The inscription is cold and hot Can the Bitcoin ecology be sustainable this time?

Author: Day, Vernacular Blockchain

The popularity of the Bitcoin ecosystem has continued in the past few months, but when it really started to go crazy, it was from the top platform to launch ORDI, in fact, it has been less than two weeks since ORDI was launched, but the entire market environment has undergone earth-shaking changes. Two weeks ago, the market could be said to be a stagnant water, but recently it has been hot and hot, and all kinds of news have made it easy for people in this industry to be anxious, almost at any moment to be inundated with project information that has swept in.

So, where do the endless hot spots of the Bitcoin ecosystem come from, and what will be the next trend, let’s take stock together. **

##01***Ordinals & u20**

• ###Ordinals

In the last bull run, NFTs were mainly built through protocols such as ERC-721 on Ethereum and then traded on a centralized marketplace. While some people were wondering how NFTs could be implemented on the Bitcoin mainnet, Ordinals emerged. **Since the Bitcoin network does not support smart contracts, it is not possible to issue NFTs directly. Casey came up with a solution to engrave NFTs on the smallest unit on Bitcoin, the sat. By assigning a unique serial number (Ordinals) to each Satoshi and connecting it with information such as pictures, text, and videos, non-fungible NFTs are realized. In this way, Bitcoin has native NFT capabilities.

At the beginning of '23, Casey launched the NFT protocol Ordinals on the Bitcoin mainnet. The protocol allows for the identification and tracking of each satoshi and provides on-chain asset verification. Since its launch, Ordinals has revolutionized the landscape of Bitcoin NFTs, with significant growth in trading volume and the emergence of new Ordinal NFT marketplaces. **As of November 19, more than 41 million Ordinals inscriptions have been minted, and the minting cost is close to $100 million.

• BRC20

Ordinals is an NFT protocol for Bitcoin, burning NFT information on Bitcoin, which received a lot of attention, and shortly after its launch, Domo proposed the BRC20 standard, which is similar to the ERC20 standard on Ethereum, but it is designed for the Bitcoin network and is used to issue fungible tokens on Bitcoin. The BRC20 standard is rapidly expanding in the market, but due to some limitations, such as the need to use third-party sequencers and the complexity of transfers, when it first came out, it was criticized more than praised, although it is all criticism, but the current Bitcoin protocol is based on Ordinals to tinker, and it is some imitation disk. **

Recently, after the top-level platform launched ORDI, it completely detonated the entire BRC20 market, and BRC20 began to transform from pure meme to application, BRC20 is no longer just a string of code, and the project party began to do a series of functions such as launchers, aggregation transactions, etc., to reproduce the form of Ethereum DeFi to increase the liquidity of the market.

龙头:ORDI

ORDI is the first BRC20 token based on the Ordinals protocol, which was deployed on March 8, 2023, with a total amount of 21 million, and is currently listed on many mainstream CEXs.

02 Ethions

After this period of fermentation, the Ethereum inscription protocol Ethions, in which the inscription ETHS also has a strong performance in the inscription market.

The concept of Ethions was proposed by Tom Lehman, co-founder of Genius, and on June 17, 2023, a search engine and website were developed for the protocol. Ethions’ proposal is modeled after the Ordinals protocol on Bitcoin, which is intended to reduce the minting cost of NFTs and promote the popularization of NFTs.

But so far, it may be because NFT has been developed on Ethereum and has been mediocre, but the BRC20-like Token play has been unexpectedly developed. When Ethions was first proposed, many people thought that Ethereum was turning back the clock on history, and many people were influenced by this kind of remarks and directly ignored the Ethereum inscription, but the truth is the opposite, but most of the people who are currently promoting the most are early holders.

Early Project: ETHS

On June 17, the first ETHS was burned by an unknown user as the first “concept coin” of the Ethereum inscription protocol Ethions, with a total of 21,000 tokens, and on September 8, Ethions officially announced ETHS as the official Token.

##03 ***

Three months after the release of Ordinals, another developer noticed Ordinals and thought it had some shortcomings, and after half a year of research, the Atomicals protocol was developed in early September. Atomicals is a protocol built on top of the Bitcoin network that allows the creation, transfer, and upgrade of various digital items on the Bitcoin network, such as native digital NFTs, gaming NFTs, digital identities, domain names, and social networks. At the same time, the protocol also supports the creation of fungible tokens, which enables the issuance and trading of tokens on the Bitcoin network.

Atomicals is different from Ordinals in that it rethinks how fair token issuance takes place in the Bitcoin network. The protocol uses sat, the smallest unit of Bitcoin, as the base unit of token, and the UTXO of each sat is used to represent an independent token, which means that 1 token is equal to 1 sat. By binding UTXOs to tokens, the Atomicals protocol avoids the complexity faced by Ordinals and increases the decentralization of the entire system.

Also, since UTXOs can be combined in Bitcoin transactions, this enhances the programmability of ARC20 Tokens. **Theoretically, the exchange between Bitcoin and ARC20 Token only needs to adjust the input and output of the UTXO. Atomicals employs a design called “atomicity” so that token transaction computation is handled entirely by the Bitcoin network.

Overall, Atomicals is a Bitcoin-based token protocol that redesigns the way tokens are issued and traded to make it more in line with Bitcoin’s decentralized and native nature, as well as the culture and philosophy of the Bitcoin community. **Compared with BRC20, some senior KOLs are more optimistic about the development of ARC20 because they feel that it is more in line with the “blockchain spirit”. **

But at present, there are many problems in Atomicals, which is about the introduction of proof-of-work (POW) in the casting process of ARC20 Token, and the march needs to run the full node of the Bitcoin network to participate in the minting, although it ensures the fairness and decentralization of the minting, although it is said that anyone can participate, but the high technical threshold actually restricts the participation of the vast majority of people, and the underlying technology is not perfect, resulting in users making Bitcoin transfers, it is easy to use ARC20 The token is lost.

**There are three main asset types for Atomicals: NFTs, BRC20-like ARC20, and domain-like Realms, with the current early project being ARC20’s ATOM. **

Early Project: ATOM

In the early morning of September 21, someone issued Token ATOM through Atomicals, which needs to run a Bitcoin full node for minting, which was mined in about 5 hours, as the first Token in the Atomicals ecosystem, with a total of 21,000 tokens and 1,000 tokens each.

04 Runes & Pipe

On September 26, Ordinals founder Casey tweeted that Ordinals has too many junk inscriptions, 99% of which are scams and does not fit its development philosophy, and at the same time proposed Runes (Runes Protocol), whose goal is to create a simple, UTXO-based protocol that will enable Bitcoin users to have a good experience**. This protocol aims to reduce the problem of hogging up the resources of the Bitcoin network, especially the “junk UTXO hazards” associated with the BRC-20 protocol. Some have commented that Casey didn’t make any money because of the release of the ordinals protocol. **On November 2nd, Casey said in a space that he would suspend development of the Runes protocol and continue to focus on optimizing the Ordinals protocol. **

While Trac founder Benny upgraded it to the Pipe protocol two days later based on the concept proposed by Casey. **The Pipe protocol is a combination of ordinals and runes ideas. Pipe is not only more convenient and easier for builders and users to use than BRC20, but also inherits the BRC-20 fair minting concept that RUNES does not have, and one of the obvious advantages of Runes over BRC-20 is that it is compatible with the Lightning Network.

Early Project: Pipe

Benny launched the first runes-based Pipe protocol token on September 27, 2023, with a total amount of 21 million.

05 Taproot Assets

The popularity of BRC20 prompted Lightning Labs to release Taproot Assets, a protocol for issuing tokens on the Bitcoin mainnet. Unlike other similar protocols, Taproot Assets does not store the token’s transfer, minting and other functional codes on the Bitcoin mainnet, but writes the token information into the transaction output script of the Bitcoin mainnet. Taproot Assets treats the Bitcoin mainnet as a registry for tokens, but it does not rely on the full operation of the Bitcoin mainnet. To trade tokens, these tokens must be deposited into the Lightning Network. Due to the design of Taproot Assets, the storage and indexing of tokens need to rely on third-party services.

Without these services, tokens can be permanently lost. As a result, users can choose to run their own Bitcoin full node and Taproot Assets client, or rely entirely on a centralized server to trade Taproot Assets tokens. This makes Taproot Assets one of the more centralized protocols in the Bitcoin Token protocol. In addition, the token issuance method of Taproot Assets is also different. Users can’t self-mint tokens directly on the Bitcoin mainnet. On the contrary, the issuance of tokens is done through the project party’s address at one time, and then the project team transfers the tokens to the Lightning Network for distribution.

早期项目：Trick & Treat

With a total supply of 420 million, half each, the Bitcoin Lightning Network Nostr airdropped nearly 20% to users, the first memecoin on the Lightning Network.

06 RGB

The RGB protocol was proposed by Peter Todd in 2016, and in 2023, the RGB protocol has gained attention again amid the development boom of the smart contract ecosystem on Bitcoin.
RGB is a smart contract system based on Bitcoin and the Lightning Network. Its goal is to introduce smart contract functionality to the Bitcoin network, similar to Ethereum’s smart contracts. RGB enables the verification and updating of smart contracts by translating the smart contract state into a short proof and storing the proof in Bitcoin’s UTXO. Each state change creates a new UTXO to store proof of the change.

RGB’s smart contract data exists entirely off-chain and is managed by dedicated RGB nodes. Users can verify changes in the state of the contract by scanning the UTXOs on the Bitcoin chain. RGB is designed so that Bitcoin can have smart contract functionality, but unlike Ethereum, the state of RGB’s smart contracts is independent and not shared. RGB also relies on the Lightning Network to enable interoperability between multiple contracts.

At present, there is no application for RGB to be used for layout, but it is backed by Tether, and the popularity of the Bitcoin protocol continues, so the development of RGB is worthy of long-term attention.

07 Summary

The above is the relevant introduction to the Bitcoin protocol, it can be seen that this year’s new ones are optimized on the basis of Ordinals, **With the explosion of BRC20, it has also transmitted the inscription casting boom to other public chains, such as dogim on Doge, pols on Polygon, sols on Solana, etc.

Whenever a new technology or a new track comes out, it will go through the stages of being invisible, looking down, not understanding, and too late, especially in the blockchain industry. From the birth of Bitcoin to the development of DeFi, NFT and other tracks in the last round of bull market, there will always be a wave of people who jump out to oppose it, thinking that it is worthless and hype, but the facts have taught everyone a lesson again and again. Although the biggest beneficiaries of this BRC20 market are miners, giving users the motivation to learn about Bitcoin wallets, addresses and other related knowledge can well promote the development of the ecosystem.

It can be said that the last wave of bull market was ignited by the DeFi development of Ethereum, and this bull market allows us to at least see that the Bitcoin ecosystem has the hope of doing the same.