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Understanding ORDI: Exploring Bitcoin's First BRC-20 Token

As the inaugural BRC-20 token based on the Ordinals protocol, ORDI showcases new functionality for assets on Bitcoin but faces questions over alignment with Bitcoin's ethos.

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ORDI has rapidly emerged as one of the most popular tokens built on Bitcoin's blockchain. It has grown to a market capitalization of over $1 billion since the first inscription in March. Its meteoric rise has highlighted the pent-up demand for Bitcoin-based tokens and collectibles. However, ORDI and the underlying Ordinals technology have also faced criticism over potential impacts on Bitcoin's scalability and questions around whether tokenization aligns with Bitcoin's ethos.

This article explores the origins and growth of ORDI, its role as a BRC-20 token, the factors driving its valuation, and the ongoing debates within the Bitcoin community about the merits of Ordinals and tokenization more broadly.

What Is ORDI?

ORDI is a memecoin on the Bitcoin network and functions as the first BRC-20 token to be created using the Ordinals protocol.

The Ordinals protocol, developed by software engineer Casey Rodarmor, allows for data like text, images, audio and video to be written directly to each satoshi, or the smallest unit of the Bitcoin network. This novel technology has enabled entirely new applications of non-fungible tokens and tokens to emerge on Bitcoin.

A satoshi is the smallest unit of the Bitcoin currency, and there are over 2.1 quadrillion satoshis in existence in total. Through the Ordinals protocol, text, images, audio and video can all be written directly to each satoshi as a permanent record.

This capability has enabled entirely new applications of Bitcoin in the form of NFTs and other cryptographic tokens. As the inaugural token to make use of this protocol, ORDI serves as a showcase for these new possibilities. With a fixed supply of 21 million tokens to match the total Bitcoin supply, ORDI operates as a fungible and transferable token. It also represents the first Bitcoin-based NFTs and tokens more broadly. Its success has highlighted both the innovation of the Ordinals protocol and the opportunities this type of functionality could unlock going forward.

Why Is ORDI Rising In Value?

In the months following its creation, ORDI began to gain recognition as the token representing the new capabilities of the Ordinals protocol. As users started experimenting with creating and trading NFTs and tokens directly on the Bitcoin network using Ordinals, interest in ORDI grew. This was fueled by the expanding collection of artworks, collectibles, and other digital assets being issued through the protocol.

In May 2023 centralized crypto exchanges started listing ORDI for trading. These listings provided much wider availability and liquidityfor the token, exposing it to a larger potential buyer base. The impact was immediate and the price skyrocketed over 1000% from its initial levels as a rush of new investors sought to purchase one of the first BRC-20 tokens.

By gaining its first mainstream exchange listings, ORDI demonstrated the demand for tokenization and other applications now possible through the Ordinals protocol. Another surge in demand came from Binance listing ORDI for trading in November 2023. ORDI continued to benefit from integrations that expanded access to the Ordinals ecosystem.

As of December 2023, ORDI currently trades around $50 per token with a market capitalization of around $1 billion.

Is ORDI a BRC-20 Token?

ORDI follows the BRC-20 token standard. BRC-20 tokens emerged amid the surge of "memecoins" in 2023 as a new token standard being built on the Bitcoin blockchain. They represent an attempt to create something akin to the popular ERC-20 tokens that exist on Ethereum, but adapted for Bitcoin's architecture.

BRC-20 tokens utilize the Ordinals protocol, similar to how Bitcoin Ordinals can uniquely identify each satoshi. However, with BRC-20 tokens a single satoshi is "minted" to contain JSON data defining the properties of an entire collection of tokens. For example, one could mint 100 hypothetical $RANDOM tokens by inscribing a satoshi with the relevant token details.

While this allows for the creation of transferable crypto assets on Bitcoin in a similar way to ERC-20, it is not without its complications. Bitcoin's codebase was not designed for complex smart contract-like functionality. BRC-20 tokens only approximate what can be achieved with Ethereum's dedicated smart contract platform.

Some have also argued they represent an inelegant workaround being imposed on Bitcoin's architecture. Still, the hunger for new token projects, combined with the technical capability unlocked by upgrades like Taproot, led to BRC-20 tokens emerging as the first popular token standard utilizing the Ordinals protocol on Bitcoin's blockchain.

Criticism of ORDI

While ORDI has seen tremendous success due to the novel Ordinals protocol, it also faces ongoing challenges. The addition of inscription data to each satoshi has led to debates around potential negative impacts on Bitcoin's scalability and transaction processing capacity.

Bitcoin developer Luke Dashjr highlighted in a viral tweet on X that Bitcoin Ordinals are, in his opinion, “spam” on the Bitcoin blockchain. He hopes this “vulnerability” of the Bitcoin will be resolved with future updates:

Furthermore, ORDI remains highly speculative as its value proposition is reliant on the continued growth and adoption of both the Bitcoin network and the broader BRC-20 token ecosystem that Ordinals enables. After the tweet by Luke Dashjr, ORDI experienced a rollercoaster ride in price performance, with its value swinging wildly between $40 and $60 in the space of hours. This further highlights the volatility of ORDI and how nascent the BRC-20token space is.

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