Why Are Ordinals So Popular And Is It Worth It Investing in Them?

Why Are Ordinals So Popular And Is It Worth It Investing in Them?

Bitcoin is the biggest digital asset in the world, despite being the earliest to launch and serving as the blueprint of many different altcoins in the meantime. It has maintained the highest level of market capitalization out of all decentralized assets and continues to be a favorite among investors. In fact, it has even begun attracting interest from market newcomers who are eager to diversify their portfolios in order to protect themselves from the negative effects of inflation and asset devaluation. Throughout 2023 and into 2024, Bitcoin has recorded stellar market performance, mainly due to the introduction of spot exchange-traded funds that are Bitcoin-based on January 10th and also because the next halving is due to arrive in late April.

One of the less-discussed but equally important reasons why the king of crypto has been doing so well recently is because of the introduction of Ordinals, which are essentially non-fungible tokens situated on the Bitcoin blockchain. If you’ve been paying attention to the evolution of the market over the last few months, you may have begun wondering if you should incorporate them into your list of holdings. Here’s what you should know.

In a nutshell 

First and foremost, it’s crucial to establish what the Ordinals are exactly. In simple terms, they are a means of creating non-fungible tokens on the Bitcoin blockchain by attaching visual input such as videos or images to a Satoshi, the smallest Bitcoin unit currently available on the blockchain. They were officially launched on January 20th, 2023, and investors immediately connected them to the Ethereum NFTs. However, a more in-depth look at the asset class reveals that it is actually different and should be treated as such.

Ordinals are complex holdings that are much more difficult to create and also more challenging to obtain, meaning that their scarcity drives a large part of their appeal and value. This is similar to Bitcoin itself, which is also propelled by its scarcity, represented by the limited number of coins that will ever be minted and the regular halvings that take place every four years and during which miner revenue is sliced in half.

However, you might be wondering how that can be enough since there are NFTs that are just as scarce. Do they not hold any value as well? They naturally do, but Ordinals have an additional benefit that they enjoy: issuance. The first 10k Ordinals will always be highly sought-after, regardless of the project they belong to.

The Benefits 

If you want to purchase tokens of any kind, you must use a reliable platform such as Magic Eden in order to minimize the risks that come with shopping for and trading decentralized assets. But you might also be wondering if there are any benefits that come with dealing with this particular asset class. For starters, they are secure, with the Bitcoin Ordinals being particularly well-regarded from this perspective, as they are located directly on the main blockchain. This differs from the other marketplaces, which keep similar assets on sidechains. These assets have their own advantages as well however, as they can be stored off-chain as well. Whichever you prefer will largely depend on personal preference and the type of experience you’d rather have when trading.

The NFTs are also well-known for their strong liquidity levels, with Bitcoin once again taking the crown and its popularity further contributing to making all BTC inscriptions more liquid compared to the traditional non-fungible tokens that are sold elsewhere. The Ordinals are also more exclusive due to their parent coin’s fixed and limited supply, which is yet another characteristic that draws investors to them. For the Bitcoin community, the arrival of the Ordinals has cemented additional use cases, enabling artists to sell and use digital artworks.

It empowers and encourages more miners to participate, increasing their earnings and also making the network a more secure space for investors at the same time. As the hash power receives a boost, attackers have a more difficult time carrying out 51% attacks that could enable them to get a hold of the system and manipulate it however they please.

Should You Invest? 

However, just because there are some advantages that come with owning non-fungible tokens doesn’t mean you will necessarily want to add them to your asset portfolio, right? Do the ordinals bring anything extra to you as an investor and your portfolio as well? As a general rule, you should aim for the assets that interest you or those which you know will yield additional revenue over time, otherwise you’re unlikely to enjoy them or see their value at all. And since they can be quite expensive and it takes no small amount of purchasing power to obtain them, you should also time your investments well.

The Ordinals market is generally easily accessible, mainly because it has international reach, and as more investors become interested in the environment, there is also the theoretical idea that the demand will remain infinite. The fractionalized ownership the NFTs bring is also an important aspect, as it allows you to divide items efficiently across different primary markets to be resold through the means of secondary marketplaces later on. This also serves to improve liquidity rates and opens an alternative for streamlining crowdfunding.

The Bottom Line 

The cryptocurrency market is quite complex and multifaceted, containing a multitude of different projects and products that clients can benefit from. It’s not simple to keep up with the changes that intervene in the ecosystem as well as the fact that the prices tend to record so many fluctuations. Having a solid strategy can save you a lot of trouble and allow you to find ways to grow your revenue while minimizing the risk of losses.

Adding Ordinals and other NFTs to the mix does nothing more than add an extra layer to the amount that you could win by being a part of this marketplace, so you don’t want to be afraid of working within this ecosystem. Sure, there are risks, but they can be minimized with the help of a sturdy strategy that allows some room for flexibility as well.

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