Bitcoin NFTs are non-fungible tokens recorded on the Bitcoin blockchain. Most are created through the Ordinals protocol, launched in January 2023, which assigns a serial number to each individual satoshi and lets users "inscribe" data, such as an image, text or code, into a Bitcoin transaction linked to a specific satoshi. Whoever controls that satoshi controls the inscription, which can be traded like any other NFT.
Bitcoin NFTs differ from those on Ethereum and similar networks, where NFTs are entries in a smart contract and the artwork itself is usually stored elsewhere. Inscriptions usually place the full content on-chain, which supporters see as more permanent and critics see as a burden on block space. Earlier experiments with Bitcoin-based collectibles go back to 2014, but Ordinals turned Bitcoin NFTs into a significant market and sparked fierce debate within the Bitcoin community.
Bitcoin NFTs in plain terms
Imagine that every one-cent coin ever minted had a tiny serial number stamped on it, and you were allowed to engrave a small picture onto one particular coin. The coin is still worth one cent as money, but collectors may value your engraved coin far more because it is unique. You can pass it to someone else, and the engraving goes with it.
Ordinals do something similar with satoshis, the smallest units of bitcoin. A user writes data into a transaction connected to a particular satoshi. Wallets and websites that follow the Ordinals rules recognise that satoshi as carrying the inscription, and moving it moves the collectible.
History
Bitcoin collectibles predate Ordinals. Counterparty, launched in 2014, allowed tokens to be created on Bitcoin and hosted Spells of Genesis cards and the Rare Pepe collection from 2016. These used small amounts of data in Bitcoin transactions and relied on separate software. The 2017 SegWit upgrade and the 2021 Taproot upgrade made it possible to place larger amounts of data in the witness part of transactions at a discount. In January 2023, software developer Casey Rodarmor released the Ordinals protocol, using these features to inscribe whole files. Inscription numbers passed several million within months, collections such as Bitcoin Puppets and NodeMonkes appeared, and major NFT marketplaces added support. The related BRC-20 token experiment followed in March 2023, and the Runes token protocol launched at the April 2024 halving.
How inscriptions work
Creating a Bitcoin NFT generally involves these steps:
- Preparing the content. The creator chooses a file, such as an image, and its type.
- Commit and reveal. Two transactions are used: one commits to a script containing the data, and the next reveals it in the witness, writing the content to the chain.
- Assignment to a satoshi. Ordinal theory tracks the first satoshi of the revealing transaction's input, giving the inscription its home.
- Trading. The satoshi, held in an unspent transaction output, is transferred to buyers like ordinary bitcoin, using wallets that avoid accidentally spending it as normal money.
Bitcoin itself does not know about inscriptions; it simply stores the data. Indexers running the Ordinals software interpret the chain and show which satoshi carries which inscription. Recursive inscriptions can reference other inscriptions, allowing large works to be built from smaller pieces.
Inscription fees depend on the size of the file and on demand for block space at the time, so large images can cost a great deal to inscribe during busy periods. Specialised services, wallets and marketplaces handle the technical steps for most users, often holding inscriptions in custodial wallets until buyers withdraw them. Collectors who prefer to keep control use Ordinals-aware wallets, sometimes backed by a hardware wallet, that mark inscribed satoshis so they are not spent by mistake.
Comparison with Ethereum NFTs
| Feature | Bitcoin Ordinals | Ethereum ERC-721 |
|---|---|---|
| Where the token lives | Linked to an individual satoshi | Entry in a smart contract |
| Where the content lives | Usually fully on-chain | Often off-chain, linked by a URL |
| Programmability | Very limited | Royalties, logic and extensions possible |
| Fees | Depend on Bitcoin block space demand | Depend on Ethereum gas prices |
On Ethereum, standards such as ERC-721 let creators program royalties and other features, though marketplaces do not always enforce them. Ordinals offer fewer features but tie the collectible directly to Bitcoin's security and permanence.
Debate and risks
Ordinals divided the Bitcoin community. Supporters argue that inscriptions bring new users, cultural activity and fee revenue that will help pay miners as block rewards shrink. Opponents argue that Bitcoin is money and that storing images wastes scarce block space, pushing up fees for payments; some proposed filters or rule changes to discourage inscriptions, and debates about the data-carrier limits in node software continued into 2025. For buyers, risks include high fees when creating or moving inscriptions, thin markets with large price swings, losing an inscription by spending it from an ordinary wallet, and scams involving fake collections. NFT trading volumes on all chains have fallen sharply from their peaks, and the value of most collections is highly speculative. The underlying network is described in Bitcoin Blockchain.