How Bitcoin NFTs appeared on the 23rd

For the first time, Bitcoins can store digital artifacts on the Bitcoin blockchain. Casey Rodarmore’s serial protocol allows users to enter any type of data into their satoshis. This turns regular satoshi into a Bitcoin NFT (non-convertible token) that adheres to the Bitcoin protocol/Bitcoin core and can be included in valid transactions on the Bitcoin network.

We’ve already covered ordinals, the benefits of regulars, and how you can create your own ordinals with and use them in your Bitcoin transactions. This article explores how the Bitcoin blockchain is compatible with digital art preservation. To explain this, we’ll look at 5 specific events between 2012 and 2023 that transformed the Bitcoin blockchain.


We will use these terms interchangeably.

  • Conventional protocols
  • Digital artifacts
  • Bitcoin NFTs
  • Conventional NFTs
  • Bitcoin inscriptions
  • Rows:

We may miss some events between which we discuss in this article. If so, please let us know in the comments.

1. Colored Bitcoins (2012)

In the traditional Bitcoin system, all bitcoins are treated equally and are not differentiated based on their source/intended purpose.

A screenshot of a scene from Animal Farm.  Colored bitcoins are part of the history of conventional inscriptions.
Colored Bitcoins changed the perception of all coins being equal in value and used for the same purposes.

Developed in 2012, colored bitcoins denoted their purpose/feature. This additional, non-financial data highlighted each colored bitcoin among millions of other bitcoins. Furthermore, the concept moved Bitcoin away from being just a P2P currency. This is due to the fact that by using colored bitcoins, users can reflect:

  • Asset Ownership
  • Company shares
  • Right to vote
  • Digital collections
  • Real estate
  • Game elements

However, the addition of “non-financial data” captured block space and surpassed Bitcoin nodes. Thus, images of Rare Pepes for sale slowed down the processing speed of “pure” financial transactions.

2. OP_RETURN function (2014)

Colored coins used “metadata injection” to add metadata. This involved using the scriptSig field of the transaction input script. However, metadata injection was inefficient and limited in capabilities.

The Bitcoin community introduced the OP_RETURN function as part of the Bitcoin Core 0.9.0 release in 2014. The feature allowed users to “store” arbitrary data on the output of a Bitcoin transaction, which would then be stored in the Bitcoin block space (Figure 1). )

Figure 1: An example of how arbitrary data is stored on the output of a transaction. Source: Creative Data

Since the data was appended to the output, the size of the caption content could be up to 80 bytes. It was still only large enough to hold a single line of text, but was an example of how Bitcoin is moving to include more diverse types of data on it.

3. Segwit Upgrade (2017)

In 2017, the Bitcoin community proposed SegWit, or Segregated Witness Data. Before SegWit, the OP_RETURN function included arbitrary transaction block data that already included transaction time, sender/receiver address, etc. in the Bitcoin chain.

SegWit proposed the witness block, which could place witness data higher.

4. Taproot Update (2021)

Taproot’s upgrade, in 2021, is based on SegWit’s separation of transaction signature data from transaction data. It introduced a new type of transaction signature called Schnorr signatures, which are

  • More efficient
  • More secure than previous (Elliptic Curve Digital Signature Algorithm) signatures
  • Smaller in size

They allow larger metadata to be attached to transactions, to be processed faster and cheaper.

5. Originals

Conventional theory builds on top of all four previous developments. It uses the Taproot upgrade (see Figure 2: Usage of the Taproot function jumped after the release of ordinals), the SegWit protocol, the OP_RETURN function, and the principle of colored bitcoins. For the first time in Bitcoin history, users can trade Bitcoin NFTs on the Bitcoin blockchain.

ULmRbhqV4G aqWFp4GpYuf7GV yDz7ZWi60T7aaKWwsM2esEy FggmQDEmkBl12QM7dfX 0HJqAmTXFFW1KoYrHlIhrcQ5F8YtwYMN4uvRYPZ85Ynw
Figure 2: Taproot adoption has increased since Ordinals was released. Source: Glassnode

Users can write videos, images, text, PDF, audios and more on individual satoshis. This expands the use case for Bitcoin and enables the trading of Bitcoin NFTs. In the long run, the hope is that NFT enthusiasts selling their digital assets for Bitcoin could lead to more people using Bitcoin and the unrivaled, censorship-free exchange of data. In the short term, this could increase the value of the Bitcoin network and force the chain to compete with others for more NFT market share.

Transparency Statement

AIMultiple works with many companies, including mentioned in this article.


  1. Annison, Tara (February 6, 2023). “Comprehensive Explanation of Ordinals. NFTs on Bitcoin”. Average:. Retrieved March 14, 2023.

Bardia is an industry analyst at AIMultiple. He received his bachelor’s degree in economics from the University of California, Davis, and his master’s degree in economics and finance from Bogazici University. He writes about IoT, RPA, process automation and to jazz it up a bit, sometimes fintech.

Source link