Key Takeaways

• Bitcoin Ordinals allow users to inscribe data, like text or images, onto satoshis, the smallest unit of Bitcoin.
• Ordinals started as memes, but are slowly evolving toward supporting real-world assets.
• Various token standards, such as BRC-20, ORC-20, or Runes, ensure a diverse offering of Ordinals.
• While real-world assets would increase Bitcoin’s utility, the network’s technical limitations could cause some problems.
• Bitcoin users debate over Ordinals’ place in the ecosystem — whether they’re a useful utility or a waste of time and space.

What Are Ordinals and Why Did They Explode?

While many like to value Bitcoin (BTC) in terms of the dollar, the world’s first cryptocurrency actually has its own financial unit: the satoshi, the smallest unit of Bitcoin valued at 0.00000001 BTC. 100 million satoshis make up one Bitcoin.

Bitcoin is often seen as a store of value, and is even considered a digital form of gold. However, many attempts have been made to increase its utility, partly to compete with competitors like Ethereum or Solana. One of those methods is through Ordinals.

Used initially as simple digital collectibles not unlike non-fungible tokens (NFTs), Ordinals can turn each satoshi into a unique, non-fungible item. They allow users to “inscribe” text. images, or even code onto each satoshi. The data minted onto a satoshi is called an artifact. While NFTs are newly minted, Ordinals are inscribed on already existing assets, though some consider the inscription process as “minting” in its own way.

Since Ordinals’ introduction in January 2023, they’ve grown from a fun meme to provide increased utility and are quickly becoming Bitcoin’s answer to its contemporaries’ non-fungible ilk due to the following:

• Scarcity: With only 21 million Bitcoin in existence, there are 2.1 quadrillion satoshis. While that’s a significantly high amount of satoshis, the limitation brings an inherent scarcity to Ordinals rather than the artificial scarcity of NFTs on Ethereum. 
• Cultural significance: Having NFTs on Ethereum is par for the course. Having an NFT on Bitcoin is far more unique, as NFTs are nowhere near the asset’s intended use.
• Security: Some argue that Bitcoin’s increased security compared to its contemporaries, primarily due to its proof-of-work (PoW) consensus mechanism and its Taproot upgrade, which makes the network a strong contender for storing data.

As of May 2025, there are over 96 million Bitcoin Ordinals. Their utility is expanding almost as fast as the amount.

From JPEGs to RWA: Ordinals’ Expanding Use Case

Most Bitcoin Ordinals are JPEG images and random collectibles, mainly inscribed for fun. Now, however, Bitcoin enthusiasts are emphasizing expanded utility. For example, the Multibit (MUBI) protocol bridges Bitcoin Ordinals to Ethereum’s ERC-20 tokens.  

Ordinals’ ability to hold inscribed data means they can store any form of digital information, not just memes and JPEGs. Real-world assets (RWAs) — tokenized versions of tangible assets like the deed to your house or stocks and bonds — are the current focus. The former requires NFTs as they’re unique assets, while the latter are fungible assets. A tokenized RWA increases your asset’s liquidity while taking advantage of blockchain’s unique capabilities, such as:

• Fractional ownership: A business park owner can divide their $10,000 deed into 50 tokens at $200 each, allowing others to invest in the park. Fractional ownership lowers the accessibility barrier to property holding, allowing beginner investors to get involved at a lower fee.
• Improved liquidity: While NFTs are a common, suitable way to represent unique, indivisible RWAs, many RWAs are represented by fungible tokens. One-off assets like real estate utilize NFTs, but tokenized bonds or stocks are fungible tokens. Say you’re a fractional owner of a property. You can use that NFT as collateral for a loan while retaining ownership, allowing you to profit from the property’s monthly dividends while managing your loan.
• Accessibility: Managing assets in the real world is time-consuming and expensive. Take intellectual property (IP) rights, for example. Transferring IP ownership requires multiple intermediaries, and each one will charge you a fee. It can take months for a transfer to clear — a stressful process. Tokenization removes the need for intermediaries and facilitates near-instant transfers, saving you time and money.

Inscriptions, BRC-20s, and the Protocol Landscape

To understand how Ordinals can support RWAs and similar concepts, there are a few functions to focus on:

• Inscriptions: As mentioned, inscriptions are the Ordinals’ foundation. Users can inscribe text, images, or other data into a satoshi. 
• BRC-20: Unique digital assets need their own token standard, such as Ethereum’s ERC-721 token standard alongside its ERC-20 fungible standard. BRC-20 is Bitcoin’s Ordinal token standard, which enables Ordinals’ inscription capabilities. However, BRC-20 has some restrictions, like immutability and naming limited to just four letters. Other standards, like ORC-20, evolved upon this.
• ORC-20: ORC-20 is one of many new token standards competing with BRC-20. ORC-20 allows Ordinal deployers to readjust supply after deployment, and doesn’t limit token names to allow for more creativity. It is also based on Bitcoin’s unspent transaction output (UTXO) approach to prevent the double-spending issue. Plus, it even allows users to migrate their BRC-20 tokens to this new standard.
• Runes: Runes also utilize Bitcoin’s UTXO transaction model, though instead of inscribing, creators “etch” data onto satoshis. Etching allows creators to premine their tokens and set minting limits, creating scarcity, which should, in theory, increase these assets’ value.

Each of these standards is a foundation on which others can build their Ordinals project, much like Ethereum has many layer-2 networks to choose from. There are many other protocols, each improving on the base inscriptions in their own way. 

Tokenizing Real-World Assets on Bitcoin: Feasible or Hype?

Now, RWAs are already a functioning feature on Ethereum and its layer-2 networks. For example, the world’s largest asset manager, BlackRock, launched a tokenized fund in March 2024 — the BlackRock USD Institutional Digital Liquidity Fund (BUIDL). While BUIDL isn’t on Bitcoin, the network has its own, more nascent RWA development in progress. Bitcoin layer-2 solutions such as Stacks introduce Ethereum-like capabilities, such as smart contracts and NFTs, to BTC. 

These capabilities introduce an obvious question: Is it feasible for Bitcoin to achieve the same level of success? It’s certainly possible. Multiple Ordinals protocols already have millions in market cap. Ordinals also have Bitcoin’s inherent advantages on their side, such as the network’s worldwide recognition and its potential to outlive every other blockchain.

That said, Ordinals must also overcome Bitcoin’s inherent limitations. Namely, Bitcoin only processes seven transactions per second (TPS), a paltry number compared to competitors’ thousands of TPS. For RWA adoption, a higher transaction throughput is necessary.

Also, Bitcoin doesn’t natively support smart contracts. This is an intentional decision, one that increases security, even, but the lack of smart contracts puts Bitcoin behind its competitors.

Interoperability and Liquidity: Challenges to Widespread Use

As the first blockchain, Bitcoin isn’t exactly built for interoperability. The network’s isolated nature presents a few obstacles when it comes to widespread adoption:

• Split marketplaces: While competing protocols are great for developing Ordinal technology, fragmented marketplaces limit liquidity in an already niche space.
• Lack of institutional interest: Crypto enthusiasts stand against institutional involvement, sure, but it’s hard to deny the surge of interest that occurs every time funding gets involved.
• Bridging weaknesses: Bridges that bring Ordinals to Ethereum and other networks do exist, but bridges are easy targets for bad actors, making them a potential threat rather than a boon.
• Privacy concerns: Bitcoin users often value privacy. Unfortunately, inscribing Ordinals can tie your wallet address to a publicly available asset, providing the internet with another way to discover and track your spending. 

All of this said, there are two types of Bitcoin users: the maximalists who believe Bitcoin is the only way forward, and those who see it as the foundation for everything else. The former claims Bitcoin should remain a store of value, while the latter believes in improving Bitcoin utility in any way possible.

Some don’t think the effort is worth it when you can just have Ethereum, Solana, and its other competitors, but increased utility could bring in more users and potentially increase the asset’s value. That said, Bitcoin is still the largest cryptocurrency by far, so the argument can go either way. Does Bitcoin need to evolve to remain supreme, or can it coast by on simply being the first?

Maximalists do have some grounds, though. Bitcoin’s limited block space already makes the network hard to scale, and some say that Ordinals waste that space. At least, when it comes to JPEGs and memes. Should Ordinals shift into RWAs, you could argue their financial benefits.

Can Ordinals Make Bitcoin Competitive in the Token Economy?

Regardless of your personal feelings on Ordinals, you can’t deny their potential to reinvent Bitcoin. From simple memes to RWA tokenization, Ordinals are bringing layer-2-like capabilities to a network with over $2 trillion in market cap.

As Ordinals and their underlying protocols improve, Bitcoin-based tokens may stand their own against Ethereum. That said, regardless of how the tech evolves, success depends on whether or not developers and institutional investors get involved, and this isn’t to mention how regulators will react.

Whether or not Ordinals successfully evolve Bitcoin into a multi-use chain, no one can argue their potential to increase Bitcoin’s utility.