Redefining Bitcoin: Understanding Runes and Ordinals Before the Next Surge

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If you thought the world of crypto couldn’t get any wilder, brace yourself.

These innovations aren’t just turning a page — they’re rewriting the whole script of the crypto saga. Welcome to the era of Runes and Ordinals, where every satoshi has a story to tell.

This guide is designed for newcomers, so don’t worry if you’re not tech-savvy. Here’s what you need to know.

Ordinals

It might sound confusing at first, but bear with me. Borrowing from Ordinals Global on X.
Imagine Legos.

Ordinals are like assigning a unique name (or number) to each Lego piece to distinguish them. If they’re all blue Legos, how do you tell them apart?

You slap a sticker on each one with a unique number.

One becomes “Lego number 1,” another “Lego number 2,” and so forth. In Bitcoin, ordinals assign a distinct number to each tiny piece of Bitcoin so we can track and identify them individually.

Ordinals involve inscribing unique information onto the smallest unit of Bitcoin, the satoshi. This can be text, an image, or any digital data up to 4 MB. It’s like engraving a serial number on your Bitcoin — a unique identifier for each satoshi.

Runes

It might not click right away, but stay with me. Screenshot from CoinGecko.
Now take those same Legos, marked with special numbers, and add small drawings — like a smiley face or a star.

These drawings convey something unique about each piece, like a special memory. Thanks to these symbols, we gain insights into each Lego piece.

In Bitcoin, Runes are special marks or data added to satoshis to provide additional meaning. It’s not just about a unique ID (ordinals) but creating new functionalities that enhance how these satoshis can be used.

Consider a satoshi functioning as an event ticket.
The rune could include details like the event date, venue, and a unique entry code. You’d use the satoshi as a functional ticket, scanned and verified at the event.

Or a satoshi could serve as a loyalty point in a rewards program.
The rune might track points, expiry dates, and eligible rewards. The satoshi goes beyond digital currency — it becomes a unit in a rewards system.

Behind the Curtain

Casey Rodarmor, a 41-year-old from California, is the mastermind behind Ordinals and Runes. He graduated from UC Berkeley with a degree in Computer Science in 2009 and worked at Google before diving into the Bitcoin world through Chaincode Labs.

But it wasn’t until 2022 that he committed full-time to Ordinals. The idea stemmed from frustrations with Solidity while creating an NFT contract on Ethereum. Rodarmor found Bitcoin’s network more secure and reliable.

Instead of labeling ordinals as Bitcoin NFTs — a term he dislikes — he prefers terms like digital artifacts, inscriptions, or rare sats (short for satoshis). However, his innovations have faced criticism:

They disrupt the fungibility of Bitcoin, akin to having a flawed coin a bank wouldn’t accept.
As marked coins, they compromise Bitcoin’s privacy, facilitating easier tracking.
Adding large data amounts via NFTs slows down transactions and clutters the blockchain.
Despite critics, the public sees a different picture. Over 65 million ordinal inscriptions have been made to date, generating over $458 million in network fees — much to the delight of Bitcoin miners.

As Rodarmor puts it, he aimed to inject fun back into Bitcoin.