Ever notice how the conversation about “NFTs on Bitcoin” suddenly went from niche chatter to front‑page fodder? Yeah, me too. There’s excitement, confusion, and a fair bit of myth-making. I’ll be upfront: I won’t help with techniques designed to evade detection or other deceptive practices. But I will explain, clearly and practically, how Ordinals inscriptions and BRC-20 tokens actually work on Bitcoin, why they matter, and what you should watch out for.
Okay, so check this out—at a surface level, Bitcoin was never built to be a rich media chain. It was built to be a secure, censorship-resistant settlement layer. That said, clever engineers and a bit of determination found ways to store arbitrary data onchain. Ordinals and inscriptions are one such approach. BRC-20 tokens are a protocol built on top of that mechanism for minting fungible tokens. And yes, it changes some dynamics in the ecosystem, for better and worse.
What are Ordinals and inscriptions?
At its core, Ordinals is a scheme to number every satoshi (the smallest Bitcoin unit) and attach metadata or content to particular sats. Those attachments are called “inscriptions.” Think of it as labeling specific satoshis with data — images, text, or even small programs — without creating a new token standard like ERC‑721 on Ethereum.
Technically, inscriptions are placed in Bitcoin transactions using witness data (the SegWit witness field), which sits off the main transaction structure in a way that’s compatible with the Bitcoin network. That makes it efficient and avoids bloating historical UTXO semantics, though it does increase block space usage.
Now, here’s the nuance: an inscription is not a native token in the way NFTs on Ethereum are standard-compliant. Ownership is essentially the same as owning a UTXO that contains the inscribed satoshi. Transfer the UTXO, you transfer the inscription. Simple, but also a bit messy when you try to build marketplaces or standards on top.
BRC-20 — fungible tokens via inscriptions
Right after Ordinals gained traction, devs and traders created BRC-20, a “token” convention built by encoding a JSON schema into inscriptions. It’s crude compared to ERC‑20: minting is done by inscribing specific JSON commands, and supply is controlled by whoever writes the inscriptions. No smart contracts, no formal enforcement layer — just convention and the Bitcoin ledger.
So why did BRC-20 take off? Two reasons: novelty and liquidity. People wanted programmable scarcity on Bitcoin without leaving the chain. Traders and speculators jumped in, minting and trading collections quickly. But, caveat time: BRC-20 lacks onchain enforcement beyond the transfer of inscribed sats. That makes it fragile and reliant on offchain indexers and marketplaces to interpret and display state.
How ownership and transfers actually work
Here’s a practical mental model: an inscription is a payload attached to a satoshi inside a specific UTXO. If you control the private key for the address that owns that UTXO, you control the inscription. To transfer it you spend that UTXO to a new address. That’s it. No approvals, no smart contract hooks.
Practically, wallets and marketplaces (like some Unisat-based tools) track these inscriptions by indexing transaction history and mapping inscribed sats to wallet addresses, so users get a UX that feels like “transferring an NFT” even though the primitive is raw Bitcoin transactions. If you want to experiment with inscriptions, a wallet that understands Ordinals is essential; one commonly used option is available here.
Differences vs. Ethereum NFTs and ERC-20 tokens
On Ethereum, standards like ERC‑721 and ERC‑20 are enforced by smart contracts. The contract’s code defines ownership rules, transfer logic, approvals, and metadata references. On Bitcoin Ordinals/BRC‑20, the “rules” are social conventions and the ledger’s immutability. That yields simplicity and censorship resistance, but also brittleness and limited automation.
Another big difference: cost model. Ethereum gas pricing is stateful and can spike; Bitcoin fees are based on transaction weight. Inscriptions can be large and therefore expensive in sats to inscribe (because they increase transaction size). That affects economic incentives: large images or media are costly to inscribe, and many inscription creators instead store only pointers or compressed content.
Practical steps to create and trade inscriptions
If you want to try, here’s the rough workflow—no fluff:
- Choose an Ordinals-aware wallet or tool that can create inscriptions and sign Bitcoin transactions. (See the wallet link above for a common choice.)
- Prepare your payload. Keep file sizes reasonable; large files cost proportionally more in fee terms.
- Fund the wallet with enough BTC to cover the inscribe fee and the base transaction fee.
- Use the tool to create the inscription. The tool will craft a transaction that includes your data in the witness field and broadcast it.
- Wait for confirmations. Once confirmed, indexers will pick up the inscription and surface it in supported marketplaces.
Trading happens by transferring the specific UTXO. Marketplaces will often provide escrow-like UTXO exchange flows or use time‑tested UX patterns to make buying safer, but remember: transfers are just Bitcoin transactions under the hood.
Risks, tradeoffs, and community dynamics
There are real tradeoffs. Inscribing lots of data increases block space demand and raises network fee pressure for everyone. Some in the Bitcoin community view heavy inscription use as a vector for spam or for pushing commodity-like apps onto a settlement layer, which — to be fair — is a legitimate concern.
Security-wise: since BRC‑20 relies on offchain indexers, centralized points of failure exist. Lose access to the index, and some metadata or token state can become hard to reconstruct reliably. Also beware of scams: fake indexers, phishing marketplaces, and spoofed inscriptions happen. Use well-audited tools, and consider cold storage for valuable inscriptions.
Finally, legal and cultural risks: storing copyrighted images or illicit content onchain is permanent. That permanence is powerful — and also means you should be thoughtful about what you inscribe. Some projects have self‑policed standards; others have not.
Where this leads
Short version: inscriptions and BRC‑20 expanded what people think Bitcoin can do, and they created a new wave of experimentation. Some of it will stick, some will fade. We’re seeing new wallets, marketplaces, and tooling evolve fast. Expect better UX, more sophisticated indexers, and, likely, more debates about onchain content and miner incentives.
I’m biased toward the idea that Bitcoin’s strength is as a settlement layer, but I’m also intrigued by the creative energy around Ordinals. There’s a tension here — which I actually find energizing. We’ll figure out useful, durable patterns over time, or we’ll learn the hard way which experiments don’t scale.
FAQ
Can I store any file as an inscription?
Technically, yes, but practicality and cost limit you. Large files are expensive to inscribe because fees scale with transaction size. Many creators store compressed content or pointers to offchain storage instead of raw large files.
Are BRC-20 tokens secure like ERC-20?
No—BRC‑20 is more of a convention than an enforceable contract. It’s simple and clever, but it lacks the onchain enforcement and programmable guarantees you get with smart contracts on platforms like Ethereum.
How do I safely buy an inscribed NFT or BRC-20 token?
Use reputable marketplaces and wallets, verify the inscription ID on a trusted indexer, and prefer peer-reviewed tools. Consider doing a small test transfer first to confirm the UX and process.