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Bitcoin Ordinals a Success? BTC set to Gain More Ethereum Capabilities

Published October 10, 2023 3:42 PM
James Morales
Published October 10, 2023 3:42 PM
Key Takeaways
  • It has been nearly two years since the Bitcoin upgrade that introduced Ordinals.
  • As the network has evolved, new use cases have expanded.
  • Today, Bitcoin developers are working on new applications.
  • These may give the blockchain Ethereum-style capabilities.

Many often credit Bitcoin Ordinals with significantly boosting the transaction volume on the Bitcoin network. Now, nearly 2 years after the upgrade that first enabled Ordinals, developers are using the technology to build Ethereum-style capabilities into the blockchain.

But with Ethereum advancing its own roadmap toward greater transaction volumes and more complex on-chain functions, does Bitcoin need to keep up?

How Ordinals Have Already Changed Bitcoin

First introduced in November 2021, Bitcoin Ordinals enable the numbering, identification, and inscription of individual Satoshis, each representing one hundred millionth of a Bitcoin.

Thanks to Ordinals, the cost of inscribing data on the Bitcoin blockchain has dramatically reduced, and up to a 4 MB limit, it’s possible to inscribe any kind of data on a single Satoshi.

Since the 2021 upgrade, Ordinals have fueled a surge in activity on the Bitcoin network, driven by the development of new use cases like the BRC-20 NFT standard.

According to Dune data, over 35M Ordinals inscriptions have occurred to date. Although the vast majority of these are text-based, more complex data formats have also helped power the surge in Ordinals inscriptions.

Ordinals types
  Ordinals inscriptions

For example, users have recorded over 760,000 PNG images and more than 229,000 WEBP images on-chain as Bitcoin Ordinals.

Advocates assert that Ordinals play a crucial role in diversifying the functionality of the Bitcoin network and are essential for ensuring its long-term survival.

However, not everyone has been happy with Bitcoin’s evolution to embrace a wider variety of transaction types. Purists argue that the blockchain should only be for its original purpose: the peer-to-peer transfer of value.

Facing a slew of Bitcoin-based meme tokens and NFTs, critics have pointed out that transactions stemming from Ordinals inscriptions have occasionally clogged the network, leading to higher fees for users.

Is Bitcoin Due a Layer 2 Revolution?

As well as expanding the range of Bitcoin token types available, the same upgrade that enabled Ordinals inscriptions is also leading to the development of new off-chain protocols.

For example, several projects have recently made advances toward realizing the vision of Ethereum-style rollups for Bitcoin. 

By moving computation off-chain, recent innovations by Kasar Labs and Chainway could significantly scale transactions on the Bitcoin network and trigger an L2 revolution akin to Ethereum’s.

Meanwhile, on October 9, a White Paper  for a new system dubbed BitVM was published. The project’s developers claim that BitVM enables the verification of any computable function on Bitcoin. Additionally, unless there are disputes with transactions, the resulting on-chain footprint remains minimal.

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