This is what Ordinal Theory goals to achieve for every satoshi (the smallest unit of Bitcoin) by giving them unique identities that can be tracked and transferred through inscriptions.

Now let’s say you want to create a piece of digital art using these “special” pennies as your medium. You could take one penny, add some metadata like an image or text, and then inscribe it onto the Bitcoin blockchain (which is essentially just a giant ledger that keeps track of all transactions). This process is similar to creating a non-fungible token (NFT) on other blockchains like Ethereum.

However, there are some key differences between Ordinal Theory and traditional NFTs:

1. Instead of using smart contracts or separate layers from Bitcoin, Ordinals allow for metadata to be stored directly within the witness data of a transaction. This makes it more cost-effective and sustainable in terms of storage space on the blockchain.

2. Because each satoshi has its own unique identity, this means that one satoshi can be different from another (hence becoming non-fungible). For example, you could have two pennies with identical values, but if one penny had a special inscription attached to it, then they would no longer be interchangeable.

3. Unlike traditional NFTs that are typically stored off-chain and can potentially be altered by third parties, Ordinals ensure immutability through the use of prunable transaction witness data (which means that nodes can choose whether or not to store this information). This helps in preserving the metadata for future generations while also reducing storage costs.

Some popular Bitcoin NFT projects include Ordinal Punks (based on CryptoPunks), TwelveFoldTop, and BitcoinShrooms. These projects goal to fuse Bitcoin’s history, culture, and core technicalities into individual Shroom Ordinals that represent milestones in Bitcoin’s history.

In terms of the BRC-20 token standard for Bitcoin (which is an experimental fungible token standard), it utilizes Ordinal Theory by deploying, minting, and transferring tokens through JSON data inscriptions on the blockchain. Currently over 34,000 BRC-20 tokens have been minted, with ORDI being the first one created using this standard.

Overall, Ordinal Theory provides a unique way to create NFTs directly on the Bitcoin blockchain while also ensuring immutability and cost-effectiveness through prunable transaction witness data.