Ordinals, Inscriptions, and BRC-20

What Ordinals Did to Bitcoin

In January 2023, Casey Rodarmor released the Ordinals protocol — a system for numbering individual satoshis (the 100,000,000th of a Bitcoin) and 'inscribing' arbitrary data (images, text, JSON) onto them. Each inscribed satoshi becomes a unique digital artifact that can be traded like an NFT. The protocol uses Bitcoin's witness data (added in the SegWit upgrade) plus Taproot's batched transactions to embed substantial data efficiently. Within months, Ordinals had grown to billions of dollars in trading volume and reshaped Bitcoin culture.

How It Differs from Ethereum NFTs

Ethereum NFTs are smart contracts: token IDs that point to off-chain metadata (typically on IPFS). Ordinals are different: the actual content (image, text, even small video) is embedded directly in Bitcoin's blockchain. There's no external metadata reference — the artifact is the Bitcoin transaction itself. This makes Ordinals more cryptographically permanent (Bitcoin's blockchain is the storage layer) but also bloats Bitcoin's blocks substantially during inscription waves.

BRC-20 — Fungible Tokens via Inscriptions

BRC-20, introduced March 2023, is a token standard built on top of Ordinals. Tokens are 'deployed' by inscribing a specific JSON format declaring the ticker and supply. Users 'mint' tokens by inscribing 'mint' instructions; 'transfers' inscribe 'transfer' instructions. The state of who owns what tokens is computed by indexers reading these inscriptions in order. The standard is intentionally simple, almost to a fault — there's no transfer-with-approval, no batch transfers, no on-chain validation.

• Ordinals number individual satoshis and inscribe arbitrary data onto them
• Inscription data is stored directly in Bitcoin blockchain, not off-chain
• BRC-20 uses inscriptions to implement fungible tokens via JSON instructions
• Runes (April 2024) is a more efficient token-on-Bitcoin alternative