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With the advent of Bitcoin Ordinals, inscriptions became the hottest thing in the world of Web3. A mix of skyrocketing prices and bold new narratives continue to siphon off collectors from the old world of traditional NFTs.
Advocates for inscriptions highlight how they solve many problems weighing down the NFT industry; they say inscriptions are more concrete, secure, and integrated.
They are everything NFTs wanted to be but never could become.
This pitch convinces swarms of new collectors from the bitcoin ecosystem, and other blockchains are following suit. But is all this just hype?
Traditional NFT collectors and bitcoin maximalists are asking the same questions:
- Do inscriptions really solve the problems with NFTs?
- What’s the connection between inscriptions and bitcoin?
- Most importantly, where can inscriptions be bought and sold?
The following beginner’s guide will answer all these questions and more. But first, here is a wrap-up of NFTs.
NFTs As Collectibles
Non-fungible tokens (NFTs) are blockchain tokens designed to be completely unique. Unlike currency, NFT tokens are not equivalent to each other or interchangeable, they each have an individual on-chain identity.
Through a process called minting, users create these tokens and connect them to pieces of media via the token’s metadata. This piece of media is typically an image, text, video, or audio file.
Traditionally, NFTs are seen as instantiating a piece of media into a single concrete object. Like the canvas a masterpiece is painted on, the token gives individual existence to an image/form that could be reproduced elsewhere. Copying the Mona Lisa perfectly onto another canvas doesn’t mean the copy is now the real deal; the first object that Leonardo Da Vinci painted the image on is considered the authentic artwork. In the same way, the digital media being minted by a unique token is supposed to be the “real” instantiation of that item.
People who want to invest in a piece of media trade the minted NFT tokens like digital collectible objects. These are supposed to have the inherent artistic or historical value of the connected media content, they are the proof of one’s ownership of said piece.
The Big Problem With NFTs
The problem with traditional NFTs is the disconnect between the token and the piece of media.
The media is not literally in the token’s metadata, as this data is not generally robust enough to hold full media files. Often, this data is just a link to the piece, which is hosted on an external server. If the server goes down, the link in the NFT will no longer work. Further, if a bad actor got involved, they could even change the piece of data connected with the token by accessing the server.
This is just a symptom of a deeper problem pointed to by NFT critics: collectors are buying just a link, not the item itself. There is no necessary connection between the token bought and the media, the digital item is never even on the blockchain, therefore investors are not buying the piece of media at all.
Inscription attempts to solve the problem of necessary connection by bringing the piece of media associated with an NFT fully on-chain.
Ordinals: Bitcoin Inscribed
Bitcoin Ordinals popularized inscription as a method of creating NFTs.
Ordinals are a numbering system applied to satoshis (the smallest unit of bitcoin). Like a serial number, each satoshi has a unique ordinal number associated with it. This new system allows each individual sat to be tracked and identified.
Recent developments in the bitcoin space, such as the SegWit and Taproot upgrades, allowed for embedding additional data into a bitcoin transaction. More specifically, they allow for the association of more data with a single satoshi.
Combining Ordinal numbering and these recent on-chain innovations, bitcoin enthusiasts could convert sats into NFTs through a method they called inscription. The inscription of an Ordinal is the information one wants to attach to a particular token; this is the data determining the content of the NFT, such as a picture.
To inscribe a piece of media to a sat, a user adds the wanted data to the information embedded in the transaction of a single sat. Because of SegWit and Taproot, attachments large enough to house an entire media file can be included in a transaction.
The bitcoin blockchain stores the complete media and permanently connects the individual satoshi to this piece via its transaction history on the immutable bitcoin ledger. One can not inspect the satoshi in question without necessarily finding the connected media.
Ordinal advocates claim that owning a traditional NFT is like having a certificate of authenticity for a painting housed in a far-away museum. On the other hand, owning an Ordinal is like directly possessing an artwork painted on a worldwide indestructible canvas.
Inscriptions vs NFTs
Inscriptions have a few key advantages over traditional NFTs because of their on-chain integration. Advocates claim that these quell the anxiety NFTs owners have about losing their collectables.
Immutability: Inscriptions are housed on the blockchain itself: like all information on a decentralized ledger, this means that the data can’t be changed. It is cryptographically set in stone.
Decentralization: The nodes hosting and verifying blockchain data are distributed; there is no central authority that can dictate or censor the information on-chain. This means there is no single point of failure.
Security: Because there isn’t any dependence on an external server to hold the inscription content, the data is as secure as the native blockchain itself. One would need to attack the whole network to change a single piece of data.
Permanence: Due to the above considerations, it’s much harder, if not impossible, to tamper with or destroy an inscription. Nothing short of eliminating or taking over the entire underlying bitcoin blockchain could break an inscription.
Inscriptions Outside Bitcoin
Originally inscriptions were synonymous with Bitcoin Ordinals, but in the last year, a myriad of other chains have hopped on the bandwagon. In principle, just about any blockchain that allows substantial metadata in its transitions can create its own equivalent on-chain NFTs.
Each chain will have slightly different mechanisms that allow for token inscriptions. Just like Ordinals require their own wallets and marketplaces, collectors should remember that this is often the case for holding or buying any other inscriptions.
Popular chains with their own inscriptions include Solana, Ethereum, And Doge.
Where To Purchase Inscriptions
All readers are likely itching to know to get their toes wet in the inscription game.
As discussed above, inscriptions require specialized wallets and marketplaces. As inscriptions become increasingly popular, new tools and infrastructure pop up to meet the demand. The last year has been an explosion of tools and platforms.
The most robust inscription infrastructure is built for Bitcoin Ordinals. These wallets and marketplaces are the most tried and tested in the inscription industry.
For Ordinals wallets, Xverse, Unisat, and Leather are some of the best in the business. Before deciding on one, It’s best to note differences in security and marketplace integration.
For Ordinal marketplaces, Magic Eden, OKX, and Unisat are core names. Here, one should note differences in liquidity and popularity.
As far as collections, Bitcoin Ordinals have equivalents of recognizable traditional NFT collections. Names include Bitcoin Rocks and Bitcoin Punks. Bitcoin specific collections are becoming popular as well, the biggest being Runestones and Bitcoin Wizards.
For artists looking to create their own inscriptions, the above marketplaces have integrated tools to help users inscribe sats and list collections.
The second largest inscription market is Ethscriptions. The only significant marketplace in this ecosystem is the Etch market. Here, traditional NFT collections are often given Ethscription counterparts, such as Ethereum Punks or Ethereum Apes.
Other markets, such as Solana and Doge inscriptions, are too new to have any significant infrastructure. But rest assured, with inscriptions booming, this will change any day. In fact, by the time this article is released, new wallets and marketplaces might be released and finding their first users.
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