Business News Report
February 13, 2023

Ordinal Punks on Bitcoin: A Comprehensive Guide

In Brief

Ordinal Punks took Crypto Twitter by storm last week when one PFP sold for 9.5 BTC.

Ordinal Punks are a generative PFP collection on the Bitcoin blockchain.

The collection is traded through over-the-counter (OTC) transactions and users need to run a Bitcoin node to mint.

When Ordinal Punks, an algorithmically generated NFT collection of 100 CryptoPunk derivative PFPs minted on Bitcoin’s Ordinals protocol, launched in January, it had the Bitcoin community divided over whether jpegs are necessary on the Bitcoin blockchain. 

Some Bitcoin maxis questioned bringing NFTs to Bitcoin as it goes against the blockchain’s original purpose of financial transactions and that NFTs will increase transaction fees, while others welcomed the new use case on the blockchain. Last week, the collection made headlines when it soared in value as one PFP, Punk 94, sold for 9.5 BTC.

On the surface, Ordinal Punks look like an NFT collection, but the process of its creation is more complex than what users on Ethereum or other layer-2 blockchains are familiar with. 

How Ordinal Punks were created

The collection is minted within the first 650 inscriptions on the Bitcoin chain using the Ordinals protocol. What are inscriptions? According to the protocol’s creator Casey Rodarmor, content, such as an image, text, SVG, or HTML that’s created on the protocol, is called a “digital artifact” or “inscription.” These inscriptions are created in a transaction on the Bitcoin blockchain, which normally contains signatures and other data proving that a transaction is authorized. The transaction also contains a content type that identifies the type of content to be inscribed.

Ordinal Punks were made possible with Bitcoin’s Segregated Witness (SegWit) and Taproot upgrade, which allowed NFT data to be stored on chain, giving way to unlimited transaction sizes. To mint, sell, transfer, or trade an Ordinal, users must run a full node on the Bitcoin blockchain. This means that anyone who wishes to get their hands on an Ordinal Punk has to be crypto or tech savvy.

via Ordinal Punks.

Are Ordinal Punks NFTs or not?

Rodarmor wrote in a blog post that “Inscriptions are digital artifacts, and digital artifacts are NFTs, but not all NFTs are digital artifacts. Digital artifacts are NFTs held to a higher standard, closer to their ideal.” However, NFT enthusiasts beg to differ.

NFT influencer @OGDfarmer on Twitter says that Ordinal Punks are ”not quite NFTs” and that there is no programmability to the project, which severely limits its use cases. Just like its creation, trading of the collection is equally complex. Unlike most NFT collections, there are no infrastructure or marketplaces to support the trading of Ordinal Punks as Bitcoin NFT is still in its nascent stage. Instead, users purchase the “digital artifacts” peer-to-peer over the counter (OTC) via the Ordinal Punks Discord. Bids and asks for Ordinal Punks are tracked on a Google Sheet and through escrow.

To receive inscriptions, users would have to create a Bitcoin wallet on Sparrow. Outside of Ordinal Punks, other collections also exist on the Bitcoin chain and are broadly called “Ordinals.” Compared to the established marketplaces on other chains, the trading of Ordinals seems quite laughable, but it hasn’t stopped inscriptions from being made. According to data on Dune Analytics, over 75,000 inscriptions have been made on the Bitcoin chain. All of them are traded OTC.

“One of the interesting things about Ordinals is that we keep track of the global “minting” order. This is different from Ethereum NFTs where we usually track the minting order within a collection,” tweeted Forgotten Runes CEO dotta. This is why it was important for Ordinal Punks to state the collection was within the first 650 inscriptions on the Bitcoin chain. He added that those who can get their hands on the first 1,000 Ordinals “absolutely should,” but if they are priced out of reach, they could look at the first 10,000.

NFT influencer Noochie noted that the rarity of Ordinals is “still being sorted out,” but they purchased those that were within the first 10,000 ever minted as part of a broader collection. This is in line with @OGDfarmer’s opinion that the early few that managed to get their hands on the first few inscriptions will stand to make a huge profit.  

The controversy surrounding the project

Without a trustless platform to trade Ordinal Punks, some NFT enthusiasts on Twitter have raised concerns about the project’s “sketchiness.” NFT enthusiast, The Norwegian questioned whether it was the “biggest NFT scam of all time” and warned people to be careful of the project. He cited the number of scams, low transparency, and extreme information asymmetry as some of the reasons why Ordinals Punks are “sketchy.”

Like dotta, Noochie, and OGDfarmer implied above, The Norwegian said that “first-mover advantage is enormous” and that influencers are pumping the price of Ordinal Punks to offload it to buyers who buy into the hype after getting FOMO. He went on to say that he refuses “to be exit liquidity for hype orchestrators or front-runners” but acknowledges that Bitcoin NFTs could bring new people into the crypto space.

Artist and NFT advocate Sean Bonner advised against buying an Ordinal Punk or any digital artifacts created on the Bitcoin chain. 

“There’s no market, so you have to rely on trust, and scammers are everywhere B. Fomo is insane, and people are asking stupid prices C. Receiving is hard, transferring is harder. Again this isn’t like eth in the way that we’re all used to,” he tweeted.

On the other hand, Dotta offered a simple word of advice on how to avoid being scammed when buying Ordinal Punks: “use your gut and good judgment.”

Ordinals marketplaces popping up

As demand for Ordinal Punks and other Ordinals surges, a number of Bitcoin NFT marketplaces currently in the works started popping up over the weekend. These include generative.xyz; bitColl, which calls itself the “first automated NFT marketplace on BTC,” was created by the team behind the social network for NFT holders, Meta Fabric; Gamma; and Ordinali

With marketplace competition heating up in the NFT space since the start of this year, perhaps Bitcoin-focused marketplaces for Bitcoin-based projects could inject much-needed new energy into the market as it emerges from the crypto winter slump. 

Disclaimer

In line with the Trust Project guidelines, please note that the information provided on this page is not intended to be and should not be interpreted as legal, tax, investment, financial, or any other form of advice. It is important to only invest what you can afford to lose and to seek independent financial advice if you have any doubts. For further information, we suggest referring to the terms and conditions as well as the help and support pages provided by the issuer or advertiser. MetaversePost is committed to accurate, unbiased reporting, but market conditions are subject to change without notice.

About The Author

Cindy is a journalist at Metaverse Post, covering topics related to web3, NFT, metaverse and AI, with a focus on interviews with Web3 industry players. She has spoken to over 30 C-level execs and counting, bringing their valuable insights to readers. Originally from Singapore, Cindy is now based in Tbilisi, Georgia. She holds a Bachelor's degree in Communications & Media Studies from the University of South Australia and has a decade of experience in journalism and writing. Get in touch with her via [email protected] with press pitches, announcements and interview opportunities.

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Cindy Tan
Cindy Tan

Cindy is a journalist at Metaverse Post, covering topics related to web3, NFT, metaverse and AI, with a focus on interviews with Web3 industry players. She has spoken to over 30 C-level execs and counting, bringing their valuable insights to readers. Originally from Singapore, Cindy is now based in Tbilisi, Georgia. She holds a Bachelor's degree in Communications & Media Studies from the University of South Australia and has a decade of experience in journalism and writing. Get in touch with her via [email protected] with press pitches, announcements and interview opportunities.

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