How did Bitcoin NFTs start?
Bitcoin NFTs, or the concept of using Bitcoin to store digital assets, started years ago before Ethereum and Solana NFTs. The idea was first introduced in 2012 when Meni Rosefeld wrote a paper on “Coloured Coins” to store additional information on Bitcoin to represent assets. While it didn’t work out due to the lack of sophistication of the research and Bitcoin at the time, it served as the foundation for NFTs.
In 2014, the creation of Counterparty made it one of the early pioneers of Bitcoin NFTs. Counterparty launched a collectible asset in September 2016 called “The First Rare Pepes,” which consisted of a collection of Pepe the Frog memes that could be bought and sold using Bitcoin or its protocol native token, XCP. However, due to the OP_RETURN function, which allowed users to store data in the blockchain up to a maximum of 80 bytes, the collection was unsustainable.
In 2023, Bitcoin is becoming a platform for storing NFTs using a numerical method called “Ordinals.” This means that the blockchain technology behind Bitcoin, famous for its decentralization and transparency, can be used to safely store and transfer NFTs.
How did Ordinals start, and who started it?
Ordinals are digital assets or inscriptions created by Casey Rodamor, who used to work for Bitcoin. These Ordinals, also known as Bitcoin NFTs, can be created on the Bitcoin blockchain with the help of Casey Rodamor’s “Ord” wallet. Each small part of Bitcoin is given a unique number in the wallet, and users can attach different media types, such as pictures or videos, to these numbers to create their digital assets.
What are Ordinals?
Ordinals are a way of assigning a unique number to each Satoshi, which is the smallest unit of Bitcoin. With ordinals, you can keep track of individual Satoshis and know precisely how many you have. It’s like assigning a unique serial number to each coin, except in this case, it’s a digital currency unit. This numbering system can help track the movement of Bitcoin or Satoshi units.
What are Digital Artefacts?
Digital artefacts are a type of NFT that is unique and cannot be replicated or changed. To be considered an artefact, the NFT must meet certain requirements. It must be created using a standard protocol that ensures compatibility with other decentralised platforms and stored on a decentralised blockchain network. Once stored on the blockchain, the artefact becomes immutable, meaning it cannot be altered or deleted. Finally, artefacts must be unrestricted on-chain, meaning they can be transferred or sold freely without external restrictions.
What are Inscriptions?
Inscriptions are digital artefacts generated by adding content to your Bitcoin using a unique tool called “the Ord client”.
Inscriptions don’t require any sidechain, separate token or changes to the Bitcoin blockchain. They are also public, so you can view them using the original explorer.
What is the value of Bitcoin NFTs?
The value of Bitcoin NFTs is determined by similar factors of other blockchain NFTs, such as their rarity and level of demand. Also, it can be determined by the value of Bitcoin itself, depending on whether the market condition is favourable or otherwise. Apart from these, the founder’s reputation and experience can significantly influence how much people would be willing to pay for the NFTs.
How to get started with Bitcoin NFTs
To start investing in Bitcoin NFTs, the first thing to do is to run a full node on Bitcoin to allow you to create, sell or transfer them.
Secondly, create a sparrow wallet here.
What are the pros and cons of Bitcoin NFTs?
Like other blockchain NFTs, Bitcoin NFTs have their upsides and downsides.
Pros of Bitcoin NFTs
They expand the Bitcoin ecosystem by attracting new creators and users.
Bitcoin NFTs help to enhance a community of like-minded individuals by bringing them together through digital collectibles to learn, educate and connect. Also, it lowers the barrier of entry for new users and creators by helping creators monetize their work, and the users access unique digital assets.
They create another excellent use case for Bitcoin.
By enabling digital assets through inscriptions and ordinals, Bitcoin NFTs create a new use case for Bitcoin rather than a means of exchange or a store of value for which Bitcoin is known. This will contribute to the scalability of the blockchain by solidifying its excellence through innovation.
Cons of Bitcoin NFTs
Slower Transactions
The transaction per second of Bitcoin could be faster compared to other blockchains. At the speed of 7 transactions per second, if NFTs become more popular on the Bitcoin network, they could increase the slow transaction issue. NFTs are unique digital assets that are often bought and sold on the blockchain, which means that each NFT transaction adds to the overall transaction load on the network. This could lead to even longer confirmation times and higher fees for NFT and other Bitcoin transactions.
You need to run a full node on Bitcoin before you can create, sell or transfer.
A node is a computer that runs the Bitcoin software and connects it with the network. Nodes are essential for the security of the Bitcoin network, as they monitor the blockchain and reject any transactions that break consensus rules.
To get access to Bitcoin NFTs, you need to start your journey into ordinals. However, you need to acquire a Bitcoin node and get “Ord” running; otherwise, you won’t be able to create, sell, or transfer your NFTs. You can get started using the handbook here or get your node here or read through Casey’s conversation here and join the community for Ordinals here to learn and contribute to the technology.
How to sell or transfer Bitcoin NFTs without using a full node
If you have the chance to mint but want to bypass running the whole node. You can use Peer-2-peer or OTC to sell or transfer your asset by following the following steps:
Make sure you are in the Discord community and have the mint opportunity.
Send crypto to the creator to help you keep the NFT in his wallet.
Use the Peer-2-Peer or OTC Trading channel to connect with your buyer.
Chat with your buyer and have a mutual agreement.
Reach out to the creator and request an escrow service.
The buyer sends the crypto to the escrow, and the escrow releases your NFT to their wallet.
The escrow releases the crypto to you.
How to Create your own Bitcoin NFTs
Using the Ordinal wallet, use the command “ord wallet inscribe file.jpg” to inscribe an NFT on the Bitcoin blockchain.
To set a custom fee rate and name your wallet, use the command “ord –wallet ord-dotta wallet inscribe file.jpg –fee-rate 5”.
Wait for the NFT to be confirmed, which may take some time.
Note that only one NFT can be inscribed at a time, so to create a collection, you need to have more UTXOs (Unspent Transaction Outputs) in your inscribing wallet.
Think of each UTXO as a crypto transaction change or unused transaction output. This means that if you send yourself two transactions of enough size, you can inscribe two Ordinals simultaneously.
Make sure you send enough Bitcoin to each UTXO, or else you won’t be able to inscribe the NFT because you need enough sats to pay the mint fees.
Please don’t use any other wallet software with this Ordinal wallet address, or it may interfere with the inscription process.
How to know the Bitcoin NFTs to invest in
Like other blockchains, you can check for various factors, including team, roadmap, influencers etc. However, the art can be tough to explain because it’s weird, unlike Ethereum or other blockchain NFTs.
In addition, you can check for derivative or historical projects because they mostly have a higher demand and are easy to liquidate in any market.
Lastly, you can target the top Bitcoin NFTs because they’re often more costly due to their rarity. The more they’re first inscribed, the higher the demand and the perceived value.
Bitcoin NFTs are still growing with room for more innovation, so you can expect a vast growth or decline in the future. Always DYOR before buying into the hype of any project. You can use ordinals.com to do some of your research.