What are Bitcoin ordinals?

The Ordinals protocol is a system designed to assign a sequential number to each satoshi (the smallest unit of Bitcoin) and track them in transactions. In simple terms, users can attach additional data to each satoshi using Ordinals, making each one unique. This process is referred to as "recording."

The term "satoshi" is named after the pseudonymous creator of Bitcoin, Satoshi Nakamoto, and represents the smallest denomination of Bitcoin (BTC). One Bitcoin can be divided into 100 million satoshis, which means each satoshi is worth 0.00000001 Bitcoin.

The numbering of satoshis is determined by the order in which they are mined and transferred. The numbering scheme is based on the order of mining, while the transfer scheme is based on the order of transaction inputs and outputs, hence the name "Ordinals."

While traditional NFTs share some similarities with Ordinals, there are several key differences. NFTs are typically created using smart contracts on blockchains like Ethereum, Solana, and BNB Smart Chain, and sometimes the assets they represent are stored elsewhere. In contrast, Ordinals are directly recorded on individual satoshis and included in blocks on the Bitcoin blockchain. Ordinals exist entirely on the blockchain and do not require sidechains or separate tokens. In this sense, Ordinals recording inherits the simplicity, immutability, security, and durability of Bitcoin itself.

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