyond financial transactions. This contrasting perspective reflects the ongoing discussion surrounding the implementation of Bitcoin Ordinals and their implications for the broader Bitcoin ecosystem.

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