What's The Difference Between NFTs and Inscriptions

Web3 appears to be dominated by Ordinal Inscriptions after Casey Rodarmor launched the protocol on January 21. The response has been mixed, with some embracing the upgrade and others rejecting it. Currently, more than 50,000 Ordinals exist, showing that more people are already buying into the innovative idea.

However, inscriptions are a new and innovative concept that many are still unfamiliar with, including how they differ from NFTs. This guide aims to give enthusiasts a basic understanding of Inscriptions and their unique features.

What Are Inscriptions?

Inscriptions are digital artifacts that belong to the Bitcoin blockchain. By inscribing sats with content using the ord client, these artifacts are brought to life and can be explored through the ordinals explorer. Unlike other digital assets, Inscriptions don't need a separate token, a side chain, or any modification to the Bitcoin infrastructure.

To create an Inscription, one can embed various types of content, such as images, SVG, text, or HTML, into an inscription transaction. The transaction witness, which usually comprises signatures and other verification data, is where the content is stored. This enables the transaction to provide proof of authorization while simultaneously serving as a vessel for creative expression.

How are Inscriptions different from NFTs?

On Ethereum and other Ethereum Virtual Machine-based blockchains, NFTs frequently reference off-chain data stored on the Interplanetary File System (IPFS). IPFS serves as a decentralized file storage system, much like the blockchain's own hard drive, and enables dynamic metadata. This means that NFT projects can enhance the image quality of individual NFTs by altering their metadata. In some cases, holders are prompted to click the "refresh metadata" button on OpenSea to obtain the new, better-quality image.

The ability to modify an NFT's metadata reveals a weakness that Rodarmor aimed to address when creating the new protocol. He believes NFTs are "incomplete" because they frequently rely on off-chain data. In contrast, Ordinals are "complete" because all the data is recorded directly on-chain. This is why Rodarmor identifies them as digital artifacts, not NFTs.

Furthermore, while NFTs often include creator royalties, digital artifacts do not. According to Rodarmor, Ordinal inscriptions embody what NFTs should be, occasionally are, and what inscriptions always are by their very nature.

To put it simply, Inscriptions have the potential to not only bring about a cultural shift for Bitcoin but also represent a technical advancement over NFTs.

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