In the chapter 【4. Penguins' Advance and Ordinal Theory】, the author specifically reviewed the history of Ordinals, which we can take a look at today:
In August 2017, Bitcoin underwent a soft fork upgrade called Segregated Witness (SegWit).
This upgrade split Bitcoin transaction data into two parts:
Transaction data (containing information about senders, receivers, inputs, and outputs) Witness data (containing script and signature data).
SegWit made it easier and cheaper to store larger amounts of data on the Bitcoin blockchain without significantly increasing its size, thus serving as a solution to years of debate over block size limits. Few people remember the intense debates at that time, but in reality, they were 100 times more heated than they sound now.
An unexpected development brought by the SegWit upgrade to Bitcoin was Taproot, which was activated in November 2021. One of the main features of Taproot is advanced scripting capabilities provided in the witness portion of Bitcoin transactions. In fact, Taproot removed the limit on the amount of data that could be included in the transaction witness section, unintentionally enabling individuals to store large amounts of arbitrary data on the Bitcoin blockchain.
This means that Taproot enhanced the functionality of the Bitcoin blockchain, enabling it to support more complex smart contracts and applications. This enhancement added new possibilities to the Bitcoin network, although it might also bring potential risks of storing large amounts of non-transactional data, which could affect the efficiency and scalability of the network. Nonetheless, the introduction of Taproot is still regarded as an important milestone in the history of Bitcoin's development, laying the foundation for future innovation and development.
By 2023, non-fungible tokens (NFTs) on Bitcoin had experienced explosive growth, including the largest Bitcoin block and transaction ever, featuring a "Wizard" NFT using Taproot technology. The concept of "Ordinal Theory" was introduced, which is an off-chain serialization or numbering method for individual satoshis (the smallest unit of Bitcoin, abbreviated as "sats"). It introduced collectability to Bitcoin and allowed users to tag fungible satoshis with arbitrary data, turning them into NFTs.
This innovation allows users to create and trade unique digital artworks and collectibles on Bitcoin, similar to NFTs on platforms like Ethereum. By inscribing information on individual satoshis of Bitcoin, unique representative digital items can be generated. Although this method does not alter the transactional function of satoshis, it adds new application scenarios and value to the Bitcoin network. The introduction of Ordinal Theory marks a further expansion of the functionality and application of the Bitcoin network, showcasing the diversity and flexibility of blockchain technology.
Last year, the number of ordinals on Bitcoin increased by over 300 times, sparking predictable debates within the Bitcoin community about the use of the Bitcoin blockchain; mainly regarding whether it should be used as a platform for financial transactions or to support more complex data processing on Bitcoin. Some may find these debates absurd. The author personally believes it is a good thing and hopes that BRC-20 tokens will operate smoothly.
This growth and debate reflect the Bitcoin community's exploration of the scope and purpose of blockchain technology applications, as well as how to balance the traditional financial transaction functions with emerging innovative applications. The success of BRC-20 tokens and ordinals could not only drive the diversity and vitality of the Bitcoin ecosystem but also inspire new thoughts and innovations across the entire blockchain field regarding technology and applications. These developments demonstrate that Bitcoin is not just a tool for storing and exchanging value but could also become a broader platform for digital innovation and expression.