Author: Casey Rodarmor 2022-02-23 00:43:52
Published on: 2022-02-23T00:43:52+00:00
Casey Rodarmor has proposed a scheme called Ordinal Numbers for numbering and tracking satoshis across Bitcoin transactions. The scheme assigns every satoshi with a serial number in the order it is mined and can be used as a primitive for various applications such as NFTs, reputation systems, and Lightning Network-compatible stablecoins.When satoshis are spent in a transaction, the input satoshi ordinal numbers are assigned to output satoshis using a simple first-in-first-out algorithm. The suggested key derivation path is `m/44'/7303780'/0'/0`, and Casey is working on a command-line tool that builds an index of ordinal ranges to answer queries about the whereabouts of a particular ordinal or the ordinals contained in a particular output.The use of ordinal numbers in Bitcoin allows the output of an ordinal without a transaction ID by substituting the block height and transaction index within the block for the transaction ID. Any ordinal transfer can be accomplished in a single transaction but may contain outputs below the dust limit and thus be non-standard and difficult to get included in a block. Transfer can be accomplished by breaking the transfer into multiple transactions.Ordinal numbers require no changes to blocks, transactions or network protocols, and can thus be immediately adopted or ignored without impacting existing users. Adoption of ordinal numbers will increase the demand for transactions which will drive up fees, thereby requiring the development of a robust fee market. The document also includes a reference implementation of an ordinal index that tracks the position of ordinals in the main chain, available on GitHub.Ordinal numbers can be used to create spending transaction templates that constrain how specific ordinals are spent in future transactions, allowing for the transfer of digital assets such as stablecoins or non-fungible tokens (NFTs). It can also serve as the basis for account and authentication schemes, colored coin schemes, reputation systems, and persistent voting rights for DAOs. Ordinals are opt-in and should not impact the privacy of existing users. The document discusses various potential applications of ordinal numbers, including RGB, a proposed scheme for using sequences of single-use seals to define state transitions of off-chain, client-side-validated state machines.In conclusion, ordinal numbers provide an efficient way of tracking satoshis across transactions in Bitcoin without the need for explicit creation. It has various potential applications such as NFTs, reputation systems, and Lightning Network-compatible stablecoins. Ordinal numbers are fully backwards compatible and require no changes to the bitcoin network. Its adoption will increase the demand for transactions and drive up fees, which is a strong positive of the proposal.
Updated on: 2023-05-22T17:40:26.277019+00:00