bitcoin ordinals

Bitcoin dev denies adding inscriptions to National Vulnerability Database

Bitcoin core developer Luke Dashjr said he played no part in flagging Bitcoin inscriptions as a cybersecurity threat with the NVD, as the listing received a “5.3 Medium” severity score.

Bitcoin core developer Luke Dashjr has denied playing any part in adding Bitcoin inscriptions as a cybersecurity risk on the United States National Vulnerability Database’s (NVD) Common Vulnerabilities and Exposure (CVE) list. 

Dashjr courted controversy in a Dec. 6 post to X (formerly Twitter) claiming that inscriptions — used by the Ordinals protocol and BRC-20 creators to embed data on satoshis — exploit a Bitcoin Core vulnerability to “spam the blockchain.”

The Bitcoin network has seen increased congestion over the past few months due to a wider craze around Ordinals’ nonfungible token inscriptions and BRC-20 token minting.

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Bitcoin inscriptions added to US National Vulnerability Database

The United States National Vulnerability Database (NVD) flagged Bitcoin’s inscriptions as a cybersecurity risk.

The National Vulnerability Database (NVD) flagged Bitcoin’s inscriptions as a cybersecurity risk on Dec. 9, calling attention to the security flaw that enabled the development of the Ordinals Protocol in 2022.

According to the database records, a datacarrier limit can be bypassed by masking data as code in some Bitcoin Core and Bitcoin Knots versions. “As exploited in the wild by Inscriptions in 2022 and 2023,” reads the document.

Being added to the NVD’s list means that a specific cybersecurity vulnerability has been recognized, cataloged, and deemed important for public awareness. The database is managed by the National Institute of Standards and Technology (NIST), an agency of the U.S. Department of Commerce.

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Bitcoin Ordinals ORDI token tops $1B market cap after 850% monthly gain

Following an outsized rally, ORDI became the first BRC-20 token to breach a $1 billion market capitalization.

The Bitcoin Ordinals-based ORDI token has become the first BRC-20 token to top a $1 billion market capitalization after staging triple-digit monthly and weekly percentage gains.

ORDI notched a new all-time high of over $65 on Dec. 5, surging more than 850% from around $6.80 on Nov. 5, according to CoinGecko data. ORDI is up 216% in the last seven days.

The sudden ORDI price uptick saw it become the first BRC-20 token to reach a $1 billion market cap on Dec. 5. At the time of writing, it has a value of $1.3 billion.

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Improving Bitcoin NFT marketplace infrastructure sets the stage for ecosystem growth

Bitcoin NFT inscription activity continues to rise and the launch of new BTC specific marketplaces could lay the groundwork for the next hype cycle.

Bitcoin NFT inscription activity has remained strong with consistency in the daily number of NFTs inscribed on Bitcoin. At the same time, the infrastructure to foster Bitcoin trading is finally coming together with the development of wallets and marketplaces supporting Ordinals.

NFT marketplaces, Gamma and Magic Eden, added support for Bitcoin NFTs this week. While the initial response of traders has been subdued, the activity is expected to pick up soon.

Improving the infrastructure around Bitcoin NFTs

Bitcoin NFTs, also-known-as Ordinals, began with much fanfare in late January as they enhanced the utility and revenue of the Bitcoin blockchain.

Dune dashboard from data analyst dgtl_assets shows that the Ordinals inscription activity remains robust, with nearly 580,000 NFTs inscribed in less than three months.

Cumulative sum and number of daily BTC NFTs inscribed. Source: Dune

While the daily inscription activity is vigorous, the trading volume of Bitcoin NFTs is still muted, which can be primarily attributed to the absence of Bitcoin wallets and supporting marketplaces.

Ordinals require a specially designed Bitcoin wallet that recognizes content files on discernable satoshis, the smallest unit of Bitcoin, and facilitates its transfer. Hiro and Xverse are the leading wallet providers in the space.

Mark Hendrickson, the product lead at Hiro, told Cointelegraph that the “active users for the wallet are up significantly in general this year, around 350%.” The activity picked up significantly since February, thanks to the Ordinals hype.

On the other hand, Xverse added Bitcoin NFT support on February 15.

So far, the Xverse Chrome browser extension has been downloaded on over 10,000 browsers, with Hiro’s download numbers surpassing 90,000. The Hiro wallet enjoys an advantage here as it was initially designed for the Stacks blockchain, a Bitcoin sidechain that supports smart contract ability.

Marketplaces come together

Since March 19, there has been considerable improvement in the space, with two leading marketplaces, Gamma and Magic Eden, beginning to support Ordinals trading on March 20 and March 22. So far, the marketplaces have met with a soft opening with less than $1 million in trading volume on both venues.

In comparison, OpenSea has facilitated more than $10 million in daily trading volume on Ethereum NFT trades alone on most days in the first quarter of 2023.

Gamma users have completed around 182 Bitcoin NFT purchases since launch. Whereas Magic Eden has done close to 18.94 BTC (worth around $530,000) volume since launch, with the Bitcoin DeGods collection dominating volumes by 67%.

Related: Stacks (STX) surges as Bitcoin NFT hype grows, but its blockchain activity raises concern

Additionally, Hendrickson noted that Magic Eden enjoys an advantage in “the cross-protocol department given that they’ve previously rolled out support for Solana, Ethereum and Polygon. This could help serve cross-chain trading needs faster, especially as demand increases for moving liquidity across chains to access their various NFT markets.”

Bitcoin Ordinals top collections on Magic Eden. Source: Magic Eden

At the same time, he noted that “Gamma has an advantage among Ordinals marketplaces given their deep focus on Bitcoin-based technologies.” Data provided by Hendrickson shows that the number of Hiro users interacting with Gamma surged significantly to around 2,144 weekly users as the hype around Bitcoin NFTs kicked off.

Number of Hiro clients that connected their wallets to Gamma. Source: Hiro

The Bitcoin NFT trading activity is expected to pick up. Ordinals provide superior security guarantees than NFT ecosystems elsewhere. The digital media file of Ordinals is stored directly on the Bitcoin blockchain and enjoys the same security guarantees as regular BTC transfers. Whereas other ecosystems like Ethereum store the content file of the NFT on third-party storage solutions like AWS and IFPS. Hendrickson noted, “Their long-term durability is a huge advantage.”

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Magic Eden launches marketplace for Bitcoin Ordinals

It’s one of the first major NFT marketplaces to join the Bitcoin Ordinals fray, which as of March 21 boasted 567,087 inscriptions.

Nonfungible token marketplace Magic Eden has launched its own “fully audited” marketplace for Bitcoin Ordinals, leveraging the surging interest in “Bitcoin NFTs.” 

The newly launched marketplace allows Bitcoin (BTC) NFT traders to buy and sell Bitcoin Ordinal collections, giving users a similar experience to the one that Magic Eden offers for Polygon, Ethereum and Solana-based NFTs.

“Just as we have expanded into other chains, we now aim to bring our expertise in building marketplaces to the nascent, yet flourishing Ordinals ecosystem,” the firm said in a March 21 statement. 

The new Ordinals protocol was introduced in January by former Bitcoin core contributor Casey Rodarmor. Since then, the popularity of Bitcoin Ordinals has surged.

According to data from Dune analytics, between Feb. 1 and March 1, the total number of Bitcoin Ordinals inscriptions surged from 679 to 240,000. As of March 21, a total of 567,087 have been inscribed.

“We paid close attention to the release of Ordinal Theory and the lightning pace of adoption that soon followed,” said Magic Eden, adding:

“Our marketplace was built within a month, culminating in a hackathon in California with over a dozen devs.”

Currently, the marketplace only supports secondary sales of Bitcoin Ordinals. The marketplace said it is also looking into future tools that would allow creators to more easily mint or inscribe Bitcoin NFTs, such as its launchpad, which it offers for other chains.

In order to enable permissionless swaps, it uses partially signed Bitcoin transactions — a Bitcoin standard that allows multiple parties to sign the same transaction — rather than smart contracts.

The marketplace launched with over 70 collections. Source: Magic Eden

Meanwhile, Magic Eden says while there will be no royalty support for the marketplace, it is “actively looking” into this, adding there is “very little tooling and no secure and trustless enforcement solutions.” 

“With no royalty standard today, we have decided to launch on Bitcoin without royalty support for now,” said Magic Eden.

“We believe that this is most in-line with the ethos of the ecosystem, and despite this, we are actively looking into the development of an on-chain, permissionless royalty standard and are committed to working with creators and the greater community,” it added.

Related: Bitcoin thought leaders weigh the pros and cons of Ordinals

Other Bitcoin Ordinals marketplaces have already launched, including ORDX and Generative XYZ, which launched in February. Earlier this week, NFT platform Gamma.io unveiled its own Bitcoin Ordinals marketplace, allowing users to create and trade ordinal inscriptions in a manner similar to Ethereum NFT marketplaces.

Cointelegraph contacted Magic Eden for comment but did not immediately receive a response.

Related: Become a hot new NFT artist via the ‘soft shell taco method’ — NFT creator Terrell Jones

What are Bitcoin ordinals?

Bitcoin ordinals have been the most hyped-up Web3 trend of 2023 so far. How do ordinals compare to traditional NFTs, and what are the opportunities?

Ordinals vs. traditional NFTs

Ordinals are different from traditional NFTs from a technical design perspective. There are several features that make the pricing for ordinals a different exercise. 

Bitcoin ordinals, as mentioned before, help identify sats uniquely and have content or art stored on-chain. Ethereum’s ERC-721 standard, which is used to create NFTs, typically holds the metadata or a pointer to the art, which is generally held off-chain. Some Ethereum NFTs are experimenting with on-chain storage, but they are more of an exception.

The other key difference with Bitcoin ordinals is the way rarity is derived and how pricing around the NFTs would work. With traditional Ethereum-based NFTs, the attributes of the art typically define the rarity of the NFT and, subsequently, its price. With NFTs like Ethereum Name Service (ENS) for instance, limited supply drives the value.

However, with Bitcoin ordinals, pricing would be defined by key moments that a Bitcoin block would represent. The first 1,000 or 10,000 ordinals inscribed might still be treasured by collectors. Don’t be surprised if the genesis Bitcoin ordinal is sold for a few million dollars in a couple of years. Yet some sats would be considered more precious than others.

A simple framework suggested by the founders of Bitcoin ordinals is that key events would decide the rarity of a sat and the ordinal inscribed into that. The first sat of every new block would be rarer than the other sats in the block. The first sat of an adjustment period that occurs approximately every two weeks would be even rarer. As the next halving is slated for 2024, the first sat of each halving epoch would add another level of rarity. 

Finally, the first sat of the adjustment period, which happens once every six halvings (approximately once in 24 years), would be another level of rarity. Per the founders of this amazing innovation, this could differentiate Bitcoin ordinals from NFTs and make their rarity truly random and not controlled by the founding teams of nonfungible token collections or by their artists.

This could also help understand why the activity around Bitcoin ordinals has already peaked in the short term. It would be interesting to see how activity ramps up closer to the Bitcoin halving in 2024. 

How have ordinals been perceived by the broader Bitcoin ecosystem?

Bitcoin ordinals are a great innovation that can highlight various applications unique to the chain, thereby driving developers to participate and create the tools needed by users.

Bitcoin ordinals have certainly seen a hype that potentially peaked sometime in February 2023, based on transaction data. However, the hype around the application tier on the Bitcoin blockchain is just getting started. 

For instance, Stacks (STX) has seen a rise in price since the ordinals episode warmed up. It is clearly the early days for the Bitcoin ecosystem, but if developers are attracted to the chain, then the network effects between developers and users could come in time for the next crypto cycle.

Related: Bitcoin DeFi ecosystem explained

However, there are downsides to the way ordinals have been designed. As the inscribed content is all on-chain with ordinals unlike with most Ethereum-based NFTs, the size of the blockchain would increase. As new applications emerge and network utilization and transactions increase, so will the cost of transactions. 

The other potential impact of Bitcoin ordinals is whether it will affect the fungibility of sats. So far, satoshis have been exchanged with one sat being valued the same as another. With various applications of ordinals, this may not be true in the future. A sat with a Bitcoin Punk inscribed in it could be priced differently. Nonetheless, it would be interesting to see how this narrative evolves over the next few months and years.

How to buy, sell and trade ordinals

Much like the process of minting Bitcoin ordinals, the trading process hasn’t had the matured tooling. Yet there are a few tools to trade these digital artifacts.

As Bitcoin ordinals grow in popularity, most of the trades have been largely over-the-counter. Collections, such as “Planetary Ordinals” and “Bitcoin Punks,” among the first 1,000 inscriptions were transacted mostly without an NFT marketplace such as OpenSea or Blur.

However, tools like the Ordinals Wallet, Hiro and Xverse allow users to buy and sell Bitcoin ordinals. Users can buy some sats within the wallet, using on-ramp payment plugins, and perform the transactions to buy and sell ordinals.

The typical user journey involved in buying Bitcoin ordinals using Ordinals Wallet is as follows.

  1. Go to ordinalswallet.com
  2. Click on “Create Wallet”
  3. Take a backup of the recovery phrase for your wallet
  4. Set up a password for wallet access
  5. Use the address of the Ordinals Wallet to send some sats to the wallet 
  6. Go to “Collections” at the top of the page
  7. Choose the ordinals collection and the inscription that you would like to buy
  8. Buy the ordinal (using the sats in your wallet).

How to mine Bitcoin ordinals?

Mining, minting or inscribing Bitcoin ordinals are the terms that have been used to refer to this process. Unlike minting NFTs on the Ethereum blockchain, which is a relatively matured process, mining Bitcoin ordinals is a technically complex process and lacks intuitive tools.

Bitcoin ordinals, in the initial days, could only be mined by those who ran a Bitcoin node. For tech-savvy users, a Bitcoin node with the ord app, a command line wallet, would be the gateway to mining ordinals. Node operators would load their wallets with some sats to pay for the gas fees and perform an inscribing process on their ordinals.

However, no-code ordinal mining applications like the Gamma or the Ordinals Bot aim to allow users to upload the content that they want to inscribe to create their Bitcoin ordinal. The user journey takes them through a payment process using a QR code and is intuitive enough for the less technically gifted.

The tools around Bitcoin ordinals are still at a very early stage. It has only been a few months since the genesis ordinals were inscribed. As demand from ordinary users and followers increases, the ecosystem and the tooling should start maturing with more user-friendly journeys.

How do Bitcoin ordinals work?

Bitcoin ordinals are based on ordinals theory that essentially has brought life to satoshis (sats) and allows them to be treated as atomic units on the Bitcoin blockchain. Ordinals, in their simplest state, are a numbering scheme for sats.

Ordinals theory drives the mechanics behind how Bitcoin ordinals work. Ordinals theory defines satoshis (sats) as the atomic unit that can be identified and traded individually on the Bitcoin network. There are 100 million sats that make up 1 Bitcoin (BTC). Sats are numbered based on the order of mining, and this number, which uniquely identifies a sat, is an ordinal number.

Related: Bitcoin vs. Satoshi: Key differences explained

By being a unit of transaction, sats can also be inscribed with digital content that make up Bitcoin ordinals. They become immutable digital collectibles that can be transacted on the Bitcoin network using Bitcoin wallets. As per ordinal theory, sats can be attached to security tokens, accounts or stablecoins using ordinal numbers as stable identifiers.

Due to the broad set of use cases that ordinals can support, Rodarmor prefers not to equate Bitcoin ordinals with NFTs. The use case of ordinals to number a sat that’s been attached to or inscribed with a JPEG can be called a nonfungible token on the Bitcoin blockchain. Although the ordinal’s use that found market fit is that of NFTs on the Bitcoin blockchain, ordinals are much more than just nonfungible tokens.

What are Bitcoin NFTs?

Bitcoin NFTs — aka Bitcoin ordinals, aka digital artifacts — are a way to inscribe digital content on the Bitcoin blockchain. 

The Bitcoin ordinals protocol was launched in January 2023 by Casey Rodarmor. The protocol allows inscribing of digital content like art onto the Bitcoin blockchain. Unlike nonfungible tokens (NFTs) on Ethereum and other blockchains, Rodarmor wanted to create an immutable on-chain presence of a piece of art, text or video. The genesis ordinal was a pixel art of a skull that Rodarmor inscribed on Dec. 14, 2022. 

As the NFT space based on Ethereum’s ERC-721 standard skyrocketed in 2021, Rodarmor, who was a programmer and an artist, saw the opportunity to create a similar yet unique experience on the Bitcoin blockchain. His solution was Bitcoin ordinals, based on ordinal theory, which he went on to implement through 2022.

Ordinal theory concerns itself with satoshis, giving them individual identities and allowing them to be tracked, transferred and imbued with meaning. The ordinals hype really kicked off in February 2023, six weeks after the genesis ordinal was created.

The number of inscriptions doubled every week for a few weeks. However, the number could have been much higher if the infrastructure to inscribe and trade ordinals had been better planned and executed.

Daily inscriptions by type

The rise of Bitcoin ordinals has seen the Bitcoin network explode in terms of usage, fees and storage space as shown in the chart above. This may also be the first big breakthrough for the Bitcoin application tier and can help move the narrative from a pure “store of value” to something more utilitarian.

Ordinals Litecoin fork took one week and was ‘quite simple,’ says creator

The creator of a Bitcoin Ordinals protocol fork that works on Litecoin said he did it all for a crypto bounty of a few thousand dollars.

A small monetary bounty and an aptitude for coding were all it took to fork the Ordinals protocol to the world’s second-ever cryptocurrency network, Litecoin (LTC), earlier this week, its creator told Cointelegraph.

On Feb. 18, an Australian software engineer by the name of Anthony Guerrera posted a repository to GitHub that forked the Bitcoin (BTC) Ordinals protocol to Litecoin. This allowed for nonfungible token (NFT)-like assets on the Litecoin network in much the same way it had made it to Bitcoin earlier in the year.

In an interview with Cointelegraph, Guerrera said he was spurred to make a Litecoin Ordinal fork due to a 5 LTC bounty posted by the pseudonymous Twitter user Indigo Nakamoto on Feb. 11 that rose to 22 LTC, or about $2,000, to anyone who was first to successfully create a fork.

“I knew it was possible because Litecoin has Taproot as well as SegWit,” Guerrera said, adding:

“I was in a bit of a mad rush to try and get it done as fast as I could.”

Taproot and SegWit are the names given to the Bitcoin protocol updates that aimed to improve the privacy and efficiency of the network but also allowed for NFT-like structures called “inscriptions” to be attached to satoshis.

The cost to inscribe an image onto the Bitcoin blockchain can cost tens of dollars depending on its size but Guerrera said the cost to inscribe a litoshi — the LTC equivalent to a satoshi — is “about two cents.”

A point of contention among Bitcoiners is the block space that Ordinals take up on the network because their data size is far greater than transactions. Guerrera doesn’t think this issue will be as prominent on Litecoin due to its larger block size but could it still possibly eventuate.

“Pandora’s Box has already been opened and someone was going to do it, so it may as well be me.”

Guerrera said his LTC fork took around one week to create as “the changes were quite simple.” He explained he updated the Ordinals code to work with inputs from the Litecoin network instead of the Bitcoin network.

Parameters that differed between the blockchains such as the total possible number of coins and block time creation differences also had to be accounted for in the fork.

In a Feb. 19 tweet, Guerrera said he’d inscribed the first ever Litecoin Ordinal, putting the MimbleWimble whitepaper onto the blockchain in the so-named “inscription 0.”

The inscription of the whitepaper is in the wake of the May 2022 Mimblewimble Extension Blocks (MWEB) upgrade that allows Litecoin users to opt-in to confidential transactions and other blockchain improvements such as helping reduce excess and unnecessary transaction data.

Related: How the Ordinals movement will benefit the Bitcoin blockchain

“I wanted to dedicate the first inscription to that and make it aware that Litecoin now has this privacy sidechain attached to it,” Guerrera said.

“I’m a fan of the technology and I like that privacy can become a thing on these public ledgers.”

As for the future of the forked protocol, Guerrera will “keep contributing to this fork as much as I can” and port across updates from the original Ordinals.

“I probably want to hand over this as I don’t want it to take too much of my time,” he added. “I’m doing other things. I’ve got other things on my plate.”