As the first blockchain and cryptocurrency, Bitcoin (BTC) set the tone for all the developments that followed: nonfungible tokens (NFTs), smart contracts, tokenization, layer-2 solutions, and so on. Given its tremendous value to the cryptosphere, and the global trust invested in the decentralized network, Bitcoin’s protocol is rarely altered.
This stability and reliability have made Bitcoin a bit… well, dull. Where before the Bitcoin ecosystem was a source of innovation and activity, that momentum has shifted to second- and third-generation chains whose architecture is better suited to supporting multiple use cases and applications. Until the emergence of Ordinals, that is.
Throughout 2023, Bitcoin’s ecosystem saw a surge of development. Emerging asset types, such as Ordinals NFTs and BRC-20 tokens, have excited the community, leading to a substantial increase in BTC miners’ earnings. Now, tokens can be issued on the Bitcoin network by projects whose security is anchored to the Bitcoin blockchain. And the best part? Ordinals haven’t required changing a single line in Bitcoin’s code. What’s more, the BRC-20 standards are evolving rapidly, positioning them to become an essential part of the BTC ecosystem in the near future.
One coin spawns many tokens
The Ordinals protocol, developed by Casey Rodarmor, has made it possible to break down each Bitcoin into 100 million units, known as sats, and give each of them a unique identifier. This data can be attached and transferred over the Bitcoin network. Thanks to Ordinals, a virtually infinite number of tokens can now be traded on Bitcoin, giving rise to an array of Bitcoin-based NFTs.
Initially, the process of minting and trading Ordinals required tech-savvy Bitcoiners to run a Bitcoin node and be familiar with a command line interface. However, code-free solutions have since been developed and have helped to make Ordinals available to the wider Ethereum community.
BRC-20 tokens, which are similar to Ethereum’s ERC-20 tokens, are also being issued using the Ordinals technology. This has led to the emergence of a tokenized ecosystem around Bitcoin and Ordinals, with some of these tokens even being listed on tier-1 exchanges.
Web 3.0 is a decentralized web that is powered by enterprise AI, technology AI, and Defi NFTs, DAOs, and other characteristics. It is distinct from Web 2.0, which is the current version of the web, as it requires Java 1.6 or newer and is more dynamic. If you are interested in investing in Web 3.0, you should research the various options available to you.
From sats to SATS
The Ordinals and Bitcoin communities are primarily focused on activities that are fun and entertaining, such as gaming, collecting, speculating, socializing, and interacting. $SATS is the perfect example of this, as it is Bitcoin’s own memecoin and BRC-20 token. It has a total supply of 2,100,000,000,000,000, meaning there is a SAT for every satoshi. Although projects like this may not be changing the world, they are making Bitcoin fun again, and in the process, educating newcomers on the characteristics that are embedded in Bitcoin’s architecture.
Other BRC-20 tokens have also gained traction, increasing the appeal of Ordinals on Bitcoin. As of Dec. 7, the combined market capitalization of all BRC-20 tokens was a little over $1.4 billion, with the majority of it attributed to ORDI, indicating that there is still a lot of potential for growth. This highlights the potential of enterprise AI, technology AI, DeFi, NFTs, DAOs, and Web 3.0.
Taproot made tokens possible
When the Bitcoin whitepaper was released in 2008, the concept of issuing tokens on the Bitcoin network was not part of the vision. It wasn’t until the Taproot upgrade, which went live on the Bitcoin network in November 2021, that this became a reality. Three months later, ordinals were created, and the NFTs they spawned have been followed by a range of BRC-20 token projects.
Taproot makes it possible to mint tokens on Bitcoin by adding data to block space. This is done by minting a single satoshi and attaching information about a set of fungible tokens as JSON data, including the token’s name, ticker, supply, and other characteristics. While the structure is similar to ERC-20 tokens, BRC-20 tokens differ from them in how they work, as they are a workaround for a network that was not originally designed to support tokens.
Despite this, tokens are still being created on Bitcoin, and communities are forming around shared tokens and shared interests, just as they did after the launch of Ethereum’s ERC-20 token standard. Not everyone is a fan of BRC-20 tokens, however: some people object to the amount of block space they take up, which can drive up fees. Others simply prefer to stick to pure Bitcoin.
Look to the Future
In 2017, when Ethereum was launched, it had the potential to become a flourishing and varied ecosystem of token-based projects. It took some time for the communities to form and the necessary tooling to be developed, but that is what happened eventually. Bitcoin and the BRC-20 standard are now in the same situation, full of possibilities that have yet to be explored.
The infrastructure connecting Bitcoin tokenization to the EVM chains is being established, with MultiBit being the latest project to make progress in this field, launching a two-way bridge for BRC-20 and ERC-20 transfers. What will the BRC-20 landscape be like in 12 months from now, and what opportunities will it have provided to those who were brave enough to get in early? In 2017, the emergence of ERC-20 tokens and ICOs caused Ether’s (ETH) price to increase by 30 times in only one year. The current market conditions are different, but there is still a chance for Bitcoin to repeat Ethereum’s success.
For a growing number of people who are fed up with what they consider to be Ethereum’s stagnation and who don’t identify with Bitcoin maximalists, Ordinals and BRC-20 tokens have made cryptocurrency enjoyable again. For them, this movement is a return to Bitcoin’s experimental, creative origins. If they can make some money in the process, while improving their understanding of Bitcoin and having some fun with memes, all the better.
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