The popularity of Ordinals has made the market see the potential of the Bitcoin ecosystem. From the inscription craze at the beginning of the year to the current outbreak, the rapid development of the Bitcoin ecosystem and the growth of its value have attracted the attention of the market. So, how did the BTC Inscription Token develop? Which other protocols are more competitive among the Inscription protocols? This article will explore these issues in depth. Bitcoin inscription
Preface
From the inscription craze at the beginning of the year to the current outbreak, the rapid development of the Bitcoin ecosystem and the growth of its value have attracted the attention of the market. During market fluctuations, the performance of the BRC-20 sector has become the focus of investors' attention, and the rise of Bitcoin Inscription Tokens has triggered a huge wealth effect. Although the surge in the number of inscriptions has been questioned by some, it is undeniable that the market enthusiasm has also led to the recovery of the Bitcoin community and promoted innovation in the Bitcoin ecosystem.
market background
Progress in key technologies
The launch of Segregated Witness in 2017 was a major event for the Bitcoin protocol, which was upgraded to address Bitcoin scaling challenges and specific vulnerabilities. Its main goal is to solve the transaction scalability problem and expand the Bitcoin block size to facilitate more transactions. Segregated Witness introduces the concept of block weight, breaking through the traditional block size limit, allowing the block to accommodate a maximum of approximately 2,700 transactions, which is a significant increase compared to the previous 1,650 transactions.
With the Taproot upgrade at the end of 2021, the Bitcoin ecosystem began to support more complex scripts and data types, making BTC programmable and scalable, which laid the foundation for the explosion of the Bitcoin ecosystem in 2023. The Taproot upgrade mainly includes changing the transaction confirmation method and introducing Schnorr signatures. The introduction of Schnorr signatures provides better privacy protection, especially in multi-signature wallets. It allows all private keys to be compiled together, making multi-signature transactions look like Other transactions are no different. Additionally, Schnorr signatures support batch confirmations, making transactions across the network cheaper and faster.
ETF expected to be approved
While Bitcoin's native ecosystem is booming, the external environment has also undergone earth-shaking changes. The proposal of Bitcoin spot ETF has laid the foundation for Bitcoin's compliance. As early as June 29, 2021, ARK Invest, owned by Cathie Wood, submitted an application document for a Bitcoin ETF. The application went through multiple extensions and was finally rejected by the SEC in April 2022. ARK was rejected again in early 2023 and filed for a third Bitcoin spot ETF in May. On June 15, 2023, according to people familiar with the matter, BlackRock, the largest asset management company, is about to submit an application for a Bitcoin ETF. Subsequently, Fidelity, which ranks third in assets under management, also joined the ranks of ETF applications. On September 12, after the news about Franklin Templeton's ETF application came out, it further stimulated the market's enthusiasm, and Bitcoin also completed its last bottom construction.
The development history of inscriptions
Source: homemade pictures
Source: homemade pictures
According to Dune data, as of November 23, 2023, the cumulative number of transactions of Ordinals reached 43.27 million, and the cumulative transaction fees were approximately 3,875.7 BTC.
Source: https://dune.com/cryptokoryo/brc20
Agreement inventory
In the Ordinals protocol ecosystem, various Tokens represented by BRC20 have brought significant wealth effects and driven FOMO sentiment in the market. Over time, more protocols have been launched, including Atomics, Taproot Assets, Runes, and BRC420, etc. This trend shows that the Bitcoin ecosystem is moving in a more diversified direction. What trends will emerge in the hot spots emerging in the Bitcoin ecosystem? The key agreements will be reviewed below.
Ordinals and BRC20
Source: unisat.io
In January 2023, Bitcoin developer Casey Rodarmor released the Ordinals protocol, which is an asset issuance protocol based on Bitcoin, mainly composed of two core components: Ordinals ordinal theory and Inscription inscription.
Casey hosts content on UTXO in the following ways:
- The smallest unit of Bitcoin, 2,100 trillion satoshis, is assigned a unique identifier, which constitutes the ordinal theory of the Ordinals protocol.
- Inscription is the process of associating content with UTXO. The asset issuance process of the Ordinals protocol is similar to writing information into witness data and recording Token information in JSON format using BRC20.
On March 8, 2023, anonymous developer Domo launched BRC-20 based on the Ordinals protocol, which is a Bitcoin ecological token issuance protocol similar to ERC-20. BRC-20 defines a specific format of JSON data and is inscribed on the BTC chain through Ordinals. Deployers of BRC-20 can decide the total amount and name of the tokens themselves, and follow the first-come, first-served principle. $ORDI is the first BRC-20 token deployed by Domo. However, BRC-20 needs to rely on a third-party index to record the ledger off the BTC chain, which adds extra workload to the system and becomes a weak point of the system.
Atomic and ARC20
Source: https://docs.atomicals.xyz/
Atomics is a protocol built on the Bitcoin network. Its purpose is to realize the creation, transfer and upgrade of various digital items on the Bitcoin network, including native digital NFTs, game NFTs, digital identities, domain names, social networks, etc. At the same time, the protocol also supports the creation of exchangeable Tokens, making it possible to issue and trade Tokens on the Bitcoin network.
The protocol uses Satoshi, the smallest unit of Bitcoin, as the basic unit of Token. Each Satoshi UTXO represents an independent Token, that is, 1 Token is equal to 1 Satoshi. By binding UTXO to Token, the Atomics protocol successfully circumvents the complexity of Ordinals off-chain indexing and improves the decentralization of the entire system.
However, Atomics still faces some problems at present. One of the significant problems is the introduction of proof of work (POW) in the minting process of ARC20 Token. Minters need to run a full node of the Bitcoin network to participate in the minting. Although this ensures the fairness and decentralization of minting, it also limits the participation of most people due to the high technical threshold. In addition, the imperfection of the underlying technology makes it easy for users to lose ARC20 Tokens when making Bitcoin transfers.
Runes and Pipes
Runes was proposed by Casey Rodarmor, the founder of the Ordinals protocol, to solve the efficiency problems of BRC-20. Unlike the complexity of some protocols, Runes is designed with simplicity and convenience in mind. Runes will prompt in the transaction to assign the token to a specific UTXO with output index, token count and token ID without the need for additional off-chain data or native tokens, thus optimizing the use of on-chain data.
The concept of Runes was just an idea at first, and the founders of Trac built the first usable protocol based on it and issued PIPE tokens. Due to Casey's high profile, PIPE has inherited the hype that continued from BRC20. Although Runes is more orthodox than BRC20, it still faces certain challenges in gaining recognition in the BTC community.
Bitmap and BRC420
Source: https://ordinalswallet.com/collection/bitmap
Bitmap is the first Metaverse project in the Bitcoin ecosystem, which is based on ordinal theory and bitmap theory. Ordinal number theory numbers the smallest unit of Bitcoin, Satoshi, emphasizing the scarcity of Satoshi, which can be used to carry data. The bitmap theory maps each transaction input in the Bitcoin block into a plot to form a block or area. The specific plot size is determined by the size difference of different transaction inputs.
In Bitmap.land, the method of dividing land and drawing patterns on the map is adopted, which is similar to the land purchase logic on these two platforms. Users gain ownership of specific Bitcoin blocks by writing data into satoshis through inscriptions, similar to free minting.
The BRC-420 protocol is a Bitmap-based asset protocol that creates various assets from small characters and pets to complete game scripts and virtual machines by combining multiple inscriptions into a complex asset. Due to their on-chain open source, these assets can be run or verified on any client.
Overall, the BRC-420 protocol and related Bitmap projects are stimulating innovation and vitality in the Bitcoin ecosystem. By creating complex, modular digital assets, the BRC-420 is enabling new interactive experiences for creators, developers and users.
Taproot Assets and Nostr Assets
Source: https://doc.nostrassets.com/
Taproot Assets is a protocol launched by the well-known Lightning Labs, designed to create and trade various digital assets on the Bitcoin network and integrate with the Lightning Network. The update of Taproot Assets expands the Lightning Network from a simple point-to-point payment channel to a point-to-many model, realizing the distribution and circulation of assets. The uniqueness of this protocol is that Token information is recorded in the UTXO output script of the Bitcoin mainnet in the form of registration, while functions such as transfers are implemented in the Lightning channel. The biggest difference from BRC20 and ARC20 is that the way Taproot Assets are issued is to be pre-minted and then distributed by one owner, rather than distributed fairly.
NostrAssets is an open source protocol that introduces Taproot assets and coins into the Nostr ecosystem. Users can use the public and private keys of the Nostr protocol layer to send and receive assets. The settlement and security of assets rely on the Lightning Network, and the Nostr Asset Protocol itself does not issue assets, but only introduces assets to Nostr through the protocol.
Features of NostrAssets include seamless integration of Taproot assets and Bitcoin into the Nostr ecosystem, providing developers with tools to create innovative products, enriching the value of the Bitcoin and Lightning Network ecosystem, and enabling a seamless experience from chat to transaction.
The above is an introduction to Bitcoin-related protocols, in addition to RGB protocol, BRC100, etc. With the popularity of BRC20, the inscription craze has also spread to other public chains, such as dogim on Doge, pols on Polygon, sols on Solana, etc.
Summarize
From the inscription craze at the beginning of the year to the current resurgence of the inscription track, the rapid development of the inscription track shows the huge vitality and potential of the Bitcoin ecosystem. In the future, more creative projects and protocols will emerge to further enrich the ecology of Bitcoin and other public chains. However, the Inscription Track is still in the exploratory stage and awaits further development and improvement.
Author: Snow
Translator: Piper
Article reviewer: KOWEI, Piccolo, Elisa, Ashley He, Joyce
Copyright: Gate.io
