What is Ordinal Theory?

The Ordinal theory introduces a unique numbering scheme for satoshis, facilitating the tracking and transferring of individual sats. These numbers, aptly called ordinal numbers, are assigned to satoshis in the order they are mined and transferred from transaction inputs to transaction outputs following a first-in-first-out methodology. This numbering scheme hinges on the order in which satoshis are mined, while the transfer scheme relies on the order of transaction inputs and outputs, hence the term "ordinals."

What's intriguing about the Ordinal theory is that it operates independently, requiring no separate token, another blockchain, or any modifications to Bitcoin. In essence, it's a concept that is readily applicable in the current Bitcoin environment.

Ordinal numbers can be represented in various ways:

  • Integer notation: This is simply the ordinal number, assigned according to the sequence in which the satoshi was mined. An example would be 2099994106992659.

  • Decimal notation: This representation includes the block height where the satoshi was mined, along with the offset of the satoshi within the block. An example would be 3891094.16797.

  • Degree notation: This takes a unique form, for example, 3°111094′214″16797‴.

  • Percentile notation: This expresses the satoshi's position in Bitcoin's supply as a percentage. An example would be 99.99971949060254%.

  • Name: This is an encoding of the ordinal number using the characters a through z, like 'satoshi'.

Using ordinal numbers as stable identifiers, arbitrary assets such as NFTs, security tokens, accounts, or stablecoins can be attached to satoshis.

Bitcoin Improvement Proposal

The Bitcoin Improvement Proposal (BIP) provides more technical details about the Ordinal theory. The Ordinals project is an open-source initiative developed on GitHub, which includes a BIP describing the ordinal scheme, an index that interacts with a Bitcoin Core node to track all satoshis, a wallet for making ordinal-aware transactions, and a block explorer for interactive exploration of the blockchain. The project also offers functionalities for inscribing satoshis with digital artifacts and a comprehensive manual.

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