NFTs! I am sure you have all heard of them, so you probably know that they originate from Ethereum blockchain, right?. But what if I told you that there is a way to create NFTs on the Bitcoin Network?
This is where Ordi comes in.
Ordi, also known by the market ticker ORDI, is the first BRC-20 token on the Bitcoin network.
The Ordinals protocol, which is unrelated to the ORDI token, allows for the smallest denomination of Bitcoin, known as a Satoshi, to be edited with text, images, audio, and video making it an NFT.
ORDI is the first BRC-20 token created using the Ordinals protocol on the Bitcoin network.
But BRC-20, Ordinals protocol, Bitcoin, NFTs. How is ORDI connected to all of these? And does it have any intrinsic value? Today we find out!
What is Ordi?
Ordi was created by an anonymous user in 2023
To understand ORDI, first I need got to talk about Bitcoin’s Ordinals protocol.
Although ORDI comes from the word Ordinal, it has no official affiliation with the Ordinals protocol, which was founded by software engineer Casey back in 2022, after having gained experience at the likes of Google and Oculus.
They are two entirely separate entities with different founders, developers, and goals.
What is Ordinals Protocol?
The Ordinals protocol allows for information to be written on the smallest unit of Bitcoin, known as a Satoshi.
To quickly explain, a Bitcoin is the whole unit. Like a dollar.
Like a dollar, a Bitcoin can be broken down into smaller units known as Satoshi. Every 100 million Satoshis equals one Bitcoin.
So, instead of buying “0.00002 Bitcoin” for $10 you technically bought 20,000 Satoshis.
But what exactly does Ordi do?
ORDI was the first BRC-20, or NFT, tokens created on the Bitcoin network.
Now, to be clear, I’m not talking about colourful apes.
Regular fungible tokens are interchangeable and mutually identical, meaning each unit is indistinguishable and holds the same value as every other unit of the same type, such as a dollar, for example.
Non-fungible tokens, or NFTs, on the other hand, are unique digital assets with distinct characteristics, often representing ownership or proof of authenticity for specific items, such as art or collectables on the blockchain.
While fungible tokens can be exchanged on a one-to-one basis, each NFT has a unique characteristic that makes it distinct and can cause the value to differ.
In this case, that unique information would be whatever text, images, audio, or video was added to the Satoshi. Again, the benefit here isn’t just the information, but the proof of ownership and authenticity that comes with it.
But how does it all work?
How does Ordi work?
As I mentioned, ORDI is a BRC-20 token.
A BRC-20 token is similar to the ERC-20 tokens I’ve talked about previously.
BRC-20 was first introduced in March 2023 by an anonymous developer known as Domo.
Like Ethereum’s ERC-20 token, BRC-20 tokens are designed to ensure compatibility with the Bitcoin network.
However, unlike ERC-20 tokens, BRC-20 tokens do not have full smart contract functionality.
Ultimately, the Ordinals protocol allows for users to create their own BRC-20 tokens on the Bitcoin network, with ORDI being the first.
As ORDI is a BRC-20 token it is a Proof-of-Work network, like Bitcoin.
Proof-of-Work is a consensus algorithm first used by the Bitcoin blockchain where certain network nodes, known as miners, compete to solve complex mathematical puzzles.
The first miner to solve the puzzle validates and adds a new block of transactions to the blockchain and receives a reward for doing so.
What makes Ordi unique?
Unfortunately, when it comes to ORDI itself, really what makes it unique is just being the first.
However, one thing BRC-20 tokens allow, that the ERC-20 tokens do not, is the ability to store 100% of the NFT data on the blockchain itself.
ERC-20 NFTs use external servers to store files, which essentially makes them JPEGs on a centralised web server.
BRC-20 tokens on the other hand enter all of the added information into the Witness Signature field of Bitcoin transactions, which ensures all information stays on the blockchain.
Meaning whatever text, images, audio, or video is inscribed onto that Satoshi stays on the Bitcoin network and isn’t sub-hosted to a centralised server somewhere.
Although, I should also point out that BRC-20 tokens have been controversial on the Bitcoin network as their size is significantly larger than that of regular transaction data to the point where a noticeable spike in fees occurred, similar to what occurs on the Ethereum network.
These larger NFT data files require more space on the block, and as there is a limited amount of data available on the block, the more NFT data files there are, the longer regular transactions take to process, in addition to costing more to send.
ORDI use cases
ORDI is sometimes referred to as a memecoin, as it doesn’t have any inherent use case other than to show that this technology exists.
That said, being the first does give you value as it gives you the first mover advantage.
This means ORDI still has time to innovate and drive its value higher, or at least help sustain it over the long run.
At present, the ORDI token is simply a method of payment which mimics the 21 million supply of Bitcoin itself.
While that may sound ominous, it is worth remembering there are plenty of tokens out there with no inherent use cases that continue to do well in terms of market cap, such as Dogecoin, Shiba Inu, and Pepe.
ORDI is the first of its kind, by becoming the first NFT collection released on the Bitcoin network, of which there are 21 million.
The Ordinals protocol and BRC-20 tokens are disruptive but equally innovative technologies, allowing for a whole new range of applications and possibilities on the Bitcoin network, of which ORDI is the first.
At present, the value of ORDI is determined by how much people are willing to pay for it.
That said, I don’t rule out a potential specific use-case being created for ORDI at some point, which may see the value increase further.
Though, as always, it will require expert management from the top, and even then, nothing is guaranteed in crypto.