Bitcoin Ordinals Vs Ethereum ETFs: Major Differences
What are Bitcoin Ordinals?
Anyone associated with Bitcoin and crypto investments has heard about the Ordinals project on Bitcoin. Ordinals are like NFTs and they allow digital inscriptions on satoshi. For context, it is important to note that satoshi is one unit of Bitcoin that is denominated as 1/100,000,000th of one BTC. There is a need to understand the history of Bitcoin in order to understand the Ordinals.
The Bitcoin blockchain incorporated the Segregated Witness (SegWit) in 2017. This resulted from a soft fork on the network that introduced witnesses for various parts of Bitcoin transactions. The witness data from the main block was moved out of the main block leading to size reduction in transactions and increasing the block capacity without changing limit. At the same time, SegWit solved the malleability issues.
In 2021, Bitcoin devs added the Taproot update. This update cleared Bitcoin security and transaction privacy. Additionally, the size of each block was increased by 4 megabytes. This update laid the foundation for Bitcoin Ordinals protocol.
The Ordinals protocol also leveraged the existing ability of satoshi units to be uniquely identified and inscribed with data. In this manner, it was possible to create digital art on Bitcoin without smart contracts.
The Ordinal protocols were formally launched in 2023 and allowed Bitcoin users to mint NFTs directly on Bitcoin. These Ordinals inscriptions were akin to NFTs on the Bitcoin blockchain and made up of digital media such as images, texts, or videos.
Working Mechanism of the Ordinals Inscriptions
Ordinals are Bitcoin native and not minted on a separate blockchain layer. They are usually reliant on arbitrary ordering mechanism that are called Ordinals systems. In this way, the Bitcoin protocol does not need further layers and remains backward compatible. Since Bitcoin core protocols are immutable by design, Ordinals introduce new use cases. Every NFT is assigned a serial number.
This serial number is a unique identifier for each satoshi on the Bitcoin network without changing fungibility of satoshis. The data preserved on Ordinals with satoshis is non-fungible.
The serial number for each NFT minted on Ordinals follows the sequence of their minting time. This Ordinals Theory has a rule of transferring satoshis based on FIFO (first-in-first-out) order.
The unique ID of satoshis requires the buyers to inscribe every unit with a unique and arbitrary serial material. These artifacts are stored in Bitcoin wallet and transferable as normal Bitcoin transactions. The immutability of Bitcoin Ordinals is guaranteed with decentralized and security of the Bitcoin ecosystem.
What is Ethereum NFT?
Ethereum is a smart contract-based blockchain network that allows developers to create decentralized applications and protocols. Anyone can view the ownership of digital assets on the Ethereum blockchain in the form of on-chain data.
Different decentralized protocols allow users to mint and store NFTs on the Ethereum network. Some of these NFTs are used to define ownership of real estate, some are used for in-game assets, and others have a diversified utility.
Ethereum introduced smart contracts after adding the ERC-721 and ERC-1155 standards. Both these ERCs are dedicated to NFTs and NFTs on the same contract. ERCs or Ethereum Request for Comment are a type of Ethereum Improvement Proposal (EIP).
ERCs are applied on the application layer. This blockchain operates as a defining standard for token and smart contract interfaces. ERCs are approved by the community participants.
Bitcoin Ordinals Vs Ethereum NFTs
In terms of design and structure, both share a lot of similarities. Both these digital products are used to create and own digital artwork. The media contained in both types of NFTs is immutable and requires decentralized approval.
However, Ethereum creates and tracks NFTs on the blockchain using smart contracts. Some of NFTs on Ethereum are stored on IPFS. On the other hand, NFTs are stored on Bitcoin units or satoshis on the Ordinals protocol.
Bitcoin users can use the same verification process as Bitcoin transactions. On Ethereum, NFTs can be stored on off-chain storage of metadata. It means that NFT owners have the option to edit or enhance the appearance of some of the NFTs.
Meanwhile, Ordinals NFTs are immutable much like on-chain data on Bitcoin blockchain. The transaction size of Ordinals NFTs is higher and stored in an off-chain manner. The
Conclusion
There are also some other important distinctions between Ethereum NFTs and Bitcoin Ordinals such as scalability and interoperability. However, in the wake of AI Ordinals protocol and Ethereum blockchain is incorporating various important changes to enhance music, art, in-game, and video creation etc.
