Bitcoin NFT Ordinals
Understanding the Ordinal Theory for Satoshis
Bitcoin has revolutionized the financial world by enabling secure, decentralized, and borderless transactions without the need for intermediaries. Each bitcoin is divisible into 100 million satoshis, and the smallest unit of bitcoin is a satoshi. Ordinals are a unique numbering scheme for satoshis, allowing them to be tracked and transferred as individual sats.
Ordinals are assigned based on the order in which satoshis are mined, and each ordinal number represents a unique satoshi. The numbering system relies on order, as the satoshis are transferred from transaction inputs to transaction outputs on a first-in-first-out basis. The numbering scheme does not require a separate token, another blockchain, or any changes to Bitcoin, making it easily adoptable.
The ordinal numbering scheme provides several different representations of each satoshi, including integer notation, decimal notation, degree notation, percentile notation, and name notation. Each notation represents the ordinal number in a different way, with the degree notation providing an unambiguous representation of the ordinal number, making it easy to determine the rarity of a particular satoshi.
The rarity of a satoshi is determined by the periodic events of the Bitcoin network, which naturally lend themselves to a system of rarity. These periodic events include blocks, difficulty adjustments, halvings, and cycles. Each periodic event increases the rarity of the first satoshi of the block, difficulty adjustment period, halving epoch, and cycle, respectively. The first satoshi of the genesis block is considered the most mythic and is the rarest of them all.
The rarity of a satoshi can be easily determined using degree notation, with each degree representing a different periodic event. The degree notation provides a clear and concise representation of the ordinal number, making it easy to determine the rarity of a satoshi at a glance.
Ordinal theory is an open-source project developed on GitHub, consisting of a BIP describing the ordinal scheme, an index that communicates with a Bitcoin Core node to track the location of all satoshis, a wallet that allows making ordinal-aware transactions, a block explorer for interactive exploration of the blockchain, functionality for inscribing satoshis with digital artifacts, and a manual.
Arbitrary assets, such as NFTs, security tokens, accounts, or stablecoins, can be attached to satoshis using ordinal numbers as stable identifiers. The ordinal numbering scheme provides a unique and secure way to identify and track individual satoshis, making it a valuable addition to the Bitcoin network.