What are rare sats? Exploring Bitcoin's unique digital artifacts

The ordinals protocol has helped to educate more people about the value of digital collectibles or, as the creator of the protocol Casey Rodarmor coined them, "digital artifacts". The protocol's arrival allowed for custom data to be inscribed on satoshis — the smallest unit of Bitcoin. And, given the significance of the Bitcoin network and its underlying technology, rare satoshis — aka rare sats — have emerged as popular collectibles marking significant events connected to Bitcoin.

In this article, we'll walk you through what rare sats are, explore the different categories of rare sats, how explain how you can identify and verify an assets' rarity.

TL;DR

• In 2023, rare sats were developed based on Casey Rodarmor's ordinals protocol. These Bitcoin-native digital artifacts use Taproot and SegWit upgrades to uniquely mark and track individual satoshis by their ordinal number.

• A satoshi is the smallest unit of Bitcoin. It's worth one hundred millionth of a Bitcoin. This makes it useful for smaller transactions and pricing.

• Rare sats vary from common to mythic, distinguished by their unique characteristics and historical significance, such as their creation time or specific Bitcoin events like halvings and difficulty adjustments.

• Tools like Ordscan and blockchain explorers help verify the rarity and authenticity of rare sats, while Bitcoin NFT marketplaces and community forums facilitate trading and debates.

• Light pools offer a more efficient and decentralized trading system for rare sats. They use a network of nodes to improve trading without relying on traditional blockchain methods.

First, what's a satoshi?

Before we jump into the details or rare sats, it's worth first understanding what a 'satoshi' — the 'sats' in 'rare sats' — is. A satoshi is the smallest unit of Bitcoin, and it's worth one hundred millionths of a Bitcoin. It's important for transactions needing smaller amounts, as Bitcoin is now priced in the tens of thousands of dollars. The satoshi, named after Bitcoin creator Satoshi Nakamoto, represents a divisible unit of Bitcoin and symbolizes its decentralized and innovative spirit.

For instance, instead of quoting Bitcoin in large, complex numbers, you can simplify pricing into satoshis, similar to how you use cents instead of dollars for daily transactions. The satoshi also plays a role in the security and integrity of the Bitcoin network. Each transaction, even those involving the smallest satoshi, is recorded on the blockchain, ensuring transparency and security.

How did rare sats originate?

Rare sats, a type of Bitcoin NFT or digital artifact, were born from Casey Rodarmor's ordinals protocol. Rodarmor wanted to give Bitcoin more uses without changing its core structure, so he planned to use the Taproot and SegWit upgrades to make Bitcoin more useful.

Launched in January 2023, the ordinals protocol introduced a novel method for inscribing data directly onto individual satoshis. Each satoshi can be uniquely identified and tracked by its assigned "ordinal number." This reflects its creation order and position within its block. This unique identification is crucial for rare sats because it distinguishes satoshis based on significant characteristics, like their timing relative to Bitcoin halving events.

With Bitcoin's blockchain, satoshis can now hold digital art, collectibles, and data. The ability to inscribe satoshis has turned them into valuable collectibles based on their rarity, which is defined by their ordinal numbers and the historical or strategic significance of their minting moment.

What are the different categories of rare sats?

Rare sats have brought uniqueness to each satoshi on the Bitcoin network, and it's possible to categorize specific assets in various ways — underlining the characteristics that make them unique. Here's what these categories look like.

First, sats can be categorised by just how rare they are.

• Common Sats: Most satoshis on the Bitcoin blockchain are standard and don't stand out. Only the first and last satoshis in a block are different.

• Uncommon Sats: These are the first satoshi of each newly mined block. The first satoshi to be mined is rarer than common blocks, making them more desirable than common sats.

Moving into the rarer categories, each becomes more unique and historically significant:

• Rare sats: The first satoshi minted after every difficulty adjustment, which happens every two weeks on the Bitcoin network, falls under this category. These sats are scarce because difficulty adjustments are infrequent.

• Epic sats: Halving events happen every four years, and epic sats are minted after these events, making them especially infrequent.

• Legendary sats: These are very rare sats minted after unique events. For example, when a difficulty adjustment happens at the same time as a halving.

• Mythic sats: Mythic sats are the first satoshis mined by Satoshi Nakamoto. Only one exists, making it the ultimate collectible.

Beyond these, there are exotic sats, which include categories like:

• Black sats: Black sats are uncommon, being the last satoshi in a block that marks the end of an event.

• Pizza sats: These are the famous satoshis from the transaction on May 22, 2010 where someone bought two pizzas with 10,000 BTC. They're special in Bitcoin history, so much so that the day is now celebrated as Bitcoin Pizza Day.

Each of these categories adds a layer of depth and intrigue to the Bitcoin ecosystem, turning simple transactions into a potential "easter egg" for collectors. The Rodarmor Rarity Index plays an important role in this, as it provides a systematic approach to classifying and valuing each satoshi based on its rarity and historical importance.

What makes some sats more valuable than others?

Some sats hold no significant value. You can picture them as just ordinary pennies in your pocket. However, other satoshis are tied to different Bitcoin events that are important to the community.

Historical significance

Some satoshis are valuable because of their history in the Bitcoin community. For example, sats used early in transactions, or on Bitcoin Pizza Day when Laszlo Hanyecz bought two pizzas for 10,000 BTC.

Position in the block

The value of a satoshi can also depend on its position within a Bitcoin block. For example:

• Uncommon sats: The first satoshi in a block is rarer than others buried deeper within the block.

• Rare sats: A network difficulty adjustment makes the first minted satoshi rare. These adjustments occur every 2016 blocks (about every two weeks) making these sats even rarer.

Ordinal inscriptions

With the introduction of the ordinals protocol, satoshis can now be inscribed with data, turning them into digital collectibles or NFTs. A satoshi with unique content, like art, text, or code, can be valuable because it's one of a kind.

Market dynamics

Supply and demand affect the crypto markets, including rare sats. Rare or desirable sats can be more valuable, especially if they're part of a limited series or tied to blockchain events.

Bitcoin's technological milestones

Sats from important Bitcoin upgrades like SegWit or Taproot may be more valuable. These sats mark Bitcoin's evolution and are sought after by collectors interested in historical and technological significance.

How can you identify and verify the rarity of a satoshi?

The ordinals protocol provides access to specific tools, outlined below, that analyze and highlight unique characteristics of each satoshi, helping you to measure their rarity.

Ordscan

Ordscan lets you view fundamental information about satoshis, like their number, data, and mining block. You can search for specific inscriptions or browse through categories to find rare ones.

Bitcoin blockchain explorers

To verify a satoshi's transaction history and block details, blockchain explorers like Blockstream and BTC.com are useful. They offer insights into transaction paths and block details, helping you understand the mining context. This is important for verifying its rarity.

NFT marketplaces with Bitcoin support

More NFT marketplaces support Bitcoin-based NFTs as the ordinals space grows. Platforms like Gamma.io let you buy, sell, and analyze the rarity of these NFTs. They often provide extra data about popularity and market value, which can indicate rarity.

Community forums and catalogs

The Bitcoin NFT community often shares information about rare satoshis. Forums like BitcoinTalk or Discord channels have ongoing debates around these digital collectibles, making them ideal avenues to identify rare sats.

Social media and developer blogs

Developers share findings about rare sats on platforms like X and Medium. Following influencers in the Bitcoin NFT space can provide real-time insights and announcements about rare satoshis.

What's next for rare sats?

In one of his blogs, Casey mentioned light pools. They're a new trading system for Bitcoin assets like rare sats. Unlike traditional decentralized trading methods that use blockchain-based AMMs, light pools use a network of nodes that communicate trading information more efficiently and cheaply.

Rare sats could benefit significantly from a decentralized, secure, and efficient trading platform such as light pool. The platform uses Bitcoin's features like UTXOs and digital signatures to create a trading mechanism. This mechanism respects the decentralized nature of Bitcoin while offering a practical solution for real-world trading needs.

The final world

Satoshis play an important role in allowing Bitcoin transactions of all sizes to be completed, being the smallest unit of a single Bitcoin. But beyond their utility on the network, satoshis have also emerged as a popular collectible, especially those representing significant milestones in the network's mining past.

With the ordinals protocol allowing for custom data to be inscribed on satoshis, rare sats have become an in-demand artifact to be hunted down and traded among crypto enthusiasts. With greater rarity typically equaling greater value, it's little surprise rare sats continue to attract attention.