Bitcoin ordinals are the next big thing in crypto

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the bitcoin blockchain and referenced by a unique address also held in the blockchain.getty data structure

New in cryptography are ordinals. In a nutshell, an ordinal is information written in the bitcoin blockchain and referenced by a unique address also held in the blockchain’s data structure.

It looks like a non-fungible token (NFT), but an NFT is a token that references a piece of data somewhere else on the internet, like IPFS (interplanetary file system), which is the actual data. It may be somewhere else, but the problem is that if the file or its storage disappears, the NFT data is gone, leaving only the token pointing to nothing.

This means that ETH could do its job in a hundred years, but Bored Monkeys or Punks may have long since evaporated in a cloud of disintegration.

An ordinal is actually stored in a bitcoin block, so while bitcoinBTC or one of its forks is alive, the data is there. The only way it will go away is if bitcoin ceases to exist and every instance of the blockchain is erased. It’s almost impossible.

All sorts of stuff is stored up to the 4 megabyte limit of information, but the storage isn’t cheap because it has to be pulled from the blockchain. I paid to extract a 25,000 byte bitcoin image and it cost $115, so megabytes are going to cost thousands. The attraction is the fact that the ordinal of the artwork I created will never go away, which is pretty strong. (If you want to fetch its ordinal 8041535.)

When I visited the Miami Blockchain show on May 19, there were 8 million ordinals and 4 days later there were 9 million. Ordinals explode.

This may or may not be good news for bitcoin.

It certainly blew up transaction fees.

Here is a table:

transaction feesCredit: bitinfocharts.com

Many bitcoin maxis are not fans of this fun trick. Bitcoin is their digital gold; Bitcoin is for serious economic purposes, not pictures of frogs, it’s like taking gold and turning it into trinkets…oh wait! Or

Yet the concern is real. If there is huge value in storing things like images and text in the bitcoin blockchain, it will increase the cost of financial transactions and that seems to be a threat. Alternatively, it will drive low value transactions out of bitcoin and into layer 2 solutions in much the same way polygonMATIC serves this purpose for Ethereum.

Again, ordinals may be a doomed fad. However, that will not happen. Ordinals more likely will trigger a new wave for bitcoin where it goes beyond its previous incarnation while remaining layer 0 of all cryptos.

The fact that transaction levels increased, resulting in a bonus for miners, many of whom struggled until a sudden influx of ordinal fees poured in, should be enough to prove that ordinals are a breakthrough, not a bane.

Ordinals are another rabbit hole to fall into and I expect it to be extremely fruitful and there is a new land grab afoot.

Are ordinals going to be a huge financial opportunity?

Go ask Alice.

Follow me on Twitter or LinkedIn. Check out my website.

I am the founder and former CEO of the equity and investment site ADVFN and general partner of Ylem Capital ([email protected]). I am a prolific financial writer; I wrote a stock market column for Wired – which described me as a Market Maven – and am a regular columnist for many financial publications around the world. I have written for titles such as: Working Money, Active Trader, SFO and Technical Analysis of Stocks & Commodities in the US and have written for just about every national newspaper in the UK. In 2018, I won Journalist of the Year in the Business Market Commentary category at the State Street UK Institutional Press Awards. Over the past few years, I’ve become a financial thriller writer and authored the best-selling investing book: 101 Ways to Pick Winners in the Stock Market. Find me here on Amazon US. You may have also seen me on CNBC, CNN, SKY, Business News Network, the BBC and Al Jazeera giving my perspective on the markets.

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