What are Bitcoin Ordinals?
If you’ve asked yourself this question in the past six months, you’re not alone. The rapid rise of the Bitcoin Ordinals ecosystem has enthralled developers, divided the Bitcoin community, and reintroduced the original blockchain to a new generation of users.
In May, Bitcoin became the second-largest blockchain for NFTs with sales volume passing the likes of Solana and Polygon. Even Ethereum co-founder Vitalik Buterinhas hailed Ordinals as an “organic return of builder culture” to Bitcoin.
Ninjalerts CEO Trevor Owens has been a fixture on the movement’s frontlines, investing in Bitcoin projects as a GP for Bitcoin Frontier Fund and covering all things Ordinals as a co-host for nft now’s Not Financial Advice Twitter Space every Tuesday and Thursday from 6:30 pm ET.
In an informative nft now podcast interview, Owens breaks down what Ordinals are, why they matter, and what he’s building using the protocol.
Matt Medved: Everyone has a unique story about how they got into the space. What’s yours?
Trevor Owens: I’ve been a founder for a decade and a developer in the web2 space. I became interested in Bitcoin in 2013, but I was more enthusiastic about blockchain technology than necessarily the coin itself. I’m very practical, and my specialty is go-to-market strategies. I spent a decade coaching founders in the lean startup methodology. I worked with Eric Reese; you’ll see my name in the thank you section of his book.
The space took a long time to mature, and it wasn’t until 2021 that I noticed a tipping point where I saw Metamask, OpenSea, and Uniswap. At this point, I recognized that the technology that I always thought was promising was here in full force.
I’d known the founders of Stacks for a long time, being one of their first advisors. When they launched Stacks 2.0, I connected with them. They wanted me to manage their ecosystem venture fund. So, I raised a small fund of four million. Recently, we closed a second round, raising about six to seven million. To date, we’ve made 50 investments across the Bitcoin ecosystem.
I’m also an angel investor in a bunch of different various startups like nft now and others on the ETH side as well. I’ve spent a lot of time working with zero-to-one companies, and now I do that professionally at the Bitcoin Frontier Fund. Our focus has expanded from Stacks to Ordinals more broadly.
I’m also the CEO of Ninjalerts, an Ethereum analytics trading tool for NFT users that gives you the best push notifications and alerts when things happen on the blockchain. I’m living the dual life of a builder and an investor.
The value proposition of Bitcoin Ordinals
In one statistic pic.twitter.com/wEy6yS6oCg
— trevor.btc (@TO) July 2, 2023
Let’s jump right into Ordinals. It’s been amazing to watch the growth of that ecosystem in such a short amount of time. People are still trying to wrap their heads around it. How would you explain Bitcoin Ordinals to your grandmother?
I would describe it to my grandmother as a way to permanently record data in any form and also a way that makes a certificate of authentication — similar to NFTs — for that data to track ownership on Bitcoin.
The really innovative thing about Ordinals is that all data is on-chain, and it’s much more inexpensive than having a smart contract. Which is important for a chain like Bitcoin, where it is very expensive and block space is limited.
“The really innovative thing about Ordinals is that all data is on-chain, and it’s much more inexpensive than having a smart contract.”
It’s a way to record any type of media, and you can also build new kinds of Web3 applications that are also different from how Ethereum applications are structured. That leads to some interesting use cases and ergonomics that actually make decentralized coordination a little bit easier.
We’re seeing things that people tried to do on Ethereum that I think are objectively good ideas but were limited by the structure of having smart contracts and a solidity EVM. By just inscribing the raw data, it’s a little bit easier, and that’s the fascinating thing.
— kmoney (@kmoney_69) February 16, 2023
It’s been interesting to see the various types of inscriptions, whether it’s a photo, music, or something else, directly on Bitcoin, which wasn’t possible before. How did we get here, and why do you think this is so transformative?
We got here kind of by accident. In 2017, SegWit was introduced, which was an upgrade to Bitcoin that created something called the segregated witness. A normal Bitcoin block has something like a one-megabyte limit, but in the witness area of the transaction, you can fit up to an additional three megabytes. So, In total, you can have four megabytes per block.
And in addition, that area of the inscription is actually discounted by 75 percent. It still ends up fitting one megabyte within the Bitcoin block, but since it’s a total of four, 75 percent is like one megabyte. So, the data is actually stored differently than the rest of the transaction.
That kind of opened up this avenue for really inexpensive permanent data storage in a way that, if you do the math in terms of how much it would cost you to have a Dropbox account for life or run an Amazon Web Services Server for life, there’s no way you can get data storage this cheap in a permanent way.
An amazing Bitcoin dev named Casey Rodarmor was a contributor to Bitcoin core over the years, and he’s considered one of the top Bitcoin developers in the world. He was working on this project for two years. Casey is a very unique individual. He was born from the Bitcoin community and fits in with some of the “laser eye” maximalists we like to dunk on.
He was always an instigator and liked to break the rules, and he had development skills and a deep understanding of how Bitcoin works. He spent two years working on Ordinals and Inscriptions. Ordinals refers to Ordinal theory, which is the way that we actually turn Bitcoin or pieces of Bitcoin, Satoshis, into non-fungible tokens that are trackable and tradable throughout the blockchain.
“While many of the Bitcoin Maxis tried to cancel Ordinals, it only made it stronger.”
On January 20 this year, it just took off like a rocket. It was also the perfect timing. We were just coming back from FTX, and that cascade and we were at a low in the market. It was something that violated all the narratives in the space.
Then you had Udi Wertheimer dropping a four-megabyte Bitcoin block, which was the largest Bitcoin block ever done. I think the real reason it succeeded among the Bitcoin community. Where other innovations have failed or have been attacked by the immune system, so to say, of the Bitcoin Maxi community was because Ordinals are not only a cool use case for a lot of users, but it increased the fees on Bitcoin.
When you have two people fighting for moral authority, in Bitcoin, whoever pays is in the position of superior moral authority. The idea is, if you don’t like it, you should pay more. Paying directly to the miners is contributing to the security of Bitcoin. Eventually, the security subsidy on Bitcoin is going to be gone, and it will need to survive the security budget generated by fees.
But historically, fees have been so low on Bitcoin that it’s been an open-ended question. How are we going to make sure Bitcoin is viable in the long term from people paying enough to support the security and decentralization of the network? Ordinals kind of came in and provided that answer.
While many of the Bitcoin Maxis tried to cancel Ordinals, it only made it stronger. We have had hundreds of developers pour into the space. We’ve had a ton of infrastructure, like marketplaces, wallets, explorers, and other tools, developed that just didn’t exist four months ago.
I think whenever there’s a new and exciting ecosystem, there’s a perceived barrier to entry. How can people get started with Bitcoin Ordinals?
The first step would be to get a Bitcoin web wallet similar to Metamask. The most popular one right now is Xverse. I’m an investor. You can also check out Hiro, which is an investor in my fund, and UniSat. Those are the top three.
They offer a few different things, but they’re pretty similar. And then, there’s multiple marketplaces. So there’s Magic Eden, Gamma, Ordinals Wallet, and Ordswap. And go and get an Ordinal. Or inscribe. One of the coolest things about Ordinals is that you don’t need to launch a smart contract to make an Ordinal.
The whole system is easier than any NFT marketplace storefront. Some of the wallets have their own inscription service embedded in them, and you can just drag and drop a file, like a JPEG or an MP3, pay a Bitcoin fee, and boom, it’s forever recorded on Bitcoin. As long as Bitcoin survives, it’s going to be there.
10 Ordinal Metas Everyone Should Know
1. Rare Sats
4. Inscription Numbers
5. File Size
6. Parent Child
7. Cursed Inscriptions
8. Domain Names
9. File Type
I broke them all down in an article for @nftnow here:
— Leonidas (@LeonidasNFT) July 7, 2023
There are already some quite notable Ordinals projects that have launched. In your view, what are some that the average Web3 lover should have on their radar?
One of the first notable ones, I think, was Bitcoin DeGods. That was a very successful mint where what was originally a popular community on Solana that moved to Ethereum and Polygon inscribed a percentage of their art onto Bitcoin.
There are a lot of projects under the 1,000 mark. The earlier the Ordinal, the earlier and a little bit the more attractive they are. There’s Ord rocks, which were actually like Ether Rocks. There’s Ord Punks, which was using some of the traits of CryptoPunks, but some other traits as well, to make a bunch of CryptoPunk-like PFPs in the sub-1,000 range.
“You have a higher barrier to entry, which I think means that you see a lot fewer low-effort projects launched on Ordinals.”
I have a colleague who has an Ordinals collection called Diamond Fingers, which is sub-10,000, which are these like 3D middle fingers that say, ‘You can’t censor my transactions, and NFTs are fun.’ There’s Ordinal Maxi Biz, which is one of the most recently successful and hyped projects. There’s On-Chain Monkey, which is another really good one.
And, of course, we’re doing our own project here for Ninja Alerts, which is 1,500 ninja PFPs inscribed on rare pizza sats. So, there’s a lot going on. The pace of projects is not like Ethereum, though. You have a higher barrier to entry because, most of the time, the cost of putting Ordinals on the blockchain is held by the project creator.
On Ethereum, usually you just launch the smart contract, and that costs around an ETH to do. But then all of the people who mint pay the cost of gas to mint the NFT. On Ordinals, it’s the opposite; the creator has to do all of the inscribing. So you have a higher barrier to entry, which I think means that you see a lot fewer low-effort projects launched on Ordinals.
1/ The next chapter in Ninjalerts is beginning!
We love Bitcoin Ordinals, BRC-20, Rare Sats, Recursion, and Pizza.
Want WL? pic.twitter.com/npcRuTZ3Ax
— Ninjalerts (@ninjalerts) June 18, 2023
Pizza Ninja is the project that you’re launching with Ninja Alerts. It’s built on rare Satoshis from the Bitcoin Pizza transaction. Tell us a little bit about the project.
Trevor: I think the cool thing about rare sats is that it allows you to do more creative storytelling. So, project creators are now able to combine the medium with which they’re doing their art, the Satoshi, with the art or the story of the art that they’re trying to do.
Pizza sats are not as rare as the uncommon or rare sats. However, it’s a very historic transaction. It goes back to the first verified Bitcoin transaction ever to buy anything, which is also the first physical item. A guy named Laszlo paid somebody 10,000 Bitcoin for two Papa John’s pizzas.
It’s like a holiday every year in the Bitcoin community, the day when that transaction happened. And for people who want to get rare stats, it’s a really good entry rare sat to get. I love pizza. If you go back to like the history of civilization, a lot of historians say bread is the most important invention in human history in terms of how it formed the basis of the societal construction of families, breaking bread for reconciliation and peace.
So, with an NFT project, I think the most important thing that you want to do is try to create meaningful experiences that can bond together your community. Having a theme to tie people together. I think pizza is universally loved across all cultures. I was thinking about Ninja Alerts and pizza sats. And then, of course, the next thing you think of is Ninja Turtles.
1/ Bitcoin Ordinals Pizza Ninja Videos Keep Coming In!
We’re finding ppl who care about the project & want to be join, rather than quick flip
Building community on a shared meaningful experience
Enjoyoors Breaking Bread together online
Here are some badass videos pic.twitter.com/l4tpQSOQUH
— trevor.btc (@TO) July 6, 2023
So, we just went on this path to try and create a unique project with some amazing art that could bring together our community and also the launch of Ninja Alerts on Ordinals on Bitcoin. On Ninja Alerts, we provide some of the best NFT analytics and alerts for Ethereum. Of course, we want to move into Ordinals. So, we decided to do this project to help curate our community and help get the word out.
We’ve been asking people to make videos on Twitter where they will record themselves eating pizza while wearing a Ninja costume. This is like a hat tip to Udi Wertheimer, who did this with Taproot Wizards.
We’re getting videos every single day. It’s just been a super fun experience. The way you actually try to distribute the opportunity to participate to those early holders is one of the most important decisions that you have. Being able to select the people who care the most, I think, is going to be the most important sign of long-term health for a project.
This interview transcript has been edited for concision and clarity.
For the full and uncut interview, listen to our podcast episode with Trevor Owens.
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