ORDI, a Game of Attention

ORDI has no technical value and is just a speculative tool. I initially wanted to criticize the speculative frenzy around ORDI, but to my surprise, I discovered that ORDI is actually a top-tier meme comparable to Doge.

• Inscription has paved the way for the rise of the Bitcoin ecosystem, addressing the issue of Bitcoin security budget（Income Protecting the Bitcoin Network by Miners）. The main criticism is that Inscription leads to the inflation of the size of Bitcoin nodes, thereby undermining the argument for decentralization.
• ORDI is a useless token with no technology or functionality. While legitimate project tokens need to capture value and attract investors through value, meme tokens need to capture attention.
• “Meaning” is something bestowed by humans. Compared to many other memes like Pepe, Harry Potter, Obama, and Sonic, ORDI can be imbued with more and higher-quality “meaning”.
• ORDI belongs to the top tier of memes, but it also faces the challenge of how to sustainably capture attention.。

1. What is Bitcoin Inscriptions and BRC-20？

In December 2022, Bitcoin developer Casey Rodarmor released an open-source software called ORD, which runs on top of the Bitcoin Core software. ORD allows users to mint Bitcoin inscriptions in two steps: 1) entering arbitrary information on the Bitcoin blockchain, such as a text or image (“inscription”), and 2) associating the uploaded inscription with a specific satoshi. Satoshi is the smallest unit of Bitcoin, where 1 BTC equals 100,000,000 satoshi. The final product is a satoshi with an inscription, known as a Bitcoin inscription.

Bitcoin inscriptions can be classified into two types based on the input information: text-based inscriptions primarily used for creating tokens, such as the BRC-20 token standard, and image-based inscriptions primarily used for creating NFTs, such as various cartoon characters.

It is important to note that although inscription-based NFTs and BRC-20 tokens are stored entirely on the Bitcoin blockchain, the connection between inscriptions and individual satoshis is established by Ordinals. Each Bitcoin consists of 100 million satoshis, but these satoshis cannot be differentiated. Ordinals, as an off-chain numbering scheme, differentiate individual satoshis. In other words, the existence of Ordinals requires consensus and widespread acceptance within the community. Without the Ordinals theory, inscriptions cannot be traced or traded as they would not automatically point to individual satoshis. From the perspective of the blockchain, every satoshi is the same.

So, what is ORDI?

ORDI is the first BRC-20 token issued on the Bitcoin blockchain, with a total supply of 21,000,000 tokens. ORDI was created purely as an experiment, mainly to test if the Ordinals protocol could be used to deploy fungible tokens similar to ERC20 tokens issued on Ethereum.

Unlike the Ethereum ERC-20 token standard, Bitcoin does not support smart contracts. BRC-20 is not a smart contract token and does not have any underlying technology, project team, actual project support, or any real-world use cases. The price of the token solely relies on community consensus and market demand. BRC-20 tokens utilize the Ordinals theory to enable token issuance, set supply, and perform basic transfer functions on the Bitcoin network.

ORDI is purely a meme, so evaluating its value shifts from being a good project to being a good meme.

The existence of ORDI is built upon the Ordinals. Before discussing ORDI, let’s first understand what the Ordinals protocol means for Bitcoin.

2. Ordinals: Paving the Way for BTC Security Budget Resolution

Some people have a critical attitude towards the Ordinals protocol, believing that the extensive inscription of information on the blockchain leads to increased network transaction fees, which affects ordinary users. The rapid growth of transaction information also increases the size of the blockchain’s occupied nodes’ hard drive, raising the hardware requirements for running Bitcoin nodes. This, in turn, affects the number of running full nodes and undermines decentralization.

However, many institutions, including Grayscale, have proposed the Ordinals protocol to have a positive impact on the security of the Bitcoin network and miner income.

Firstly, the introduction of the Ordinals protocol has increased the transaction fees earned by Bitcoin miners.

The transaction fees on the Bitcoin network have surged three times this year in March, May, and November, corresponding to the three waves of the Ordinals. According to estimates by research institution K33, miners’ daily income in 2023 is projected to be 973 BTC, higher than the originally anticipated 900 BTC per day. The additional transaction fees brought by Ordinals have increased miner income by approximately 8%.

Transaction fee income is crucial and fills the security budget of the Bitcoin network as the BTC block rewards continue to decrease in the future. Miners play an important role in maintaining the security of the Bitcoin network. Currently, miners primarily rely on the block rewards in BTC after mining a block as their income. However, Bitcoin’s block rewards are halved approximately every four years. The decrease in block rewards leads to a decline in miner income, which can result in miner attrition and a decrease in the network’s computing power. This is not an immediate problem but a serious issue for the long-term development of Bitcoin.

Furthermore, an increase in miner earnings will attract more miners to join, expanding the overall computing power and security of Bitcoin.

Higher computing power means that attackers need to invest more resources to obtain 51% of the computing power required to launch an attack. Is the criticism regarding the increased disk space required to run nodes a significant problem for Ordinals?

In the world of Bitcoin, miners mine new blocks through computing power, while nodes running Bitcoin clients (such as Bitcoin Core) are responsible for validating the validity of the blocks, and developers maintain the clients. Miners, node operators, and developers form a complex game relationship, where no party can control the Bitcoin network. If you want to have a deeper understanding of the game relationship among the various parties in the Bitcoin network, I recommend the book “The Blocksize War: The battle over who controls Bitcoin’s protocol rules.“

Therefore, some people are concerned that the rapid growth of Ordinals will lead to an increase in the size of the Bitcoin blockchain, raising hardware requirements for running Bitcoin clients, reducing the number of nodes, and decreasing decentralization, which affects the delicate balance among miners, nodes, and developers.

Although this is a reasonable concern, the current size of Bitcoin clients, such as Bitcoin Core, is only 500GB. Assuming that every block is filled after Ordinals, the size of the Bitcoin blockchain would increase by approximately 1TB every four years (source). In today’s situation where hard drives of over 1TB or even 2TB are quite common, worrying about the Bitcoin blockchain’s size seems premature. Moreover, with technological advancements, the affordable hard drive space for ordinary users is rapidly increasing.

3. ORDI, A Powerful Meme

Meme is a term coined by British evolutionary biologist Richard Dawkins in his book “The Selfish Gene” published in 1976. Meme shares similarities with genes as they are the smallest units of culture and information that can be spread and evolve among people. The value and popularity of meme tokens depend on their spreadability and the participation of the community users.

Meme tokens may seem to have no practical use, but they actually fulfill a real and significant need of users in the cryptocurrency market: an imaginative and fair speculative asset.

Not every meme token is filled with endless imagination, and not every meme provides speculators with a fair gambling opportunity.

Many opinions compare the Fair Launch of BRC-20 with VC projects, but I believe this comparison is unfair. VC investments are made in the early stages of a project, providing funds to the team with a significant amount of uncertainty regarding the success and market acceptance of the product. VCs take on significant risks and should obtain the cheapest chips and maximize their profits once the project succeeds.

However, memes do not have products, technical development, or initial investments. Therefore, a good meme should not have investors or a team holding a large number of tokens. This may seem like a reasonable requirement, but the reality is different. Earlier this year, the popular meme token Pepe was exposed in August for team members stealing and selling a large number of tokens.

The Fair Launch mechanism of BRC-20 tokens ensures that participants can only acquire tokens through minting, eliminating early investments and the existence of a large number of tokens held by the project team. Additionally, since BRC-20 is not a smart contract token, its functionality is limited, thereby eliminating smart contract risks such as the project team stealing or the contract being blacklisted. These features make BRC-20 tokens a natural speculative asset.

4. The Significance and Imagination Room of Memes

The value and popularity of Meme coins depend on their reach and community engagement. Reach refers to capturing the attention of a sufficient number of people. While traditional project tokens aim to capture value and attract investors through their intrinsic worth, meme tokens strive to capture attention.

For example, after the Terra debacle, numerous Memecoins emerged, some even skyrocketed due to the arrest of Do Kwon, such as JAIL KWON. This year, a Korean laboratory claimed to have developed a room-temperature superconductor named LK-99, leading to multiple price fluctuations in the corresponding meme coin, LK99.

Creating a new meme coin incurs no cost, but every meme coin faces endless competition from other meme coins.

Some competitors resort to crude methods to capture attention, such as naming their coins after popular figures like HarryPotterObamaSonic, and even using the token symbol BITCOIN.

So, what is the narrative of ORDI and what kind of attention can it capture?

ORDI is the first BRC-20 token deployed using the Ordinals protocol. It is the first BRC-20 token with a market capitalization exceeding $1 billion. ORDI represents the Ordinals protocol, which represents the evolution of Bitcoin, solving the security budget problem of Bitcoin and opening up the development of the Bitcoin ecosystem, making Bitcoin more interesting and allowing more people to enter the Bitcoin ecosystem.

“Meaning” is something bestowed by humans, and compared to Pepe, HarryPotterObamaSonic, ORDI can be endowed with more and higher-quality “meaning”. Therefore, ORDI belongs to the first tier of memes. It can be compared to other first-tier memes such as DogeCoin, with a market capitalization of $13 billion, and SHIBA Inu, with a market capitalization of $5.7 billion.

5. ORDI’s Biggest Challenge: Sustaining Attention

Of course, this is a meme, and creating a meme doesn’t require any cost. ORDI faces the challenge of creating memes that have more cultural impact and can impart more “meaning.” Here, we cannot fail to mention another BRC-20 token called SATS.

Each Bitcoin can be divided into 100 million satoshis (sats). The BRC-20 token named SATS has a total supply of 21 trillion, corresponding to the maximum number of satoshis in the Bitcoin network. SATS was listed on Binance on December 12th, with a market value of almost $1 billion.

In the Bitcoin ecosystem, there will surely be a meme coin with a market value exceeding billions, like Doge. Will it be ORDI or STAS? No one can predict. Projects with real utility need continuous development and value creation from the project team, while a meme requires holders and communities to constantly voice their opinions on social platforms, waving flags and shouting slogans to create attention for the meme they hold.

This is the correct way to play the meme game.

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