Bitcoin Ordinals on Magic Eden Getting Started Guide
Ordinal Theory was introduced to the world just 11 months ago (January 2023) by Casey Rodarmor and it’s been an absolute game changer. Casey is a genius computer programmer and a great follow on Twiter / X @rodarmor. The Ordinals protocol allows anyone to inscribe images, text, art, music, and other data into individual satoshis (SATs) on the Bitcoin Blockchain. In addition to digital collectables, the potential use cases for Bitcoin Ordinals is still not fully realized as this is so new.
What are Bitcoin Ordinals and how are they Different than NFTs?
Ordinals are fully on-chain data inscribed directly into individual Satoshi / SATs on the original blockchain, Bitcoin. Most ordinals are inscribed on common satoshis but the most sought after are inscribed on Rare Sats. Also knows as “digital artifacts”, Ordinals will live as long as Bitcoin lives. Many of the NFTs (non-fungible tokens) minted on Ethereum, Solana, Avalanche and other other blockchains are not fully on-chain. The underlining token is on-chain but the image that represents the NFT is often hosted on centralized servers like Amazon Web Services. It’s important to note that is not always the case, as there are some Ethereum NFT projects like Checks Originals and Onchain Monkey that are fully on-chain.
Overview of Getting Started with Bitcoin Ordinals On Magic Eden Marketplace
Magic Eden is one of the most popular marketplaces for trading BTC Ordinals and Runes tokens. In this example, we’ll take a close look at Bitcoin Frogs which is one of the original 10K projects. When analyzing any Ordinals project, these are the things I like to look at…
Floor Price and Total Volume: You’ll most likely have a budget in mind before you even begin looking at Ordinal projects to invest in which is why Floor Price is a great place to start. It tells you the cheapest price in $BTC you could buy into the project at and it changes based on market sentiment. I like to use the Bitcoin Converter tool on CoinGecko to see what the floor price of projects in in $USD. Total Volume is an indicator of how popular the Ordinals project has been and could be again. Projects with high total volume is an indicator of strong liquidity. Most likely, there will be buyers when you want to sell. Low total volume projects indicate you can buy but their might not be much of a market (unless something changes) when you decide to sell.
Total Supply and Owners: Combining the two indicators gives you a good idea of the decentralization level of the Bitcoin NFT Ordinals project. For example, lets take a 10K project like Bitcoin Frogs. Let’s says “Owners” is 5,000. That would be a really good sign as it means there are 5,000 unique wallets out of the 10,000 total supply that hold Bitcoin Frogs. It would indicated strong decentralized, and likely enough unique wallets to prevent a small number of whales from crashing the floor price. So the more decentralized an Ordinals project is, the better chance the floor price has to climb higher.
Range: Shows the range of Inscription Numbers within the Ordinals project. Typically, the lower the inscription numbers in the project, the better chance it has to rise in value. Low inscription numbers indicated the project was early / among the first adopters of Bitcoin Ordinals and in theory, will trade for a premium. The Range for Bitcoin Frogs is 381224 to 412389 which means it’s a sub 500,000 inscriptions Bitcoin Ordinals project. At first that might not sound important, but when realize that there are over 39,000,000 total inscriptions on Bitcoin at the time of writing this (11/11/2023), anything sub 1 million might be significant in the eyes of collectors.
Activity and Pending Transactions: Combine these 2 indicators to get a good feel for how liquid the project is and it’s general strength. For example, if there are a bunch of “Pending Transactions” for Bitcoin Frogs on Magic Eden as well as consistent buys well above Floor Price, you can reasonably conclude it’s a good project.
Thanks for taking time to check out this Stouy tutorial. Please use the comments section below if you have any questions. Finally, make sure to check out our other Bitcoin Ordinals on Magic Eden tutorials!
