Ethereum NFTs versus Business Ordinals: A comparative analysis

Non-fungible tokens (NFTs) made the initial steps into the world in 2014, when Quantum, the first NFT was minted on the Namecoin blockchain. However, at that time, NFTs were characterized by technological complexities and high gas fees, and this is why they didn’t really benefit from widespread adoption until 2017. What brought this change? Well, the Ethereum blockchain is one of the most important reasons, which facilitated the hosting, creation, trading and programming of NFTs, and in this way, the non-fungible tokens have benefited from a broader recognition.

Although the first NFT has been minted on Bitcoin, this blockchain didn’t really implement the needed stages to support the creation of NFT until recently. However, as of January 2023, things have changed, because Casey Rodarmor launched NFTs on the Bitcoin blockchain, which are called Bitcoin Ordinals.

In this article, we will analyze the similarities and differences between the two types of NFTs.

The similarities between Bitcoin Ordinals and Ethereum NFTs

Bitcoin Ordinals are quite a new concept in the crypto realm, which have been possible by inscribing data onto individual Satoshis, the smallest unit of Bitcoin. Bitcoin Ordinals have leveraged the security of the Bitcoin blockchain, known worldwide for its decentralization and robustness, and what makes Ordinals special is the fact that they are developed on the Bitcoin blockchain directly. NFTs are unique artworks, which can be in the form of a piece of content or a specific product. Bitcoin and Ether are fungible assets, but things change when we are talking about NFTs, in which each piece is distinct and has unique attributes and metadata. This is the reason why NFTs have taken the world by storm and have transformed forever the way we interact with media and art.

Now that you have created a general idea of NFTs, it is time to take a look at the similarities between them. Both NFTs and Bitcoin Ordinals are unique digital assets that have leveraged the potential and capabilities of blockchains. Bitcoin Ordinals and NFTs are recognized worldwide for their rarity and uniqueness and are used to represent collectables and digital art. Additionally, both Ethereum NFTs and Bitcoin Ordinals can be traded in specialized marketplaces, from where people can see pieces from famous collections and invest in the one they find the most appealing. Those interested in seeing the most popular artworks from the world of NFTs and Bitcoin Ordinals can take a look at https://magiceden.io/.

Furthermore, NFTs and Bitcoin Ordinals are both developed under the principle of collectability and uniqueness, and they have brought new opportunities into the crypto space, thanks to the special attributes they carry.

What are the differences between the two types of NFTs?

The way they are stored

One of the most important differences between Bitcoin Ordinals and regular NFTs is the way they are stored within blockchains. For example, Bitcoin Ordinals are developed directly on the Bitcoin blockchain, and this is why they are safer options, as they take advantage of the cryptographic features of Bitcoin. Ordinals are made by inscribing data onto Satoshis, the smallest unit of Bitcoin, which ensures their safety. On the other side, the other NFTs are stored on secondary layers, and on Ethereum, this happens on the Ethereum Virtual Machine (EVM). NFTs on Ethereum exist with the help of smart contracts, which makes them dependent on the logic and rules that are encoded in the contract. So, if there appears to be a change in the EVM or Ethereum blockchain, there will also be one on NFTs.

Ordinals can be more liquid than Ethereum NFTs

Bitcoin is the first crypto ever created and the largest digital currency by market cap. As Ordinals are stored on Bitcoin, digital artworks will also be subjected to the liquidity of the most popular cryptocurrency in the market. The other NFTs don’t benefit from the same level of liquidity, as they haven’t existed for as long as Bitcoin.

Ordinals have better security and immutability

Ordinals inherit Bitcoin’s immutability, simplicity, persistence and security, which is why they have been considered more secure. Plus, they use the Bitcoin protocol, which is responsible for the consensus mechanism and the cryptographic hashings, which ensure immutable transactions. As every block of the Bitcoin platform has the hash of the previous one, they create a chain of tamper-resistant blocks. This is why, after a transaction is confirmed on the Bitcoin network, it is recorded permanently in the distributed public ledger.

Even if Ethereum NFTs are also secure, they don’t compare with Ordinals, as the metadata is stored off-chain. As this metadata has essential information about the one that created the NFT, cybercriminals can find it out if they try and succeed in hacking the central servers of these secondary layers.

Ordinals are more rare than Ethereum NFTs

Bitcoin has a limited supply of 21 million digital coins, where new tokens are created with the help of a process called mining. Mining enforces the supply cap, and this is why Ordinals are scarcer than Ethereum NFTs, as inscriptions can only be made on already existing Bitcoin. This makes Bitcoin a scarce asset and can increase its value and appeal in the crypto space because it has a finite limit. In comparison, Ethereum can be considered quite infinite in production, and so are its NFTs. NFTs on Ethereum work with the help of the ERC-721 contract, and a single ETH transaction can hold numerous NFTs. This happens because the contract is not the one that has the data, but the off-chain does this.

Conclusion

The digital ownership landscape is changing constantly, and in this space, regular NFTs and inscriptions provide a ground-breaking way to store and interact with digital assets. Both Ethereum NFTs and Ordinals have unique qualities, but they also have main differences that make them distinct. The NFT landscape will surely add even more features in the future with all the improvements that appear every day.