With recent hype surrounding Casey Rodarmor’s release of open-source software Ordinals for creating Bitcoin NFTs, it’s critical to realize that the concept of such digital collectibles on the Bitcoin network dates way back to 2012.
So, join us as we take a closer look at the timeline of Bitcoin non-fungible tokens (NFTs), from the start of Colored Coins to the creations of Namecoin, Counterparty, and Omni Layer. Then, to more recent upgrades like Segwit and Taproot, before leading up to the latest development of Inscriptions and Ordinals.
Let’s explore the exciting journey of Bitcoin NFTs and their evolution over time starting from start to finish:
2012 – Colored Coins
Believe it or not, Before NFTs came about on Ethereum, Bitcoin already had a way to create digital assets dubbed Colored Coins. This project allowed attacking real-world services or assets to Bitcoin transactions using EPOBC. The EPOBC mechanism makes Colored Coins different from standard Bitcoins by assigning a tag value.
Better still, the approach for inputting data into Bitcoin transactions had no extra cost. Although this marks the first of its kind to create such assets on the Bitcoin network, it soon lost the attention of the Bitcoin community. For all that, it did serve as a precursor to other projects wanting to create Bitcoin digital collectibles.
2014 – Namecoin, Counterparty and Omni Layer
In 2014, a type of Bitcoin named Namecoin came about, creating the first-ever non-fungible token (NFT) on Bitcoin. The Bitcoin was called “Quantum”, and consisted of unique, generative artworks by Kevin and Jennifer McCoy. This creation is a significant event because it brought digital art and technology (DLT) together. Although it didn’t happen primarily on Bitcoin, it was a notable moment for digital art on a Bitcoin-related platform.
Omni Layer is another notable application that came to light in 2014. Previously known as Mastercoin, the app allows developers to design numerous kinds of digital assets on top of Bitcoin, beyond using just the network itself. These assets can have additional information on them through the project’s OP_RETURN function, which still works within the basic Bitcoin system. One of the most well-known tokens on Omni is the ever-so-famous Tether. Despite no NFTs on the app latching on, it’s essential to see how other tokens did.
Following on, Counterparty further advanced digital assets on Bitcoin the same year by encoding arbitrary data through the OP_RETURN function. Despite the transactions being recognized as valid but unspendable, Counterparty nodes recognized them as digital asset transfers, which led to the acceleration of marketplaces and compatible wallets, to pave the way for the Bitcoin NFT ecosystem to flourish.
2015 / 2016 – Everdream Soft and Rare PePe Cards
Due to Counterpart’s success, a famous card trading game came to light on the Bitcoin blockchain, using NFTs, dubbed “Spells of Genesis”. Another Bitcoin NFT project called “Rare Pepe Cards” launched shortly after in 2015. These games show Counterparty’s role in introducing NFTs to the Bitcoin community. Still, they are being used to this day.
2017 – SegWit
2017’s most significant moment on the Bitcoin blockchain associated with NFTs is when changes were made to how Bitcoin transactions were organized. The difference, named Segregated Witness (Segwit), made it possible to include more data in a transaction without making it too big. As a result, have more transactions into each block for faster confirmation times.
Another aspect of Segwit is that it fixed security vulnerabilities in the Bitcoin network, making the blockchain more secure and stable overall.
Additionally, by adding these technical improvements, Segwit was able to pave the way for more features and developments on the Bitcoin network, including the creation and trading of NFTs.
2021 – Taproot and Stacks
After Segwit, there was another essential upgrade years later, in 2021, called Taproot. This upgrade made it much easier to add more data to a transaction. Thus, making it possible to create the now-famous “Inscriptions”, for users to add extra information to their Bitcoin transactions. Before such changes, users could add data to a transaction through the OP_RETURN feature – but at a limit. The new modifications meant users could add loads of data, which is how inscriptions like Rodarmor’s came around.
Stacks is another remarkable moment for Bitcoin NFTs, which uses its blockchain to let people use DeFi and NFTs with Bitcoin. It is a sidekick of the Bitcoin blockchain over using Bitcoin’s security. As a result, Stacks transactions benefit from Bitcoin’s confirmation process. However, users can only buy and sell NFTs on Stacks using its native token (STX), not Bitcoin. Unsurprisingly, some argue that Stacks is not Bitcoin, over not using the network directly. However, a large percentage of its platform is Bitcoin-related.
Now – Inscriptions and Ordinals
Now, thanks to Rodarmor’s NFTs, Inscriptions and Ordinals are the new in-thing. To understand how they work, it’s vital to note that Bitcoin uses a unique way of keeping track of Unspent Transaction Outputs (UTXOs) on the Bitcoin network. UTXOs represent a Bitcoin balance using several outputs from previous transactions rather than just one Bitcoin representing an entire balance. Therefore, once a Bitcoin is spent, UTXOs are destroyed and created to keep a record of an existing Bitcoin on the network and to prevent double-spending.
UTXO’s are like physical cash that require change once spent. For instance, if Alice has one bitcoin and wants to give Bob 0.4 Bitcoin, she has to spend the entire 1 Bitcoin and create two new UTXOs: one for Bob, which accounts for 0.4 Bitcoin, and one for herself as change (0.59 Bitcoin).
Bitcoin is developing a new cultural layer that challenges the views of users and investors regarding Bitcoin’s value propositional as money, a settlement layer, and as an application process.
Nevertheless, this does not stop OG projects like DeGods and Bored Ape Yacht Club’s Yuga Labs already joining the bandwagon. Yuga Labs’ Bitcoin NFTs generated a whopping $16.5M in revenue from Ordinals. And, with humongous sales like this, it’s no wonder why experts predict Bitcoin NFTs to reach a market cap of $4.5B by 2025.
To learn more about this recent hype, check out “Everything You Need to Know About Bitcoin Ordinal NFTs” and keep an eye out for such digital collectibles.
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