Ordinals, Inscriptions & Runes

A new movement for inscribing digital assets onto Bitcoin blocks. What Ordinals (2023) and Runes (2024) unlocked — and the community controversy they ignited.

5 min readLast updated: August 15, 2026

Key points

Ordinals theory, launched by Casey Rodarmor in late 2022 / early 2023, lets data be inscribed onto individual satoshis without changing the Bitcoin protocol, enabling assets like BRC-20 (2023) and Runes (2024). It has boosted the fee market and miner revenue, but also ignited one of Bitcoin's fiercest community debates over whether it should remain "pure money."

Ordinals — numbering individual satoshis

Ordinals theory, proposed by Casey Rodarmor in late 2022 / early 2023, assigns a unique ordinal number to every satoshi (the smallest bitcoin unit: 1/100,000,000 BTC) in mining order.
Each sat becomes individually distinguishable, allowing arbitrary data (images, text, audio, video, code) to be inscribed on a specific sat.
Crucially, Ordinals did NOT change the Bitcoin protocol at all. It reinterpreted capabilities already present in the Taproot upgrade. No soft fork required.
This shattered the long-held view that "Bitcoin is for money only" and opened diverse use cases — NFTs, tokens, metadata, and more.
Casey Rodarmor uses the term "digital artifacts" over "NFTs" to emphasize physicality and permanence beyond what NFTs connote.

Why Taproot Made It Possible

Activated November 2021, Taproot (BIP-340, 341, 342) introduced Schnorr signatures and MAST trees via soft fork.
Ordinals leverages Taproot's witness script area: transactions can embed arbitrary data (up to ~400KB) in the witness field.
Witness data is weighted at 1/4 in block-size calculation, making it relatively cheap to store large amounts of data.
Compare to the pre-Taproot OP_RETURN approach (80-byte limit): orders of magnitude larger capacity. Images, audio, and even full HTML applications can now be inscribed.
Whether this use was anticipated at Taproot-proposal time is itself a debate — and remains a source of controversy.

The First Inscription (December 2022)

On December 14, 2022, Casey Rodarmor inscribed Inscription #0. Its content was a black-and-white pixel-art skull, regarded as an homage to the Bitcoin genesis block (the Ordinals software was publicly released in January 2023).
By early February, inscriptions exceeded 10,000 and adoption exploded. Yuga Labs (Bored Ape Yacht Club) with "TwelveFold," and others from the Ethereum NFT scene, crossed over.
By end of 2023, the inscription count surpassed 50 million. Total fees reached hundreds of millions of dollars, meaningfully impacting miner revenue.
Images dominate, but text, SVG, HTML, video, audio, and even games have been inscribed — effectively any digital asset.
Inscription "permanence" equals Bitcoin blockchain permanence. The design philosophy differs sharply from Ethereum NFTs that rely on IPFS or centralized servers.

BRC-20 — ERC-20 on Bitcoin

March 2023: a developer named "Domo" proposed BRC-20, a token standard built on Ordinals.
Mechanism: deploy, mint, and transfer operations are inscribed as JSON text; indexers compute balances off-chain.
BRC-20 is strictly an off-chain convention, not a protocol feature. Bitcoin nodes do not recognize tokens; specialized indexer software tracks balances.
Tokens like ORDI, SATS, PEPE, and MEME launched. At peak, BRC-20 tokens reached several billion dollars in combined market cap.
BRC-20 is inefficient: each "transfer" requires a separate inscription, consuming significant block space.

Runes — Launch on 2024 Halving Day

April 20, 2024 (halving day, block 840,000): Casey Rodarmor launched the Runes protocol.
Runes is a new design for fungible tokens on Bitcoin, aimed at solving BRC-20 inefficiencies.
Implementation: extended use of OP_RETURN (up to 82 bytes per transaction under the standardness policy at launch — a cap effectively removed by Bitcoin Core 30.0 in October 2025); a UTXO-native design that aligns with Bitcoin's core model.
Combined with halving-day fee pressure, the Runes launch block generated the highest-ever fee revenue to miners: ~37.7 BTC (~$2M USD).
Thousands of Runes have launched — "UNCOMMON•GOODS," "DOG•GO•TO•THE•MOON," "RSIC•GENESIS•RUNE." The middle-dot (•) separator has become a cultural hallmark.

Fee-Market Impact

Pre-Ordinals, Bitcoin fees typically ran below 1 sat/vB. Post-2023, fees frequently spiked into hundreds of sat/vB.
Post-halving (April 2024+) miner revenue mix: fees rose from a few percent historically to as much as 30–40%. In some blocks just after the halving, fees actually exceeded the block subsidy.
This fee premium supports miner sustainability long-term — but draws criticism from users facing higher transaction costs.
Lightning Network and other L2 on-ramp / off-ramp costs are also affected by Ordinals-driven fee pressure.
As the 5th halving approaches (2028), Ordinals-driven fees are increasingly viewed as a structural pillar of long-run miner economics.

Community Controversy

Ordinals triggered one of Bitcoin's fiercest debates. Luke Dashjr (a prominent Bitcoin Core developer) labeled them "spam" and "exploitation of a vulnerability."
Critics argue: Bitcoin was designed as "pure money." NFTs, JPEGs, and the like deviate from the original purpose, consume finite block-space resources, and burden regular senders with higher fees.
Defenders argue: Bitcoin is a "permissionless" protocol. As long as valid fees are paid, no one can block usage — that is the point. Miners also benefit from a new revenue source.
Mining pools like Ocean (with Luke Dashjr's involvement) deliberately exclude Ordinals transactions. Most major pools, however, mine them without filtering.
In October 2025, Bitcoin Core 30.0 moved the opposite way, effectively removing the ~80-byte OP_RETURN default cap. Node operators opposed to the relaxation have migrated to the filter-focused Bitcoin Knots, and the data-storage debate continues.

Real Use Cases

Digital art: traditional NFT artists migrating from Ethereum to Ordinals for full on-chain permanence.
Domain-like identifiers: .sats (SatsDomains) — Bitcoin-native naming systems built on Ordinals.
Historical data preservation: classic books, open-source code, and historical speeches — as "1000-year archives."
Game assets: fully on-chain Bitcoin-native games (small scale).
Brand marketing: major brands like McDonald's and Pepsi have released limited collections on Ordinals.

Compared to Ethereum NFTs

Storage: Ethereum NFTs usually store metadata on IPFS or AWS S3 with only the reference URL on-chain. Ordinals are fully on-chain (inscribed into Bitcoin blocks).
Permanence: IPFS risks content loss if pinning fees lapse; AWS depends on the provider. Ordinals last as long as Bitcoin.
Issuance cost: Ethereum gas is relatively cheap; Bitcoin Ordinals typically require higher fees to inscribe.
Royalties: Ethereum NFTs can enforce royalties via smart contracts. Ordinals transfer as plain UTXOs, so royalties cannot be enforced on-chain (social-contract reliant).
Ecosystem maturity: the Ethereum side (OpenSea etc.) has ~10 years of development; the Ordinals side (Magic Eden, Ordswap, etc.) is still maturing.

Outlook

Ordinals-derived fee revenue is increasingly critical to miner sustainability post-halving.
Runes enables active experimentation with memecoins, utility tokens, and stablecoins on Bitcoin.
Layer-2 projects like BitVM and Babylon are evolving in conjunction with Ordinals and Runes.
Whether tokens like Runes/BRC-20 qualify as securities depends on evolving regulation in each jurisdiction (the U.S. SEC, for instance, signaled in 2026 that most crypto assets are not securities — a fluid stance).
The long-term possibility: Bitcoin's identity shifts from "money only" to "money plus digital-asset platform."