Reprint please indicate from the "Biteye" community
Author: Biteye Core Contributor Louis Wang Editor: Biteye Core Contributor Crush
*The full text is about 2800 words, and the estimated reading time is 6 minutes.
01
Innovations in the Bitcoin Network
As digital gold, Bitcoin's market capitalization accounts for more than half of the cryptocurrency market. Although Bitcoin has always played the role of a "peer-to-peer electronic cash system", most of the excitement in the current encrypted world is based on smart contracts. Compared with "world computers" like Ethereum, the Bitcoin network lacks the function of smart contracts, so its Applications are limited.
However, the innovation of Bitcoin has never stopped, such as the emergence of technologies such as Lightning Network and Stacks. At the end of last year, Bitcoin core contributor Casey Rodarmor created the Ordinals protocol, which introduced the concepts of Ordinals and Inscriptions, giving birth to the first NFT of the Bitcoin network.
Combining two upgrades utilizing the Bitcoin network, Segwit (2017) and Taproot (2021), Ordinals enables the recording of arbitrary data (images, videos, text, etc.) on the Bitcoin blockchain, allowing the creation of digital artwork or NFTs become possible.
Since then, the minting volume of Bitcoin NFT has soared, and people are paying more and more attention to the new possibilities of the Bitcoin network. More projects such as Yuga Labs and Magic Eden have also joined this ecosystem, and new builders are building Bitcoin. future.
Bitcoin seems to have ushered in the era of dead wood and spring.
02
Intuitive question
We are very familiar with NFT on Ethereum, but the Bitcoin network lacks smart contracts, why can NFT be issued?
Rodarmor's solution is simple, engrave NFT on BTC .
The total amount of Bitcoin is 21 million, and the smallest and indivisible unit is sat (Satoshi), 1BTC=100 million Satoshi.
Rodarmor proposed the theory of ordinals. Ordinals are numbered from 0 according to the order in which Satoshi was mined. For example, the serial number of the first Satoshi in the first block is 0, and the serial number of the second Satoshi is 1. The serial number of the last Satoshi is 4999999999, so each Satoshi has an ID attribute.
In this way, each Satoshi is artificially assigned a serial number between 0 and 2,100,000,000,000,000, and then they are connected with other information such as pictures, text, video and code, so that each Satoshi has an inseparable , non-homogeneous and traceable characteristics.
This is equivalent to giving Bitcoin the native ability to create NFTs.
These unique satoshis can be "inscribed" with any content, such as text, images, videos, etc., creating "inscriptions". An inscription is the concept of metadata in a Bitcoin NFT, stored on-chain in a taproot script.
Take "Hello, world!" as an example, the data format is as shown in the figure below:
Because the inscription is on the chain, it cannot refer to the content off the chain, unlike the Ethereum NFT that is indexed through the IPFS or AWS under the chain, so it is truly decentralized NFT.
Taking CryptoPunk on BTC as an example, the satoshi, block, inscription and other information of each NFT can be viewed through ordinals, as shown in the figure below:
03
What is Brc20?
Now that NFT can be issued through Ordinals, can tokens also be minted through Ordinals?
So on March 8, 2023, domo proposed to use the Ordinals inscription in JSON data format to deploy token contracts, coin minting, and transfers.
BRC-20, an experimental Bitcoin network homogeneous token protocol, was born, and the first token of BRC-20 - $ordi, was issued at the same time, with a total of 21 million (a tribute to BTC), first come first served, every Individuals can mint for free.
We can guess from the name that this benchmark is the ERC-20 homogeneous token standard, and its core functions include: deploy tokens, mint tokens and transfer tokens. These three functions actually correspond to different inscriptions.
Deploy Tokens
Take the deployment token as an example, you only need to modify it in the txt text according to the format below.
First, change "ordi" to the name of the token;
Then modify the maximum supply of tokens, change "max: 21000000" to the desired amount, for example "max: 9999";
Finally, change the maximum amount allowed for each transaction in other mint tokens as needed, for example, modify "lim: 1000" to "lim: 11" and so on.
This completes the deployment of the token.
Mint Token
If someone else wants to mint the token you just issued, modify it according to the format below, and then mint it into an inscription.
Modify "tick: ordi" to the symbol of the token you want to mint, and change the minted amount "amt: 1" to the amount you want, but it cannot exceed the maximum limit that can be minted per transaction set when deploying the token above .
transfer tokens
Cast the inscription according to the following format, change "ordi" to the symbol of the token you want to send, amt corresponds to the amount to be sent, the amount cannot be greater than your account balance, and the "to" and "fee" fields are not required.
Obviously these BRC-20 tokens are far from the utility value of ERC-20 tokens, just a way of storing a script file in Bitcoin and using that file as a way to give token meaning to satoshis, and then allow them from The way one user transfers to another.
04
data interpretation
However, the market sentiment of BRC-20 is obviously particularly high. According to the data of the brc-20 website, more than 14,000 BRC-20 tokens have been deployed, with a total market value of more than 800 million US dollars. Among them, $ordi ranks first, with a market value of 530 million US dollars, accounting for 65% of the overall BRC-20 market value. (Data as of 16:27, May 8, 2023)
Trading of BRC-20 tokens is skyrocketing, especially with the rapid price rise led by $ordi, the entire BRC-20 market is active. At present, the total number of BRC-20 transactions is close to 3.5 million, and the total handling fee exceeds 382 BTC.
The number of transactions has risen from less than 10,000 per day in mid-April to an average of about 200,000 per day recently. The number of transactions has increased by 20 times within half a month. On May 1 alone, the number of transactions in a single day reached nearly 370,000 times, maintained at a single-day high of 320,000 times in the last two days.
BRC-20 token transactions account for a large proportion of Ordinal transactions, exceeding 90%. Moreover, the active transaction volume of BRC-20 has had a considerable impact on the entire BTC network. In recent days, more than 50% of the transactions in the BTC network are BRC-20 token transactions.
The miner fees generated by a large number of BRC-20 token transactions recently accounted for nearly 30% of the entire BTC network. On May 7, the proportion of BRC-20 service fees reached a ATH, an astonishing 61%. Higher fees are beneficial to miners' income and overall network security, but it is undoubtedly a big headache for users who need to use the BTC network on a daily basis.
05
Opportunities and Risks
opportunity
As the cryptocurrency with the largest market value, Ordinals has opened a new door to the Bitcoin ecology, but if one percent of Bitcoin funds flow into its ecology, it can open up an imaginary space with a very high ceiling.
The NFT on the BTC network, or the BRC-20 token, is fundamentally different from the NFT and FT under the ERC standard we are familiar with.
Its advantage is that the inscriptions are directly stored on the Bitcoin L1 chain. Compared with the ERC standard NFT, many metadata are stored on IPFS, Arweave, or even the centralized Web2 server platform. NFT or inscription tokens on the BTC network It will be more decentralized, and the inscriptions cannot be deleted or modified, which adds a more eternal meaning than diamonds.
Since the inscription is engraved on a single satoshi using the ordinal number theory, each satoshi is divided into different precious grades according to the number. Another hot spot of BRC-20 is to find those rare satoshis, which are very attractive to collectors, such as those who collect inscriptions with a number less than 100k or the first inscription after the block is halved.
The wave of the entire BTC token sector was sparked by Ordinals, which can be called the Ordinals ecology of BTC . Grayscale expressed his optimism about the prospect of BTC network application caused by this; top exchanges such as Binance and OKX have shown strong interest and are eager to try; Wang Feng stated that he is extremely optimistic about BRC-20 inscription tokens and intends to integrate BRC20 into Element to facilitate transactions; OpenSea It will also be connected to the BRC-20…
But in fact, the participation threshold of the Ordinals ecology is relatively high, and most people are still very unfamiliar with the Bitcoin network, so there are not many actual participants in the discussion. Take some outstanding leading tokens as examples:
$ordi - The market value is 210 million US dollars, the name is the first 4 letters of the ordinals protocol, the first token of the brc20 protocol, the currency holding address: 7381.
$nals - The market value is 18 million US dollars, the name is the last 4 letters of the ordinals protocol, and the currency holding address is: 1767.
$insc - The market value is 4 million US dollars, the name is the first 4 letters of the inscription, and the currency holding address is 936.
$pusy - The market value is 900,000 US dollars, the name comes from pussy, it is said to be promoted by @XEN_Crypto, the currency holding address: 605.
$piza - The market value is 10 million US dollars, the name comes from the story of buying 1 pizza with 10,000 bitcoins (the bitcoin pizza festival will come on May 22nd), the currency holding address: 1045.
$pepe - with a market value of 16 million U.S. dollars, the same name as the meme coin, and the fourth BRC-20 token to be deployed, holding address: 3418.
$hash - The market value is 2.4 million US dollars, the name comes from the hash algorithm of Bitcoin, and the currency holding address is 634.
Among all BRC-20 tokens, there are only 22 inscription tokens with more than 1,000 holders. Considering the overlap of holders, the number of participants in the entire BRC20 market may be only about 10,000. Just because there are not many people who change hands, it is easier to push up the price, and the price of $ordi has increased more than ten times in a week.
risk
As an investment, Liquidity exit issues need to be considered. The infrastructure of the BRC-20 ecosystem is weak, there is no Liquidity exchange, the security of token transactions cannot be guaranteed, and there are still many defects.
Due to the absence of smart contracts, the potential financial application value of these FT/NFT is also greatly limited. But the new upsurge is attracting a large influx of developers. UniSat announced that the code is open source, which means that a large number of infrastructure tools and facilities are coming. At the same time, with the access of exchanges such as OpenSea, transactions will be smoother.
On the other hand, BRC-20 tokens currently lack practical application value, and are even a bit similar to writing numbers on white paper as checks. As more projects emerge, creating application scenarios for BRC-20 tokens can add more value to Inscription tokens. For example, OrdzGames, the original GameFi project of Ordinals, will issue rewards in BRC-20.
Although BRC-20 is experimental, it has opened up a new world of Bitcoin ecology for people and has great potential, just like when Crypto Punk first came out, everyone did not understand it. But at the same time, the risks are huge, requiring more developers, more infrastructure and applications, otherwise, once the fomo sentiment passes, it is easy to be stranded on the beach of Liquidity.
In short, the BTC ecology or Ordinals ecology represented by BRC-20 is a high-risk and high-return opportunity, and BRC is not a real standard, and there is still a lot of room for expansion in the future. The following is the relevant tool website for everyone to maintain focus on.
Attachment: Play Brc-20 Ecological Necessary Tool Website
1) Brc-20 documentation: https://domo-2.gitbook.io/brc-20-experiment/
2) Brc-20 Foundry Website: https://unisat.io/inscribe https://vip.idclub.xyz/brc20 https://looksordinal.com/ https://raritygarden.inscribetheplanet.com/
3) Ordinals Inscription Cost Calculator: https://hub.cryptocell.guru/ordinalsturbo/
4) Brc-20 token price query: https://ordspace.org/brc20 https://brc-20.io/ (the website price is manually updated and often not real-time)
5) Query account balance: https://scan.brc-20.io/index?address=
6) Brc-20 Token Holders query: https://unisat.io/brc20
7) View BTC block generation and gas status: https://mempool.space/zh/
8) Brc-20 trading market: https://unisat.io/market https://ordinalswallet.com/brc20
references
[1] https://domo-2.gitbook.io/brc-20-experiment/ [2] https://followin.io/zh-Hans/feed/4162212 [3] https://twitter.com/ domodata [4] https://mirror.xyz/fomoplz.eth [5] ETH [6] https://dune.com/cryptokoryo/brc20 [7] https:// twitter.com/tomwanhh/status/1653311136048246784 [8] https://twitter.com/DeFiTeddy2020/status/1655116830598647809
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