Bitcoin Ordinals Explained: Inscriptions, Rare Sats and Runes
Ordinals are a numbering scheme for satoshis, the smallest unit of bitcoin (one hundred-millionth of a coin). Ordinal theory gives each sat a serial number and tracks it from transaction to transaction, and inscriptions build on that by attaching content, such as an image or a text file, to an individual sat. None of this needs a separate token, another blockchain or a change to Bitcoin (ord documentation): it is a way of reading ordinary Bitcoin transactions, implemented in the open-source ord software. Inscription number 0 was made in block 767,430 on December 14, 2022, and ord lifted its restrictions on mainnet wallet use in version 0.4.0 in January 2023.
How Sats Get Their Numbers
Sats are numbered in the order they are mined. The first sat of the genesis block is sat 0, and the count runs through every block subsidy to sat 2,099,999,997,689,999, which the ord handbook lists as the last satoshi that will ever be mined. That makes 2,099,999,997,690,000 sats in all: slightly under 21 million BTC, because the subsidy is rounded down at each halving.
When a transaction spends outputs, sats move from inputs to outputs first in, first out: the first sats of the first input fill the first output, and so on, and any sats left over go to the miner as part of the fee. Anyone with a copy of the blockchain can therefore follow a particular sat through every transaction since it was mined.
The same sat can be written in several notations. The ord documentation uses this example, which we checked describes one and the same sat:
| Notation | Value | Meaning |
|---|---|---|
| Integer | 2099994106992659 | The serial number |
| Decimal | 3891094.16797 | Block height, then the sat’s offset in that block |
| Degree | 3°111094′214″16797‴ | Cycle, block in the halving epoch, block in the difficulty period, offset |
| Percentile | 99.99971949060254% | Position in the total supply |
| Name | satoshi | The number encoded with the letters a to z |
Rare Sats
Ordinal theory ties rarity to the moments when Bitcoin’s schedule turns over: a new block, a difficulty adjustment every 2,016 blocks, a halving every 210,000 blocks, and a cycle of six halvings, after which a halving and a difficulty adjustment fall on the same block again.
| Rarity | Which sats | How many will ever exist |
|---|---|---|
| Common | Every sat that is not the first of its block | 2,099,999,990,760,000 |
| Uncommon | The first sat of each block | 6,926,535 |
| Rare | The first sat of each difficulty adjustment period | 3,432 |
| Epic | The first sat of each halving epoch | 27 |
| Legendary | The first sat of each cycle | 5 |
| Mythic | The first sat of the genesis block | 1 |
Rarity is a convention among collectors, not something the Bitcoin protocol recognizes: to the network, every sat is worth exactly one sat.
How Inscriptions Work
An inscription is a file with a content type, such as image/png or text/plain, stored in a Bitcoin transaction and assigned to a sat. According to the inscription specification, the content sits in the script of a Taproot script-path spend, inside an “envelope” (OP_FALSE OP_IF … OP_ENDIF) that never executes, so it doesn’t change what the script does. The envelope holds the marker ord, the content type and the body as data pushes of up to 520 bytes each, so larger files are split across many pushes.
Because a Taproot script can only be revealed by spending an existing Taproot output, inscribing takes two transactions:
- Commit: a transaction creates a Taproot output that commits to the script containing the content.
- Reveal: a second transaction spends that output, publishing the content in its witness and inscribing it on the first sat of that input.
The inscription ID is the reveal transaction’s ID followed by i and an index, for example …i0 for the first inscription in that transaction.
What an Inscription Costs
Inscription content goes into the witness, where each byte counts as one weight unit instead of four, so data there costs about a quarter of what it would elsewhere in a transaction. The ord wallet guide gives a rule of thumb: divide the content size by four and multiply by the fee rate. A 100,000-byte image at 10 sat/vB therefore pays about 250,000 sats in fees, plus the commit transaction. Bitcoin Core does not relay transactions over 400,000 weight units, so the guide suggests keeping content under about 390,000 bytes. The fee rate itself depends on demand in the mempool, where inscriptions compete with ordinary payments for block space. ord also places each new inscription in an output of 10,000 sats by default, which stays with the inscription when it is sent on.
Ordinals vs NFTs on Ethereum
| Ordinal inscriptions | Typical Ethereum NFTs | |
|---|---|---|
| Where the content lives | In the Bitcoin transaction itself | Often off-chain, on IPFS or a web server, linked from the token |
| Can it change after creation? | No | Depends on the contract; some can be changed by their owner |
| What tracks ownership | Indexers such as ord, following sats through transactions | The token’s smart contract |
The ord FAQ stresses the first two rows: inscription content is always on-chain and can’t be modified. The third cuts the other way: Bitcoin nodes know nothing about inscriptions, so ownership is an interpretation that every ord-compatible indexer must compute the same way.
Tokens on Top: BRC-20 and Runes
Fungible tokens came later. BRC-20 is an experimental convention that writes token deploy, mint and transfer operations as JSON text inscriptions, with balances calculated by separate indexers. Runes, described in the ord documentation, stores its messages, called runestones, in OP_RETURN outputs instead of inscriptions; ord recognizes runes from block 840,000, the April 2024 halving.
Keeping Inscriptions Safe
- Use a wallet with sat control. The ord guide warns that the Bitcoin Core wallet cannot create inscriptions and does not perform sat control. A wallet that doesn’t track sats can spend an inscribed sat in an ordinary payment or as part of a fee, and the inscription then goes with it.
- Receive on a Taproot address. The ord wallet uses Taproot (bc1p…) addresses; Bitcoin address types explains how they differ from older formats.
- Don’t sweep small outputs blindly. Inscriptions often sit in small outputs that look like leftover change, and consolidation tools that clean up dust and tiny UTXOs can spend an inscribed sat as an ordinary input.
- Treat “free mint” links with suspicion. A fake mint or marketplace page can ask you to sign a transaction that sends your bitcoin or inscriptions to the attacker, so check what you sign.
The Block Space Debate
Inscriptions are contentious. The ord FAQ argues that they add fee demand that will help pay for Bitcoin’s security as the block subsidy shrinks. Critics see them as data that every full node has to download and verify, and the dispute has fed proposals such as BIP 110, the Reduced Data Temporary Softfork, which would have temporarily limited data in transactions.
Frequently Asked Questions
Are Bitcoin Ordinals NFTs?
They play a similar role, as unique items that can be owned, sent and traded, but they work differently: there is no token contract, the content is stored in the Bitcoin transaction, and ownership is worked out by following sats through the blockchain.
Did Ordinals require a Bitcoin fork?
No. They use what SegWit (2017) and Taproot (November 2021) already allowed: data in the witness of a Taproot script-path spend. Nodes that don’t run ord validate inscription transactions like any others.
Can I lose an inscription by sending bitcoin?
Yes, if your wallet doesn’t know the inscription is there. The inscribed sat can leave in a normal payment or end up in the fee, and it can’t be recovered unless the recipient sends it back. Keep inscriptions in an ordinals-aware wallet.