Ordinals Protocol

An inscription is the core unit of the protocol, consisting of arbitrary content (images, text, JSON, etc.) written directly into Bitcoin transaction witness data. This data is immutably linked to a specific satoshi via the ordinal theory's numbering scheme. The process uses envelopes—special Bitcoin script patterns—to store the content, making it a permanent part of the blockchain's history.

This is the numbering scheme that enables the tracking of individual satoshis. It assigns a unique serial number to each satoshi based on the order it was mined. Key concepts include:

• First-in-first-out (FIFO): Satoshis are transferred in the order they are received.
• Rare Satoshis: Special designations for satoshis from notable events (e.g., the first satoshi of each block, or from a block halving).
• This theory provides the framework for identifying which specific satoshi carries an inscription.

Unlike sidechains or Layer 2 solutions, inscriptions exist natively on the Bitcoin base layer. They are stored in witness data (SegWit) or taproot script-path spends, leveraging Bitcoin's inherent security and decentralization. This means the data's existence and provenance are guaranteed by the full consensus of the Bitcoin network, not a separate system.

The protocol is content-agnostic. Common inscription types include:

• Images (PNG, JPEG, SVG, GIF)
• Text (plain text, JSON, HTML)
• Audio/Video
• Application-specific data The primary limit is the block size. A standard inscription must fit within the 4MB weight limit of a Bitcoin block, though techniques like recursive inscriptions allow for building larger, more complex files by referencing other on-chain inscriptions.

An inscribed satoshi functions as a Bitcoin-native digital artifact, often called an Ordinal NFT. Its key properties differ from typical NFTs:

• No Smart Contract: Ownership and transfer are governed by Bitcoin's UTXO model, not a separate token contract.
• True On-Chain Data: The media is stored on-chain, not just a pointer to IPFS or a centralized server.
• Indestructible: The inscription cannot be deleted or altered as long as Bitcoin exists.

An Ordinals indexer is a critical piece of infrastructure. It is a software service that scans the Bitcoin blockchain, identifies inscription transactions using the protocol's rules, and tracks the location (i.e., which UTXO holds) of every inscribed satoshi. Wallets and marketplaces rely on these indexers to correctly display and transfer inscriptions. Popular implementations include ord (the reference implementation) and others.

The most common type, where image files are inscribed onto a satoshi. This created the Bitcoin NFT ecosystem. Key examples include:

• Ordinal Punks: A collection of 100 pixel-art characters, paying homage to CryptoPunks.
• Taproot Wizards: A notable collection that demonstrated the technical feasibility of larger inscriptions via the Taproot upgrade.
• These are stored entirely on-chain, unlike many Ethereum NFTs which often store metadata off-chain.

Plain text, code, or full HTML documents can be inscribed, enabling on-chain documents and decentralized websites. Examples include:

• The Genesis Inscription: The first-ever Ordinal, inscribed by Casey Rodarmor on December 14, 2022, containing a simple .webp image.
• On-chain books and essays: Entire literary works stored permanently on Bitcoin.
• HTML/JS applications: Self-contained web pages that can be rendered by browsers directly from the blockchain, a concept known as recursive inscriptions.

Audio files (MP3, WAV, FLAC) and video files (MP4, WebM) can be inscribed, though file size is constrained by Bitcoin block space limits. This enables:

• On-chain music and podcasts: Artists releasing tracks directly on Bitcoin.
• Short video clips and animations: Often using efficient codecs to fit within economic constraints.
• Storage is more expensive than images, making these rarer and often part of high-profile collections.

Data formats like JSON for configuration or WebAssembly (WASM) binaries can be inscribed, paving the way for on-chain software. This includes:

• Generative art scripts: Code that defines rules for creating unique visual outputs.
• Protocol parameters: Data inscriptions that define traits for a collection or game logic.
• Recursive inscriptions use this heavily, where one inscription can reference and use the code of another, creating complex, modular on-chain applications.

Three-dimensional model files (like .glb or .glTF) can be inscribed, allowing for on-chain 3D art and assets. These are used for:

• Virtual collectibles and avatars: 3D models that can be used in metaverses or AR/VR applications.
• Digital sculptures: Artists creating immutable 3D artwork on Bitcoin.
• Viewing requires compatible wallets or platforms that can render the 3D format.

These are text-based inscriptions that follow specific standards to create fungible tokens or other protocols on top of Ordinals. The most famous example is:

• BRC-20 Tokens: A fungible token standard using JSON inscriptions to deploy, mint, and transfer tokens. It sparked a major trend in Bitcoin DeFi.
• Other experimental standards include ORC-20 and SRC-20 (Stamps).
• These are not smart contracts but indexer protocols where off-chain indexers interpret the inscribed data to track token balances.

An inscription is the act of embedding content onto a specific satoshi. The process involves:

• Creating a taproot script that includes the content (e.g., image, text, JSON) and an OP_FALSE OP_IF ... OP_ENDIF envelope.
• Committing this script to a taproot output in a Bitcoin transaction.
• Revealing the inscription in a subsequent transaction that spends that output, writing the data to the blockchain. The inscribed satoshi is identified by the order it was mined, making the inscription immutable and permanently linked to that sat.

The protocol uses a precise system to identify every satoshi. Satoshis are numbered in the order they are mined, starting from 0 (the genesis block coinbase satoshi). This is the ordinal number. Tracking relies on the first-in-first-out (FIFO) principle for transaction inputs and outputs. By analyzing a coin's entire transaction history from its coinbase origin, the protocol can deterministically trace which ordinal numbers are held in any UTXO, enabling non-fungible tracking without a separate sidechain or token.

All inscription content is stored directly on the Bitcoin blockchain. The data is placed within witness data, which was made more economical by the Segregated Witness (SegWit) upgrade. This differs from systems that store hashes or pointers off-chain. Common content types include images (PNG, WebP), text, JSON, HTML, and even audio/video. The protocol uses a simple but effective content-type declaration within the inscription envelope to specify the MIME type, allowing wallets and indexers to interpret the data correctly.

Transferring an inscribed satoshi does not destroy or alter the inscription. The protocol treats the inscribed sat as a normal UTXO. When spent in a transaction, the inscription travels with its satoshi to one of the transaction's outputs, following the FIFO accounting rule. This makes inscriptions permanently and natively bound to Bitcoin's UTXO model. Special send transactions can be crafted to ensure the inscribed sat is sent to a specific output, but the underlying mechanism is standard Bitcoin script.

Beyond inscriptions, the protocol defines numismatic traits based on a satoshi's mining circumstances, creating inherent rarity. Key categories include:

• Common: Any sat that is not special.
• Uncommon: The first sat of each block.
• Rare: The first sat of each difficulty adjustment period.
• Epic: The first sat of each halving epoch.
• Legendary: The first sat of each cycle (every 6 halvings).
• Mythic: The very first sat (ordinal 0). These traits are algorithmically determined and immutable, independent of any inscribed content.

To read and display ordinals, an indexer is required. This is software that:

• Scans the entire Bitcoin blockchain from genesis.
• Applies the ordinal numbering and FIFO rules to track every satoshi.
• Parses taproot witness data to identify inscriptions and their content.
• Maintains a database mapping inscriptions to current UTXOs. Wallets and marketplaces then query this indexer to show users their ordinal holdings. The most common implementation is the open-source ord client, which includes both indexing and wallet functionality.

An inscription is the core data unit of the Ordinals protocol, embedding content directly onto a specific satoshi. This creates a digital artifact—a Bitcoin-native NFT. The content can be images, text, JSON, HTML, or even video game ROMs. Inscriptions are immutable and permanently stored on-chain, secured by Bitcoin's proof-of-work. The process uses witness data in a taproot transaction to store the file without bloating the UTXO set.

The protocol relies on a scheme to number and track every satoshi (the smallest unit of Bitcoin). Each satoshi is assigned a unique serial number based on its mining order. This ordinal number allows for the precise identification and tracking of the satoshi that carries an inscription. The theory enables rare satoshis, such as the first satoshi of each block (uncommon sats) or the first satoshi of each difficulty adjustment period (epic sats), which are highly sought after by collectors.

Since Bitcoin nodes don't natively parse ordinal data, specialized indexers are required. These services scan the blockchain, track satoshi movements, and maintain a database of inscriptions and their locations. Popular indexers include Ord and ordit. User interaction requires compatible wallets like Unisat, Xverse, or Hiro Wallet, which integrate these indexers to display inscriptions, manage UTXOs, and facilitate ordinal-aware transactions to avoid accidentally spending inscribed satoshis.

A recursive inscription references the content ID of another inscription using a special /-/content/:inscription_id syntax. This allows for:

• Code reuse: Deploy a single JavaScript library and have thousands of inscriptions reference it.
• Complex applications: Build on-chain websites or games by composing multiple inscribed files.
• Drastically reduced costs: Avoids re-uploading duplicate data, making large projects economically feasible. This feature enables a form of on-chain composability for Bitcoin.

BRC-20 is a fungible token standard built on top of Ordinals, using JSON inscription data to deploy, mint, and transfer tokens. While simple, it has significant limitations: it's off-chain stateful (relying on indexer consensus) and can cause network congestion. The ecosystem has since evolved other experimental standards like BRC-721 for generative art and Runes, a proposed UTXO-based fungible token protocol by Ordinals creator Casey Rodarmor designed to be more Bitcoin-native and efficient.

A full ecosystem of tools supports the trading and discovery of ordinal artifacts. Key components include:

• Marketplaces: Platforms like Magic Eden and Ordinals Wallet for buying/selling inscriptions.
• Explorers: Services such as Ordinals.com and Ord.io to search and view inscription details.
• Minting Services: Tools to simplify the inscription creation process.
• Analytics: Dashboards tracking metrics like inscription volume, fee spend, and collection rankings. This infrastructure mirrors that of other NFT ecosystems but is built specifically for Bitcoin's UTXO model.

An inscription is the core data unit of the Ordinals Protocol. It is arbitrary content—such as images, text, or JSON—embedded within a Bitcoin sat via the witness data of a transaction. This process creates a unique, immutable digital artifact on the Bitcoin blockchain. Key characteristics include:

• Immutable: Content is permanently recorded on Bitcoin's base layer.
• On-chain: Data is stored directly in the blockchain, not just referenced.
• Linked to a Satoshi: Each inscription is indelibly tied to a specific sat, which can be tracked and transferred.

A satoshi (sat) is the smallest indivisible unit of Bitcoin (0.00000001 BTC). The Ordinals Protocol uses a numbering scheme to track every sat from the genesis block, assigning each a unique ordinal number. This serialization allows sats to be individually identified, tracked, and inscribed upon. The protocol's rules govern how sats are transferred, enabling the concept of rare sats (e.g., the first sat of each block) and establishing a foundation for non-fungible digital artifacts.

Ordinal Theory is the conceptual framework that enables the tracking and identification of individual satoshis. It is a set of social consensus rules (not a Bitcoin consensus change) that assigns a serial number to every sat based on its mining order. This theory introduces concepts like:

• First-in-first-out (FIFO): The order in which sats are spent from a transaction input.
• Rarity: Sats from notable events (e.g., block halvings) are considered rare.
• Tracking: Allows anyone to audit the provenance and current location of a specific inscribed sat.

The Ordinals Protocol is enabled by two key Bitcoin upgrades. Segregated Witness (SegWit, 2017) increased block capacity for witness data, where inscription content is stored. Taproot (2021) introduced more flexible and efficient scripts, allowing large amounts of data to be inscribed in a standard transaction. Together, they provide the technical foundation for storing arbitrary data on-chain without requiring a hard fork, making inscriptions both possible and cost-effective.

BRC-20 is an experimental token standard on Bitcoin that uses the Ordinals Protocol to inscribe JSON data for deploying, minting, and transferring fungible tokens. Unlike Ethereum's ERC-20, BRC-20 tokens are not smart contracts but rather a set of inscription-based instructions interpreted by indexers. This demonstrates the protocol's extensibility for creating new asset types, though it operates with different trade-offs in speed and cost compared to smart contract platforms.

Recursive inscriptions are a technique where one inscription references the content of another using a special /-/content/:inscription_id syntax. This allows for:

• Modularity: Building complex applications from smaller, reusable components.
• Efficiency: Drastically reducing on-chain storage costs by reusing existing data.
• Scalability: Enabling the creation of large-scale projects like on-chain games or extensive libraries where code and assets are inscribed once and referenced many times.