How do Ordinals Marketplaces Work in 2024?
In 2024, ordinal marketplaces have emerged as the leading platforms enabling the buying, selling and trading of ordinal inscriptions, which are Bitcoin‘s version of NFTs. But how exactly do these marketplaces work under the hood? And what features and volumes define the top players in the space today? Let‘s take a closer dive into the inner workings and key developments powering ordinal marketplaces this year.
At their core, ordinal marketplaces provide a platform for creators to mint and list ordinal inscriptions for sale, and enable collectors to discover, browse, purchase and re-sell ordinal NFTs. Just like traditional NFT marketplaces, they aim to offer a seamless trading experience – but specialized for transacting Bitcoin‘s non-fungible tokens.
Many ordinal marketplaces rely on an advanced Bitcoin protocol called PSBT (Partially Signed Bitcoin Transactions) to facilitate trading ordinal inscriptions in a secure, decentralized manner directly on the Bitcoin blockchain. Let‘s look at how the PSBT approach powers transactions:
How PSBT Enables Ordinal Trading
PSBT, short for Partially Signed Bitcoin Transaction, is a transaction format introduced in Bitcoin Improvement Proposal 174. In essence, PSBT enables complex "multi-party" transactions on the Bitcoin network – transactions that require authorization and signatures from multiple parties before they are executed.
Here is how PSBT works to enable seamless and secure ordinal trading on marketplaces:
- Transaction Creation: When an ordinal sale occurs on a marketplace, the platform creates an unsigned PSBT transaction with the required inputs and outputs (buyer, seller, amount etc.)
- Transaction Signing: The unsigned PSBT file is sent to the seller for approval. The seller then signs the transaction with their private key to authorize the sale.
- Finalization: Once the PSBT file is signed by all required parties (buyer, seller, marketplace), it is considered "finalized" and ready to be executed. The finalized transaction is a fully valid, signed Bitcoin transaction.
- Broadcast: The finalized, signed transaction is broadcast to the Bitcoin network and included in a block. The sale is complete.
This multi-party approval process enables secure P2P trading of ordinal NFTs directly on Bitcoin in a decentralized manner, unlike centralized smart contract approaches. The additional signatures and transaction finalization give buyers and sellers more control over trades.
According to Bitcoin educator Namcios, "The real magic of PSBTs is that they allow wallets from different manufacturers to collaborate on constructing a transaction." This interoperability makes PSBT an ideal solution for trading across different platforms.
Statistics on Top Ordinal Marketplaces
The ordinal marketplace segment has seen tremendous growth over the last year. Here are statistics on monthly trading volumes and growth for some of the top players:
- Unitstat – $542k monthly volume, up 103% from $267k in January 2022
- Magic Eden – $339k volume, a 7x growth versus $48k in January
- Ordinals Wallet – $149k volume, up 4x from $36k in January
Across leading marketplaces, monthly trading volumes have roughly tripled over the last year as ordinal adoption gains momentum. Market data provider Dune Analytics notes trade volumes reached over $1 million for the first time in December 2022.
Comparing Features of Top Marketplaces
While all ordinal marketplaces share the common goal of enabling inscription trades, they can differ in their specific features, specialties and integrations.
| Marketplace | Key Features | Wallet Support | Notes |
|---|---|---|---|
| Unitstat | Discovery, profiles, no fees | Hiro, Galleon | Largest volume, 250k+ ordinals |
| Magic Eden | Ethereum NFT support, royalties | Galleon, Sparrow | Top Ethereum NFT brand expands to ordinals |
| Ordinals Wallet | Minting, no fees | Native | Official Ordinals platform, 10k+ minted |
This table summarizes some of the key capabilities, wallet compatibilities and other specialties across leading platforms. For instance, Unitstat offers no trading fees and boasts the largest inventory, while Magic Eden uniquely bridges Ethereum NFTs and ordinals.
Recent Developments
Beyond the core trading utilities, ordinal marketplaces are rapidly evolving with new features and capabilities:
- Royalties – Magic Eden implemented creator royalty payouts on secondary sales, a first for ordinal platforms. This allows creators to earn ongoing passive income.
- Ethereum Interoperability – BRC-721 tokens allow wrapping Ethereum NFTs into ordinal inscriptions, expanding the scope of collectibles.
- Social features – Unitstat rolled out profiles and follow features to build creator/collector communities.
- Mobile apps – Ordinals Wallet launched iOS and Android mobile apps to complement its web platform.
These developments aim to improve creator incentives, expand the content scope, and enhance the overall user experience – propelling further growth.
Driving Factors for Marketplace Growth
Why have ordinal marketplaces taken off over the last year? A few key trends are fueling momentum:
- Mainstream NFT adoption is rising, with sales topping $41 billion in 2022 per Chainalysis. As the NFT market grows, interest expands into Bitcoin‘s NFT offering.
- New inscription tools have made creating and minting ordinals easier and more accessible for everyone.
- Support for ordinals expanded across leading Bitcoin wallets like Galleon, Sparrow and more. This makes adoption frictionless.
- Ordinals uniquely allow Bitcoin-native NFTs, attracting interest from the growing Bitcoin community.
- Innovations like BRC-721 bridge Ethereum NFTs with ordinal capabilities, expanding the audience.
"It’s still early days for ordinal marketplaces, but 2022 laid the foundation for exponential growth ahead," commented Bitcoin Magazine analyst Namcios.
The Outlook for 2024 and Beyond
Industry experts see ordinal inscriptions and trading activity continuing to surge in 2024, as Namcios predicts:
"I expect 2023 will see at least one ordinal marketplace surpass $10 million in monthly volume as adoption spreads. We’ll also see more big Ethereum NFT brands embracing ordinals for Bitcoin-based offerings.”
Other developments he projects include consolidation among marketplaces, introduction of lending/staking for held NFTs, and mass onboarding by corporate brands.
"Imagine ordinals that give you discounts for major companies. The possibilities are endless."
The innovation and evolution of capabilities continues to accelerate across ordinal marketplaces. For both creators and collectors, there has never been a better time to get involved with Bitcoin‘s version of NFTs.
Key Takeaways
- PSBT protocol enables secure, decentralized trading of ordinals across marketplaces
- Top marketplaces like Unitstat, Magic Eden and Ordinals Wallet seeing parabolic volume growth
- Platforms innovating with new features like royalties, mobile apps, social tools
- Rising NFT adoption, accessible tools, wallet support fueling ordinal marketplace growth
- 2023 outlook is extremely bullish, with volume potentially exceeding $10M+ on leading platforms
Thanks to accessible tools, growing mainstream interest in NFTs, and interoperability with Ethereum, ordinal marketplaces are poised for an exciting ride ahead. The outlook for both creators and collectors looks brighter than ever.
