# Glossary

`Bitcoin Ordinals`: A method for creating non-fungible tokens (NFTs) directly on the Bitcoin blockchain. Unlike traditional NFTs, Ordinals embed data like images, videos, or even code onto individual satoshis, the smallest unit of Bitcoin.

`Satoshis`: The smallest denomination of Bitcoin, named after its creator, Satoshi Nakamoto. There are 100 million satoshis in 1 BTC.

`UTXO (Unspent Transaction Output)`: A core concept in Bitcoin transactions. It represents the output of a previous transaction that hasn't been spent yet. When sending Bitcoin, you don't deduct from a balance, but rather send specific UTXOs to the recipient. Ordinals leverage UTXOs for inscription.

`Inscription`: A technique enabled by the Taproot upgrade that allows attaching data to satoshis within a Bitcoin block. This data becomes the content of an Ordinal NFT.

`Ordinal Number`: A unique identifier for each Ordinal. It's based on the order in which the satoshi it's inscribed on was mined. This adds another layer of uniqueness compared to simple sequential numbering.

`Taproot Upgrade`: A significant upgrade to the Bitcoin protocol implemented in November 2021. It improved transaction privacy and flexibility, paving the way for Ordinals by enabling inscriptions.

`On-chain vs. Off-chain Storage`:

* `On-chain Storage:` The data itself (image, video) is directly inscribed onto individual satoshis within a Bitcoin block. This benefits from the same security and immutability as the Bitcoin blockchain itself.
* `Off-chain Storage`: The NFT acts as a pointer referencing the actual data stored elsewhere, often on a decentralised storage network like IPFS. This approach keeps transaction fees lower but introduces complexity and potential risk if the off-chain data becomes unavailable.

`Mempool`: A temporary pool holding pending Bitcoin transactions waiting to be included in a block. When congested, transaction fees rise as users compete for faster processing. Monitoring the mempool can help with cost-effective Ordinal transactions.

`Sat Rarity`: A classification system for Ordinals based on the satoshi used for inscription. Categories include "Legendary" (first satoshi after a halving event) and "Mythic" (first satoshi in the Ordinal genesis block).

`Scalability`: The ability of a blockchain to handle an increasing number of transactions. The inclusion of large data within Ordinals can potentially impact Bitcoin's scalability and transaction fees.