You may have heard of the term inscription, which is a way of embedding data into the smallest unit of Bitcoin, called satoshi. But what exactly is inscription and how does it work? And more importantly, why is inscription important and what can you do with it? In this article, we will answer these questions and introduce you to some of the most fascinating and valuable inscriptions in the market.
What is inscription?
Inscription is a process of carving data into satoshi, the smallest divisible unit of Bitcoin. One Bitcoin equals 100 million satoshi, and each satoshi can be inscribed with a piece of data, such as a text, an image, a song, or anything else that can be encoded as a string of characters. The data that is inscribed on a satoshi is called an inscription, and the satoshi that carries an inscription becomes a unique and scarce digital asset.
Inscription is done by sending the satoshi that you want to inscribe to a transaction on the Bitcoin network. Each transaction on the Bitcoin network has a field that allows you to attach a custom message, similar to adding a memo when you transfer money to someone’s bank account. This message field can be used to store the inscription data, which is then broadcasted to the network and verified by the nodes. The nodes use a consensus mechanism to agree on the validity and order of the transactions, and then group them into a block. A block is a collection of transactions that has a timestamp and a hash, which is a code that is generated by applying a mathematical function to the data in the block. The hash also contains the hash of the previous block, creating a link between the blocks. This is why the Bitcoin network is called a blockchain, because it is a chain of blocks.
The block is then added to the blockchain, which is a ledger or a record of all the blocks and transactions. The blockchain is updated and synchronized across all the nodes in the network. The blockchain is secure because it is decentralized and immutable. No one can alter or delete the data on the blockchain without the consensus of the majority of the nodes. If someone tries to do so, the other nodes will reject the invalid block or transaction.
How does inscription work?
Inscription works by using a protocol called Ordinals, which was proposed in December 2020. Ordinals is a system that assigns a number to each satoshi, from 1 to 2.1 quadrillion, and allows data to be inscribed on them. Ordinals also follows a rule called “first is first”, which means that only the first inscription on a satoshi is valid and valuable. If multiple people try to inscribe the same data on different satoshi, they can do so, but only the first inscription will be recognized by the protocol. The timestamp of the transaction is used to determine the order of the inscriptions.
To make an analogy, imagine that you have a $5 bill in your pocket, and you want to give me $4. According to the UTXO (unspent transaction output) model, you have to take out the $5 bill and put it on the table, give me $4, and take back the remaining $1 as your balance. Ordinals is like taking advantage of the moment when you put the $5 bill on the table, and carving a message on the $1 bill that you take back. That $1 bill then has an inscription.
The data that is inscribed on a satoshi can be anything, as long as it can be encoded as a string of characters. For example, some people have inscribed images of CryptoPunks, a popular NFT project on Ethereum, on satoshi. Some people have inscribed texts of poems, jokes, or memes on satoshi. Some people have inscribed songs or sounds on satoshi. Some people have even inscribed code or programs on satoshi.
Why is inscription important?
Inscription is important because it can offer many benefits and opportunities for users and developers. Some of the benefits and opportunities are:
Art: Inscription can create a new form of digital art, where the data is embedded into the Bitcoin blockchain, making it more secure, transparent, and permanent. Inscription can also create a new way of expressing creativity, where the data can be interpreted in different ways by different viewers or devices. Inscription can also create a new market for digital art, where the inscriptions can be traded, collected, or displayed as NFTs.
Utility: Inscription can create a new layer of functionality on top of the Bitcoin blockchain, where the data can be used for various purposes, such as authentication, verification, encryption, or computation. Inscription can also create a new way of interacting with the Bitcoin network, where the data can be executed, triggered, or modified by certain conditions or events. Inscription can also create a new platform for innovation, where the data can enable new kinds of applications or services that are powered by the Bitcoin blockchain.
Culture: Inscription can create a new culture of Bitcoin, where the data can reflect the values, beliefs, or identities of the Bitcoin community. Inscription can also create a new way of communicating with the Bitcoin network, where the data can convey messages, stories, or emotions to the Bitcoin nodes or other users. Inscription can also create a new history of Bitcoin, where the data can record the events, achievements, or challenges of the Bitcoin network or its users.
What are some examples of inscriptions?
There are many inscriptions that you can explore and enjoy. Here are some examples of different categories and genres of inscriptions:
Art: Art inscriptions are inscriptions that contain artistic data, such as images, texts, or sounds. Some of the most popular art inscriptions are CryptoPunks, which are pixelated portraits of characters that were originally created on Ethereum, and Pepe, which is a meme of a sad frog that was originally created on the internet. Both CryptoPunks and Pepe have been inscribed on satoshi by their fans, creating unique and scarce NFTs on the Bitcoin blockchain.
Utility: Utility inscriptions are inscriptions that contain useful data, such as code, programs, or keys. Some of the most popular utility inscriptions are BRC-20, which is a protocol that allows the creation of fungible tokens on the Bitcoin blockchain. Both BRC-20 has been inscribed on satoshi by their developers, creating new layers of functionality on the Bitcoin blockchain.
Culture: Culture inscriptions are inscriptions that contain cultural data, such as messages, stories, or emotions. Some of the most popular culture inscriptions are Satoshi, which is the name of the mysterious creator of Bitcoin, and We11, which is a slogan of the Bitcoin community that means “we are all one”. Both Satoshi and We11 have been inscribed on satoshi by their supporters, creating a new culture of Bitcoin on the Bitcoin blockchain.
We hope that this article has helped you to understand what inscription is, how it works, and why it is important. We also hope that you have found some inscriptions that you like and want to use. Have fun and happy inscription!