Bitcoin NFTs!?!?! A Wild 30 Days
By inscribing arbitrary data on to individual satoshis we now have Bitcoin NFTs
Welcome to the VenturePunk newsletter! We have a special guest writer this week. Corporate Trash is involved in various aspects of the NFT community. She brings a fresh perspective and we're thrilled to have her share her insights with us. One side note: if you're in Denver (or heading there) this week for ETH Denver, please see last week's email for the VenturePunk itinerary. We'd love to find time to meet up! Without further ado, here's Corporate Trash! - Jordan
About the author: woman. web3 writer, producer, project mgr & collector. learn more
Have you experienced the dopamine rush of sending money to an internet stranger and hoping they’ll send you a .JPEG in return?
No? Then you haven’t experienced Bitcoin NFTs in early February 2023.
Caution: Purchase and sell Ordinals at your own risk. They are still in early development and much still depends on trusting internet strangers and/or nascent protocols.
My first Bitcoin NFT
In early February, I saw a friend post about another Discord where someone was making and selling Bitcoin NFTs.
First question: what the hell is a Bitcoin NFT?
I am not a Bitcoin maxi, nor am I all that knowledgeable about the blockchain. In fact, I abandoned being a “whole-coiner” last year. But what I do know is that Bitcoin is the Big Daddy chain. A July 2021 survey found that 89% of American adults had heard of Bitcoin, and I can only assume it’s gone up from that figure.
No offense, Canto NFTs– but I’m more interested in getting into something new on Bitcoin than on an unknown blockchain with a cryptocurrency nobody really knows about.
Anyways, this person was selling 100 NFTs that they had “minted” on Bitcoin. The first people to put their names in a Discord channel and pay ended up getting one reserved for them (although currently, most projects run auctions for them one by one, which I don’t love).
No smart contracts, no nothing; just sending money (the equivalent of around $200) to some address and hoping you got one in return.
Right off the bat, things were too technical for my liking. I needed to set up some weird new wallet that was compatible with something called “Taproot” to receive the NFT. I didn’t really want to. But in any case, I did, and my little NFT luckily got sent to me. It was an adventure.
How did NFTs on Bitcoin come about?
After some of my friends and I had already degenned into whatever the hell this was, we did some more digging. Not the ideal order of events, I know.
We found that a Bitcoin dev had made use of the recent Taproot upgrade on Bitcoin, which enabled much larger files like images and videos to be stored on the blockchain. With this, the dev had created Ordinals, which are essentially a modern version of Bitcoin NFTs or “digital artifacts” (there were actually Bitcoin NFTs a while back).
Many people who are deep into Bitcoin don’t enjoy the thought of NFTs becoming “graffiti” on the chain, which was originally designed for financial transactions. But whatever your opinion is about them, they are here now.
Every single Ordinal is also an inscription. These inscriptions happen in order of when it is posted to the blockchain, and are on-chain and immutable.
So when people caught on that some ETH NFT collectors were placing high values on the secondary market for early inscription numbers, the gold rush began.
There was a mad dash from around Feb 1-Feb 6 to inscribe Ordinals under the number 10,000. On Feb 9, there were around 22,000 inscriptions, the highest day to date. There are now over 200,000 total inscriptions.
As some may remember, there have been a couple of “historical NFT” metas on ETH. People search for the earliest ETH NFTs they can find, in the hopes that their value will grow over time. This is the same thing that is still going on with Ordinals. The whole thing has especially attracted ENS domain and historical NFT maxis.
If I’m just being real about it, some collectors don’t even really care what the inscription image, text, or video content is. They just want the early inscription numbers.
Bitcoin Rocks (inscriptions #71-247) and Ordinal Punks (inscription #407-642) have sold on secondary for the highest amounts, worth about 1 to 5 Bitcoin each– with one Ordinal Punk going for 11.5 BTC (the highest known Ordinals sale to date).
Selling Bitcoin NFTs
Wait. Did I mention that only way to actually transfer an Ordinals NFT out of a wallet was to be running a full Bitcoin node? I had friends spending days setting up their own nodes with zero prior experience.
But even transferring with a node was a risk.
Because these Ordinals are made up of little parts of Bitcoins called satoshis, many wallets can’t tell the difference between a gas fee and an Ordinals inscription.
This means that during a transfer attempt, there can be a risk of your inscription being burnt as a gas fee and gone forever. Oops. 🤷♂️
Typically, Ordinal sales are done over-the-counter (OTC) between two people, usually using a middleman as escrow who takes a small percentage. Sales are also recorded only through the project’s Discord or Twitter on a Google Sheet, though you can see on-chain movement of funds.
I used an escrow with a node to sell one of my Ordinals NFTs– which was in my wallet that had a small risk of destroying it upon transfer. Good news: the lil guy made it safely.
I hadn’t felt this type of rush in NFTs since 2021, when I connected my ape wallet with reckless abandon to completely suspicious degen mint sites. Not recommended. 😵💫
But here’s the thing: after only a few weeks of Ordinals existing, there are now selling and transfer solutions for those without a full Bitcoin node.
The builders have been building. People wanted better wallet support, marketplaces to increase trustlessness, and directories of where to find new and existing projects.
Some “marketplaces” have popped up. These ain’t OpenSea, though. Most of these use Partially Signed Bitcoin Transactions (PSBTs) for more trustless trades (though there are arguments over how key management is currently handled).
OrdealBook shows the deal books live for top Ordinals collections, and Ordinals Directory shows info about some collections as well.
Wallets like Ordinals Wallet enable people to receive Ordinals and BTC, and send BTC, plus inscribe their own Ordinals.
Will the Ordinals meta continue to grow in 2023? Will people care about inscriptions numbered 200K and beyond? Or was this all just a blip on the NFT radar?
If you want to dive deeper into the weird world of Bitcoin NFTs, check out this thread of threads. Godspeed.