About Bitcoin NFT Marketplace and Ordinals
In this article, we will discuss the new topic of Bitcoin’s NFT marketplace, Ordinals, a new high-profile concept in Bitcoin that works like an NFT (non-substitutional token).
What are Ordinals?
Ordinals are enabled by the Taproot upgrade introduced on the Bitcoin network on November 14, 2021. This allows users to fill out digital assets in the smallest unit of Bitcoin (satoshi). This filling process is similar to NFT, but takes place on the Bitcoin blockchain.
The production of Ordinals begins with the user downloading Bitcoin Core and syncing the nodes to the blockchain. Once synchronization is complete, the user then creates an Ordinals wallet and sends satoshis to that wallet.
Background on Ordinals
The emergence of Ordinals is the result of upgrades to Bitcoin Core, such as Segregated Witness (SegWit) and Taproot, introduced in 2017. These upgrades enabled more complex transactions on the Bitcoin blockchain, allowing multiple transactions to look like standard transactions by creating new public keys and signatures.
However, the Ordinals process may seem complicated due to the size of the Bitcoin blockchain and the need to use Command Line (Windows) or Terminal (Mac/Linux).
The Future of Ordinals
Development of a more seamless way to fill out Bitcoins and a wallet that will allow users to view the Bitcoin NFTs created is underway. This will allow users to use Bitcoin NFT marketplaces such as Gamma that offer paid services for filling out images and text.
Hiro Systems has also rolled out support for Ordinals in its Hiro Wallet, and Xverse, a Bitcoin-based web wallet, has also begun supporting Bitcoin NFTs.
Bitcoin NFT Marketplace and Ordinals
In order to buy and sell Ordinals, you will need an Ordinals compatible wallet such as Xverse Wallet, Hiro wallet, Ordinals wallet, Sparrow wallet, or Unisat wallet.
If you just want to create and hold Ordinals, you do not necessarily need to interact with the Ordinals marketplace. However, if you wish to sell your tokens or purchase another Ordinal NFT, you are encouraged to visit the Ordinals marketplace.
Ordinals marketplaces, like NFT marketplaces, are platforms for creators and collectors to search, buy, and sell. These marketplaces have their own Ordinals collections and compatibility with specific wallets.
The three most popular Ordinals marketplaces as of June 2023, by volume of transactions and market size, are
1. Unitstat
2. Magic Eden
3. ordinals wallet
How to Trade on Ordinals Marketplaces
Most Ordinal marketplaces use the Partially Signed Bitcoin Transaction (PSBT) solution to trade Bitcoin NFTs. This solution simplifies and simplifies transactions between multiple participants. Specifically, it works as follows:
1. creating a transaction: a member of the group creates a PSBT file. This will contain the details of the transaction (which UTXOs are used and where the UTXOs go), but will not contain the required signatures.
2. Transaction Signature: The creator of the transaction sends the PSBT to the other group members for their approval and signature.
3. transaction finalization: once the PSBT file has all required signatures, it is considered “final” and ready to be broadcast to the Bitcoin network. The final signer converts the PSBT into a fully signed transaction that the Bitcoin network can understand.
4. broadcast: The fully signed transaction is broadcast to the Bitcoin network, where the transaction is confirmed and the process is completed directly on the Bitcoin blockchain.
Transactions in the general NFT marketplace and transactions using PSBTs, which allow Ordinals to trade, differ primarily in the way transactions are handled, signed, and confirmed.
In a typical NFT transaction, the transaction is often facilitated by a smart contract on a blockchain such as Ethereum, where a direct transfer takes place between the buyer and seller. Smart contracts process transactions automatically and handle the exchange of assets without additional authorization.
PSBTs, on the other hand, are usually designed for more complex scenarios on the Bitcoin network. These typically include
・Multiple participants
・Additional layers of security
・Situations where multiple participants need to sign before a transaction can be confirmed, e.g., multi-signature wallets.
The above information describes the Bitcoin NFT Marketplace and Ordinals as of 2023.
*Reference URL:What Are Ordinals? A Beginner’s Guide to Bitcoin NFTs
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