Table of Contents
What are Ordinals?
Bitcoin Ordinals is a protocol created by Casey Rodarmor in January 2023 that enables NFT-like digital artifacts directly on the Bitcoin blockchain. Ordinal theory assigns a unique number to each individual satoshi (the smallest unit of Bitcoin), allowing them to be tracked, transferred, and inscribed with data.
Key Innovation
Ordinals leverage Bitcoin's Taproot upgrade (November 2021) to inscribe arbitrary data - images, text, HTML, audio, video - directly into the witness data of Bitcoin transactions. Each inscription is permanently stored on the most secure blockchain in the world.
Unlike traditional NFTs on Ethereum which store metadata off-chain (on IPFS or centralized servers), Bitcoin Ordinals are fully on-chain. The data lives directly in Bitcoin's blockchain, making them truly immutable and permanent.
Ordinal Theory
Every satoshi gets a unique serial number based on the order it was mined. Satoshis can have different rarity levels based on Bitcoin events.
On-Chain Data
100% on-chain storage. Your inscription lives on Bitcoin forever - no IPFS links, no external servers, just pure blockchain data.
Bitcoin Security
Secured by the most powerful proof-of-work network. No separate chain, no bridge risk - just Bitcoin.
How Inscriptions Work
An inscription is created by embedding data into the witness section of a Bitcoin transaction using Taproot script-path spend scripts. The process creates a permanent, immutable record on Bitcoin's blockchain.
Inscription Simulator
See how an Ordinal inscription is created
Select File Type
Add Content
Satoshi Assignment
Review & Inscribe
Choose the type of content to inscribe onto a Bitcoin satoshi:
Inscription Process
Commit Transaction
First, a commit transaction creates a Taproot output containing a script with the inscription data. This doesn't reveal the content yet.
Reveal Transaction
A reveal transaction spends the commit output, executing the Taproot script and permanently inscribing the data onto the target satoshi.
Content Storage
The inscribed content (image, text, HTML, etc.) is stored in the witness data with a content type tag. Max size is ~4MB per block.
Satoshi Tracking
Once inscribed, the data is permanently bound to a specific satoshi. When that satoshi moves between addresses, the inscription moves with it. Ordinal indexers track which satoshi holds which inscription.
Satoshi Rarity Levels
Common
Any sat (not first of block)
Uncommon
First sat of each block
Rare
First sat of difficulty adjustment
Epic
First sat of each halving
Legendary
First sat of each cycle
Mythic
The genesis sat (only 1 exists)
BRC-20 Tokens
BRC-20 is an experimental token standard on Bitcoin created by the pseudonymous developer 'domo' in March 2023. It uses Ordinals inscriptions to deploy, mint, and transfer fungible tokens on Bitcoin using JSON data.
BRC-20 JSON Operations
Deploy
{
"p": "brc-20",
"op": "deploy",
"tick": "ordi",
"max": "21000000",
"lim": "1000"
}Mint
{
"p": "brc-20",
"op": "mint",
"tick": "ordi",
"amt": "1000"
}Transfer
{
"p": "brc-20",
"op": "transfer",
"tick": "ordi",
"amt": "500"
}BRC-20 tokens have no smart contract functionality. Each operation (deploy, mint, transfer) requires a separate Bitcoin transaction with a JSON inscription. This creates significant UTXO bloat and is one reason Casey Rodarmor later created the Runes protocol as a more efficient alternative.
Top BRC-20 Tokens
- ORDIFirst BRC-20 ever
- SATSNamed after satoshis
- RATSCommunity-driven
- MUBIMultibit bridge
BRC-20 Limitations
- No smart contract functionality
- Creates massive UTXO bloat
- Requires off-chain indexer for balance tracking
- High transaction cost per operation
What are Runes?
Runes is a fungible token protocol for Bitcoin created by Casey Rodarmor (the same creator of Ordinals) and launched on April 20, 2024 - the exact block of Bitcoin's 4th halving. Runes uses Bitcoin's UTXO model directly, making it far more efficient than BRC-20.
Why Runes is Different
Unlike BRC-20 which uses JSON inscriptions (creating junk UTXOs), Runes uses the OP_RETURN output and the UTXO model directly. Token balances are stored in UTXOs themselves, meaning transfers are native Bitcoin transactions. This is far more efficient, reduces blockchain bloat, and aligns with Bitcoin's existing architecture.
UTXO-Based
Token balances live in UTXOs. When you spend a UTXO, you can split or merge Runes tokens just like Bitcoin. No off-chain indexer needed for basic operations.
No Junk UTXOs
Runes uses OP_RETURN for protocol data, which is prunable. Invalid or malformed Rune transactions result in a "burn" rather than creating spam UTXOs.
Etching & Minting
"Etching" creates a new Rune with parameters (name, supply, divisibility). "Minting" distributes tokens. Open or closed minting modes are supported.
Halving Launch
Launched at block 840,000 (Bitcoin halving). The first Runes etched at the halving block became highly collectible, and fees spiked to over $78 per transaction.
Runes vs BRC-20 Comparison
Both Runes and BRC-20 enable fungible tokens on Bitcoin, but they take fundamentally different approaches with significant trade-offs.
| Metric | R Runes | B BRC-20 |
|---|---|---|
Token Model | UTXO-based | Inscription-based (JSON) |
Efficiency | High (native UTXO) | Low (JSON overhead) |
Spam Reduction | Minimal UTXO bloat | Creates junk UTXOs |
Indexing | Simple UTXO tracking | Requires off-chain indexer |
Smart Contracts | No (Bitcoin native) | No (Bitcoin native) |
Ecosystem Maturity | Growing (2024+) | Established (2023+) |
The Verdict
Runes is technically superior and better aligned with Bitcoin's UTXO model. However, BRC-20 has first-mover advantage and an established ecosystem. Many BRC-20 tokens (like ORDI) are listed on major exchanges. Both will likely coexist, with Runes capturing new projects and BRC-20 maintaining its legacy tokens.
Top Ordinals Collections
The Bitcoin Ordinals ecosystem has produced several blue-chip collections that have achieved significant trading volume and cultural impact.
Bitcoin Puppets
10,000 items | Culture-defining collection
One of the most iconic Ordinals collections. Known for its distinctive puppet art style and strong community. Floor prices have reached multiple BTC.
NodeMonkes
10,000 items | Pixel art monkeys
A pixel art collection of monkeys that became one of the most traded Ordinals collections. Consistently in the top 3 by volume.
Quantum Cats
3,333 items | By Taproot Wizards team
Created by the Taproot Wizards team (Udi Wertheimer). Features evolving cat art that changes based on Bitcoin protocol upgrades. Innovative concept.
Bitmap
800K+ items | Virtual metaverse land
Each Bitmap represents a Bitcoin block. The largest Ordinals collection by count - a metaverse concept where each block is a parcel of digital land.
Ordinal Maxi Biz (OMB)
Pioneers of Ordinals culture
One of the earliest and most culturally significant Ordinals collections. OMB holders are considered OG Ordinals collectors. The community heavily influenced the direction of the ecosystem.
Top Runes Tokens
Since launching at the Bitcoin halving in April 2024, several Runes tokens have gained significant market caps and community followings.
DOG*GO*TO*THE*MOON
Rune #3 | Community airdrop to Runestone holders
The largest Runes token by market cap. Airdropped to Runestone holders, it became the flagship token of the Runes ecosystem and is listed on major exchanges.
RSIC*GENESIS*RUNE
RSIC (Rune Specific Inscription Circuit)
RSIC was one of the first pre-Runes projects, airdropping inscriptions that would later generate Runes tokens. A key project in the Runes meta.
PUPS*WORLD*PEACE
Originally a BRC-20, migrated to Runes
PUPS was originally a BRC-20 token that successfully migrated to the Runes protocol. It demonstrated the path for BRC-20 to Runes migration.
WZRD
Linked to Bitcoin Wizards community
Connected to the broader Bitcoin Wizards and Taproot Wizards ecosystem. Part of the wizard-themed Runes narrative.
Runes Market Overview
The Runes market saw explosive activity at launch, with over 14,000 Runes etched in the first week. While initial hype has normalized, the ecosystem continues to grow with new projects launching regularly. Total Runes trading volume has exceeded hundreds of millions in BTC terms.
How to Inscribe
Creating your own Bitcoin inscription is straightforward with the right tools. Here's a step-by-step guide.
Get a Bitcoin Ordinals Wallet
Download Xverse or Unisat wallet. These wallets support Ordinals and can display your inscriptions. Create a new wallet or import existing.
Fund Your Wallet
Send BTC to your Ordinals wallet. You'll need enough for the inscription fee (varies by file size and network congestion).
Choose Inscription Content
Select what to inscribe: image (up to ~400KB recommended), text, HTML, or other supported content types.
Inscribe via Platform
Use OrdinalsBot, Gamma.io, or Unisat's inscription service. Set your fee rate and confirm the transaction.
Buy BTC for Ordinals with 20% Off Fees
Sign up on Binance with code TRADEOFF20 and get a lifetime 20% discount. Buy BTC and start inscribing.
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Wallets & Marketplaces
The Bitcoin Ordinals ecosystem has developed a rich set of wallets and marketplaces tailored for inscriptions and Runes tokens.
Supported Wallets
Xverse
Most popular Ordinals wallet. Supports inscriptions, BRC-20, Runes, and Stacks.
Unisat
Built-in inscription tool. BRC-20 trading, marketplace, and indexer all-in-one.
Leather (Hiro)
Formerly Hiro Wallet. Supports Ordinals, Stacks, and Bitcoin DeFi.
Marketplaces
Magic Eden (Bitcoin)
Leading multi-chain marketplace. Full Ordinals and Runes support.
OKX Ordinals Marketplace
Built into OKX exchange. Trade Ordinals and BRC-20 directly.
OrdinalsBot
Inscription-as-a-service. Easiest way to create inscriptions with no technical knowledge.
Safety Tip
Always use a dedicated Ordinals wallet (Xverse, Unisat) rather than a regular Bitcoin wallet. Ordinals wallets protect your inscribed satoshis from being accidentally spent as transaction fees. Regular wallets don't distinguish between inscribed and regular satoshis.
Impact on Bitcoin
Ordinals and Runes have had a profound impact on the Bitcoin ecosystem, generating both excitement and controversy.
Bitcoin Fee Impact Timeline
Average fee per transaction (USD) during major Ordinals/Runes events
Peak fee: During the Runes launch on Bitcoin halving day (April 20, 2024), average fees spiked to over $78 per transaction as users raced to etch the first Runes.
Positive Impact
- Miner revenue boost: Inscription fees added $200M+ to miner income, strengthening Bitcoin security post-halving
- Fee market evolution: Created a sustainable fee market that will be crucial as block rewards decrease
- New users: Attracted NFT collectors, token traders, and developers to the Bitcoin ecosystem
- Innovation culture: Revived Bitcoin development creativity and brought new energy to the community
Concerns & Debates
- Block space competition: Inscriptions compete with financial transactions, temporarily driving up fees for regular users
- Blockchain bloat: Large inscriptions permanently increase Bitcoin's blockchain size, especially BRC-20 UTXOs
- Culture war: "Laser eyes" Bitcoin maximalists vs. art/token culture. Debate on what Bitcoin "should" be used for
- Spam filtering debate: Some node operators called for filtering inscription transactions, raising censorship concerns
Looking Ahead
The long-term impact of Ordinals and Runes on Bitcoin remains to be seen. What's clear is that they've created a sustainable fee market, attracted new users, and proven that Bitcoin can evolve beyond "just money." As the ecosystem matures, expect better tooling, more efficient protocols, and deeper integration with Bitcoin's Layer 2 solutions like Lightning Network.
Key Takeaways
Ordinals assign unique numbers to satoshis, enabling on-chain inscriptions (Bitcoin NFTs)
Inscriptions store data permanently in Taproot witness fields - 100% on Bitcoin
BRC-20 uses JSON inscriptions for fungible tokens; ORDI was the first ($1B+ market cap)
Runes (launched April 2024 halving) is a more efficient UTXO-based token protocol
Use Xverse or Unisat wallets; trade on Magic Eden, OKX, or OrdinalsBot
Ordinals generated $200M+ in miner revenue, creating a sustainable Bitcoin fee market