Preface
"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."
—— This sentence engraved in the Genesis Block of Bitcoin witnessed the beginning of an era.
And now, as Bitcoin reaches new highs, we are also witnessing the end of another once-glorious era - Inscriptions and Runes
From the emergence of the Ordinals protocol in early 2023, to the crazy hype of BRC20, and then the successive appearances of protocols like Runes, Atomical, CAT 20, RGB++, and Alkanes, the Bitcoin ecosystem has experienced an unprecedented "Inscription Revolution".
They are all trying to transform Bitcoin from a mere value storage tool into a underlying platform that can carry various asset protocols.
However, when the carnival subsides and the true colors emerge, we have to face a cruel reality: the fundamental limitations of inscription protocols are destined to create a beautiful tulip bubble.
As a practitioner who has deeply participated in the development of inscription protocols from a technical perspective, having hand-crafted the underlying implementation of each protocol, I have witnessed this ecosystem from its budding to explosion, and now to rational return.
This article will explore why this once-glorious track has quickly reached its current endpoint by examining the innovations and limitations of multiple inscription protocols.
1. Evolution Chain of Inscription Protocols
1.1 Ordinals Protocol: The Beginning of the Inscription Era
The first key that opened the "Inscription Era" of Bitcoin. By numbering each satoshi and using the commit-reveal technology principle, it achieved on-chain storage of arbitrary data.
The combination of the UTXO model and Non-Fungible Token concept uses the sequence number of satoshis as a positioning identifier, allowing each satoshi to carry unique content.
From a technical perspective, Ordinals' design is elegant, perfectly compatible with the original Bitcoin model, and achieves permanent data storage.
However, merely writing data is its limitation, unable to satisfy the market's strong desire for "issuance" of BTC plus other assets at that time.
[The translation continues in the same manner for the rest of the text, following the specified translation rules for specific terms.]1.6 RGB++ Protocol: Technological Idealism and Ecological Dilemma
CKB attempts to solve Bitcoin's functional limitations through a homomorphic binding scheme with a dual-chain architecture. By using CKB's Turing completeness to verify Bitcoin UTXO transactions, it is technically the most advanced, achieving a richer meaning of smart contract verification, with the most complete technical architecture, considered the "technical pearl" among inscription protocols.
However, the gap between idealism and reality is vividly demonstrated here - the complexity of the dual-chain architecture, high learning costs, and institutional access barriers.
More critically, the project team itself is relatively weak, facing the dual challenge of advancing both the chain (CKB) and the new protocol (RGB++), unable to attract sufficient market attention.
In a field highly dependent on network effects and community consensus, it has become a technical solution that is "praised but not adopted".
1.7 Alkanes Protocol: The Final Sprint and Resource Scarcity
A smart contract protocol based on off-chain indexing+, integrating the design concepts of Ordinals and Runes, attempting to achieve arbitrary smart contract functionality on Bitcoin. It represents the last sprint of inscription protocols towards traditional smart contract platforms.
It can indeed theoretically implement arbitrarily complex contract logic. Moreover, it comes at the opportunity of BTC's upgrade to remove the 80-byte opreturn limitation.
However, the ruthless cost considerations shattered this technical ideal. Not to mention the huge performance bottleneck of complex contracts operating off-chain, even the project's early self-built indexer was repeatedly overwhelmed. Deploying custom contracts requires nearly 100 KB of data on-chain, far exceeding traditional public chain deployment costs. Additionally, contract operation is not controlled and still relies on indexer consensus. The high cost is destined to serve only a few high-value scenarios, and those with high value who do not trust the indexer will not buy in. Even with Unisat's strong backing, the market is not responsive. If proposed a year ago, the circumstances might have been entirely different.
2. Fundamental Dilemma: Bitcoin's Minimalist Philosophy and Over-Engineering
The Cumulative Effect of Technical Debt
The evolution of these protocols reveals a clear but contradictory logic: each new protocol tries to solve the problems of its predecessors, but in solving problems, it introduces new complexities.
From the elegant simplicity of Ordinals to the subsequent technical stacking, in an attempt to be distinctive, complexity continues to increase, until every player must learn a bunch of terms and constantly guard against risks.
Moreover, all attention is focused on a single logic of token issuance platforms. If so, why wouldn't players choose a place with lower costs, easier control, more significant price increases, and more mature platform mechanisms?
Chewing on the same topic for an extended period has also led to user aesthetic fatigue.
The Vicious Cycle of Resource Scarcity
The fundamental reason for these projects' resource scarcity may lie in the centralization of the Bitcoin system and its fair launch - without incentives, why would institutions over-invest in platforms without advantages?
Compared to miners' block rewards, operating indexers is purely a cost. Without the distribution of "miner" rewards, naturally, no one will solve technical and operational problems.
Speculative Demand vs. Real Demand
Through multiple user education experiences, it has been discovered that as long as it's an off-chain protocol, their security cannot be equated with Bitcoin's consensus. The market's cooling is not coincidental but reflects the fundamental issues of inscription protocols: they solve speculative demand, not real needs.
In contrast, truly successful blockchain protocols solve actual problems: consensus, functionality, and performance are indispensable. Inscription protocols contribute almost nothing in this regard, which explains why their popularity cannot be sustained.
3. The Era Transition at RWA: From Market Dream Rate to Market Share
Market Cognitive Maturity
As the market matures, users who have gone through several bull and bear market cycles have learned to cherish their attention - what a valuable resource.
They no longer blindly trust information sources monopolized by Twitter KOLs and discourse power communities, no longer being "consensus cannon fodder" who worship whitepapers.
The threshold for issuance platforms is low, and in the current market environment, these "low-hanging fruits" have been picked. The industry is transitioning from mere token issuance to more practical application scenarios.
But it's worth being alert: if the RWA field also only produces a bunch of issuance platforms, this opportunity will come and go quickly.
The Return of Value Creation
The technical innovation of the inscription protocol era often carried a "show-off" characteristic, pursuing technical cleverness rather than practicality. The new era's development logic has shifted from "market dream rate" to "market share", focusing more on forming true network effects through user word-of-mouth.
Real opportunities belong to teams pursuing product-market fit - creating products that truly meet user needs, have cash flow, and have a business model.
Conclusion: The Return of Rationality and Restraint
In the early stages, once everything enters a macro perspective, it will ultimately be correct and thus just.
Calming down, the exploration and setbacks of the inscription era have also provided valuable lessons for the healthy development of the entire industry.
When Bitcoin's price reaches new highs, we have reason to be proud of this great technological innovation. But we should also recognize that technological development has its internal laws, not all innovations will succeed, and not all bubbles are worthless.
The rise and fall of inscription protocols tell us that technological innovation must be built on solid technical foundations and real market needs. Speculative enthusiasm and excessive technical showboating, if not in line with the current market conditions (institutional cognition and player understanding), will result in fleeting success. Projects chasing hot topics might have volume, but projects creating hot topics can last longer.
In this rapidly changing industry, for builders, maintaining rationality and restraint is more important than chasing hot topics and hastily releasing something for fame.
Moreover, the market doesn't have much patience. While you're polishing and iterating, many traditional internet strategies of small, quick steps actually don't work - the first battle is the decisive battle.
As the author wrote in an article two years ago:
"BRC-20 and Ordinals NFT have brought much controversy to Bitcoin... Although new things may be price-explosive, their technical flaws are also quite significant: over-centralization, lack of trusted verification mechanisms, Bitcoin network performance limitations, lack of infrastructure, lack of security."
"Although not optimistic about the current Ordinals, as its blockchain space application is too monotonous... but as an interesting attempt, such a boundary-breaking innovation can reignite everyone's thinking."
History has proven the importance of maintaining rational thinking. The end of the inscription era is not a failure, but growth.
It has pointed out our direction forward and provided valuable lessons for future generations. In this sense, the historical value of inscription protocols will exist long-term, becoming an important page in the history of blockchain technology development.
