Are Rare Sats real? What Bitcoin produces and what the convention names

For several years now, Rare Sats have drawn sharply divided reactions.

For some, their rarity is written directly into Bitcoin. For others, they are nothing but an artificial construct invented with Ordinals, with no reality of their own.

Simtoshi, founder of Proof of Sats, has just published an in-depth article on exactly this question: What Bitcoin knows and does not know about its satoshis.

It is a long piece that deliberately starts from scratch. What does Bitcoin actually know about its satoshis? What can be computed directly from the protocol? Where does the Ordinals convention begin? And what is left, after that, to the judgment of collectors and the market?

The aim is not to demonstrate that Rare Sats "have value". It is, first of all, to put each claim back in its proper place.

Bitcoin knows nothing about Rare Sats

This is where the article starts, deliberately and unambiguously: with the objection.

Bitcoin has no rarity field. Its consensus rules give satoshis no serial number and do not track them as individual objects from one transaction to the next.

The uncommon, rare, epic, legendary, mythic classification is a convention that sits outside consensus.

But the analysis does not stop there.

The events this classification is tied to are produced by Bitcoin itself: every new block, every difficulty adjustment period, every halving, and the rare moments when a halving and a difficulty adjustment coincide.

The question then becomes more interesting: can a convention name something real without being part of the protocol?

Positions anyone can recompute

One of the article's central examples is block 840,000, the block of Bitcoin's fourth halving.

Simply adding up the subsidies scheduled by the issuance schedule before that height gives:

1,968,750,000,000,000

That is precisely the number the Ordinals convention assigns to the first satoshi of block 840,000.

ViaBTC later sold that same satoshi for 33.3 BTC in April 2024.

The point of the example is not the price. It is that the satoshi's position can be recovered with elementary multiplication, without a marketplace, without a specialized indexer and without having to trust whoever is selling it.

The computation is reproducible. Calling that position "epic" is a convention. The price paid belongs to yet another level: the market.

Where the convention really starts to count

The article also takes on the harder part of the subject: tracking a satoshi after it has been created.

Bitcoin does not say which units in a transaction's inputs should be matched to each of its outputs. Ordinals therefore has to add rules of its own, starting with the first-in, first-out principle.

This is where the limits come clearly into view.

Some things can be derived from Bitcoin's issuance schedule. Others depend on a deterministic convention. Others still are cultural choices: deciding that a provenance, a position or a number is worth collecting.

Mixing these up is what so often sends the debate off course.

An article that goes well beyond Proof of Sats

The piece also returns to the first discussions about numbering satoshis, as early as 2012, well before Ordinals. It covers the difference between Rare Sats and Exotic Sats, the "1 sat = 1 sat" objection, fungibility, the emergence of a market and the limits of the analogy with numismatics.

Proof of Sats appears in it as a case study: what happens when the idea of provenance is taken seriously enough to give it a physical form?

The article is also open about its author's position. When you make and sell objects built on identified satoshis, it matters all the more to separate what Bitcoin guarantees, what depends on Ordinals, and what ultimately rests on trust or on a collector's decision.

So the conclusion deliberately stays open.

You can fully understand how Rare Sats work and decide they are of no interest. You can also consider that their provenance and their place in Bitcoin's monetary history make them collectibles. That decision belongs to each reader.

But before arguing about their value, people first need to be arguing about the same thing.

That is the purpose of What Bitcoin knows and does not know about its satoshis.