Bitcoin’s ecosystem has once again garnered market attention, with NFTs based on the Ordinals protocol and BRC20 drawing market demand. In addition to the volatile market capitalization, we believe that the technology advancements behind the Ordinals protocol and BRC20 standard are worth paying attention to.
Back in January of this year, Casey Rodarmor released the Bitcoin Ordinals protocol. The protocol exploits a vulnerability in Taproot. By allowing users to record different types of metadata (images, videos, PDFs, etc.) on satoshis, they can create and store Bitcoin NFTs (non-fungible tokens) directly on the Bitcoin network. Ordinals is storing Bitcoin transaction information in an entirely new way, and is thus the first to break out in the NFT field. Ordinals NFTs achieve on-chain permanent storage of digital content through their protocol features.
This is a major breakthrough for Bitcoin, as Bitcoin users can now store digital assets on Bitcoin, something that was previously unique to other blockchains such as Ethereum, Polygon, and Flow. Bitcoin NFTs bring digital assets to Bitcoin, where they can be created, stored, and exchanged. However, there are several obvious differences between Ordinals NFTs and the NFTs currently available on the market. This article references Bardia Eshghi, an industry analyst from AIMultiple, who analyzed the differences between Ordinals NFTs and traditional NFTs and summarized several key differences between the two.
Ordinals NFTs are always stored on the Bitcoin blockchain
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Compared to traditional NFTs, one of the main advantages of Ordinals NFTs is their decentralization and higher security standards, thanks to Bitcoin’s encryption features.
Ordinals allows metadata to be recorded on satoshis, meaning that Ordinals NFTs are always stored on the Bitcoin blockchain. This core feature makes it more decentralized and secure. In contrast, most NFT types currently on the NFT market are stored on decentralized applications through self-executing smart contracts like the Ethereum Virtual Machine (EVM). This makes traditional NFTs dependent on the rules and logic encoded in the contract.
Ordinals NFTs will be more liquid
A large part of the believers in Bitcoin and Ethereum are early industry followers and Web3 enthusiasts. It can be said that the Bitcoin network is one of the earliest and most influential blockchain networks. Bitcoin’s fluctuations still affect the market situation today. Since digital assets are stored on Bitcoin, it also means that users link the art they hold with the most liquid cryptocurrency in the market. Other NFT-compatible cryptocurrencies, due to concerns about the security features, robustness, and market value of the platform they are on, cannot enjoy the same level of liquidity.
Invariant and Secure of Ordinals NFT
Ordinals NFT inherits the simplicity, invariance, security, and persistence of Bitcoin itself. The inherent properties of the Bitcoin protocol make transactions immutable through encrypted hashes and consensus mechanisms. Each block in the Bitcoin blockchain contains the hash of the previous block, creating a series of tamper-resistant blocks. Therefore, once the majority of nodes on the Bitcoin chain confirm a transaction, it becomes a permanent record in the distributed public ledger. The advantage for Bitcoin users is that there is little opportunity for fraudulent transactions or modifications to existing transactions.
Ordinals NFT is More Scarce
The maximum supply of Bitcoin is 21 million , and miners obtain newly mined bitcoins by performing computationally intensive operations and creating new Bitcoin blocks in the blockchain. The reward is halved every four years. Every 2016 blocks or about 4 weeks, the cost and difficulty of creating a new block increase. The difficulty level is designed to ensure that the rate of creating new blocks remains stable over time. Therefore, to create an engraving based on Ordinals, a user needs to conduct a Bitcoin transaction and hold that content on the Bitcoin blockchain.
Other NFTs have no quantity limit, and it can even be said that they are produced infinitely. NFTs on Ethereum are operated using the ERC721 contract. Once a contract is created for a transaction, it “can define any number of NFTs in that contract,” which means that a single transaction can hold an unlimited number of NFTs. This is because the contract does not need to save data, but points to off-chain data.
Ordinals NFT is expected to be superior to other NFTs in terms of protecting its value due to the supply restrictions of the Bitcoin network. However, although Ordinals NFT has caused a frenzy in the market, the fluctuating market situation has also attracted widespread attention from users. For developers, especially those who are exploring the NFT field, they still need to be aware of a series of challenges faced by the Bitcoin network, such as low wallet coverage, complex on-chain operations, and limited block space for inscriptions and NFTs. NFT projects that have entered the Ordinals NFT market still face unknowns and risks. For some novice developers, choosing a more suitable ecosystem may be more important than speculating on market trends.
Not only Ordinals NFT, but Polkadot is also fertile ground for NFTs.
As a blockchain network that supports multi-chain interoperability, Polkadot provides rich opportunities for the development of NFTs. Although it is different from Ordinals NFT, the support and adaptation of NFTs on Polkadot enables us to see the normal needs of NFTs in the industry, such as security, efficiency, and cross-chain capabilities.
In our article “The Current Status and Potential of NFTs on Polkadot,” we took stock of interoperable NFT projects on Polkadot and NFT ecosystems of various parallel chains. Today, we will analyze why Polkadot is suitable for the development of NFTs.
Interoperability: Polkadot’s cross-chain features and interoperability allow data and asset exchange between different blockchains, enabling NFTs created on Polkadot to interact and trade with NFTs on other blockchains. This provides NFT holders with a wider market and more liquidity.
Scalability: Polkadot provides unprecedented economic scalability by using a common validator to validate and protect multiple blockchains. By distributing transactions to parallel blockchains, Polkadot achieves higher transaction processing capabilities.
Easier blockchain construction: Polkadot’s Substrate framework makes it easy and quick to create custom NFT projects or even blockchain networks on its network. By connecting to the Polkadot network, developers can enjoy interoperability and security from the beginning. This ease of development has led to the continuous growth of Polkadot.
Higher Shared Security: Polkadot’s unique multi-chain heterogeneous design ensures secure interaction between relay chains and parallel chains. Each parallel blockchain can maintain independence while sharing security.
The explosion of Ordinals NFT has its technological inevitability. How to see its technological innovation in the impetuous market situation will bring developers more inspiration. Developers who are exploring the NFT track do not need to blindly follow the trend. Understanding the Polkadot ecosystem that combines cross-chain and interoperability may be a more flexible and efficient development option.