In-depth discussion on Ordinals: Halving is around the corner, how to bet on the Bitcoin ecosystem?

TL; DR

• Ordinal is one of the most popular protocols in the Bitcoin ecosystem, and BTC NFT and BRC20 are the main applications of this protocol.
• The speculative boom in Ordinals has faded, but agreements and project innovations are constantly emerging, and the ecology continues to develop healthily;
• BTC has formed its own unique culture, which is different from Ethereum: pursuing full on-chain, fairness, and decentralization. BTC NFT and BRC-20 are important expressions of the differences in BTC;
• BTC NFTs and BRC-20 grew up in controversy: the reverse side of the prejudice is an opportunity to participate, and the controversy may be a positive sign that the Ordinals ecosystem will continue to grow;
• $ORDI is the first token based on BRC-20. It has a Punk like storyline, and is also the most popular and most agreed upon BRC-20 token; $ORDI’s unique properties have attracted a large number of investors and community participants, and it has appeared frequently and spread widely on social media;
• $ORDI is characterized by its cultural identity, strong community, social communication, and capital drive, and still has room to grow compared to other MEME coins, especially given the narratives surrounding the Bitcoin halving cycle and the long-term development of the BRC20 and Ordinals ecosystem.

Ordinals Talks: Key Milestones in the BTC Ecology

Although the Bitcoin network and assets have experienced countless narratives, innovations, and events throughout its turbulent 14-year history, the emergence of BTC NFTs and the pace at which they have evolved is still somewhat surprising. Here are some of the BTC NFT milestones in just a few months:

(1) Publication of the Ordinals Agreement

Since the end of December 2022, Casey Rodarmor released Ordinals Protocol, introducing NFTs to the Bitcoin network through Ordinals and Inscriptions (ordinal numbers and inscriptions). The protocol can add any content, such as text, images, videos, and even apps, to sequentially numbered sats (the smallest unit in Bitcoin) to create unique digital artifacts that can be transmitted over the Bitcoin network.

Source: https://ordinalswallet.com/

(2) Bitcoin Punks launched

Bitcoin Punks is an NFT project that mimics CryptoPunks on Ethereum. There are 10,000 different 8-bit pixel-style avatars, each with unique attributes and scarcity. Bitcoin Punks completed minting on the Ordinals Agreement on February 9, 2023, and traded on platforms such as Opensea.

Bitcoin Punks, Source: https://gamma.io/

(3) Bitcoin has unearthed the largest block in history of nearly 4M

On February 1, 2023, Bitcoin unearthed the largest block in history of nearly 4M, containing the largest transaction in history of nearly 4M. This huge transaction was issued by Taproot Wizard, an unknown NFT project on the Bitcoin chain. The main data was an NFT, not a hash. It caused a lot of controversy for a while.

Source: https://unisat.io/BRC20/ordi

(4) BRC-20 protocol creates and releases the first token $ORDI

Twitter user @domodata created BRC20 on March 8, 2023, an experimental standard for fungible tokens. It uses Ordinal JSON data to mint and transfer tokens. The first BRC-20 token contract deployed “ORDI” tokens, with a limit of 1,000 coins per minting, for a total of 21 million tokens.

(5) ORC-20 released

ORC-20 is an improved protocol for BRC-20 developed by OrcDAO. “On April 30th, OrcDAO released “” About ORC-20 “”.” According to reports, ORC-20 is an open standard for Ordinal Token, which aims to improve the functions of the currently popular BRC-20.

(6) First ORC-20 Token $ORC

Based on ORC-20, OrcDAO deployed the first ORC-20 Token $ORC on the Bitcoin network. According to official data, as of 1:29 on May 4, all $ORC had been minted.

(7) Bitcoin transaction fees exceed block rewards for the first time since 2017

With Bitcoin’s recent spike in transaction fees, block number 788695 is a significant milestone for miners. For the first time since 2017, the transaction fee for a single block exceeds the block rewards assigned to miners. In this particular block, the transaction fee reached 6.7 bitcoins, which exceeded the block subsidy of 6.25 bitcoins.

Source: https://mempool.space/block/000000000000000000041802d1e36499adfe62219a8fa080ff6a29bfb51145c6

Since then, the first wave of craze reached its peak. In the following month, the BRC20 and Ordinals tracks gradually cooled down, but a large number of new local hot spots have emerged. These hotspots further confirm the continued vitality of this field:

An overview of the various agreements can be found in the table below:

The value of BTC NFTs and BRC20 from cultural differences

There are still many questions about BTC NFTs and BRC20 until today. For example, some people will say that BTC NFTs are all data on the chain, while Ethereum’s NFTs are not. Ethereum often hosts most of the images or multimedia data off-chain, but in fact, NFTs on Ethereum can also be used as BTC NFTs, such as the recent Ethical and ERC-20. They all draw on ideas related to Ordinals, Ethereum has also experienced increases of more than 100 times.

Ethscription, Source: https://ethscriptions.com/

Furthermore, the BTC NFT format is relatively expensive. Although it is now popular due to the wealth effect, can it be sustainable? Some people will question that BRC20 is also just a short-lived influencer, and will soon get carried away. What is the value of BTC NFTs and BRC20 to the industry in the long run? Do they have any meaning?

Existence is meaning, and value is high and low. The people who made the judgments just now may not understand the cultural differences between the BTC and ETH chains. Why are there cultural differences all of a sudden?

Because sometimes one thing is done and another thing is done that way, there isn’t necessarily a logic behind it, but simply because people who do it think it’s the right thing to do, and people who do it think it’s the right thing to do, that’s all.

On Ethereum, people are used to having things on Arweave or IPFS, or even on a server and then putting a link. That’s not to say there’s anything wrong with that. Even if others think that your image has been changed, sometimes you still can’t find the picture. What happened? You’re not a decentralized thing. Even so, people don’t think it, because they think it’s like this; saving a link is enough. Whoever made you save the whole thing is meaningless. They have formed this way of thinking, or more broadly speaking, this kind of culture.

However, a unique cultural atmosphere has formed on the BTC chain. If it doesn’t exist on the chain, just save a link and receive it on your own server, but the server may still shut down. If you do this kind of thing, it’s dishonest, which goes against the unique spirit of BTC.

Things on BTC are all on-chain, and the lettering on the surface of gold must not be blasphemous. Different cultures are bound to think differently. There is no tolerance for the integrity of things being affected on BTC, and users would rather spend more than get a discount.

As an extension, although BRC20 and ERC20 are only one letter different in terms of name, their logic is not the same from the bottom up. After the deployment is complete, the deployer still has to work hard to put it out. From the perspective of the participants, everyone is on the same competitive starting line. This is a fairness that Ethereum does not have. What is reflected in this is cultural differences, so it may be difficult for you to define what is right and what is wrong. If you say keep everything connected, this must be true, and I don’t see it that way. This is probably more of a difference than a question of whose position is right and who is wrong.

Move forward in disputes, break up in prejudice

From the perspective of ecological participants, we are simply divided according to multiple parties, empty parties, and wait-and-see parties:

Many:

1. Exchanges: Exchanges such as Binance and OKX are more of a mentality that they don’t want to miss new potential opportunities on the new circuit, and OKX is moving forward while watching. OKX has also collaborated with Unisat to launch the BRC20 and Ordinals NFT trading markets; Binance has also launched the BTC NFT market and published several reports on BRC20 to express concern about this field; other small companies are also motivated enough to participate because they need traffic popularity and make money;
2. Miners: Early miners did relatively ignore Ordinals, but at this stage, miners realized that Ordinals and BRC20 were profitable. On the one hand, they saw an increase in block rewards + transaction revenue, and on the other hand, they saw opportunities for the ecosystem to expand and prosper, and the miner’s voice is expected to increase. For example, it can be seen that f2pool is actively entering the Ordinals ecosystem;
3. Developers: The first category is the Ordinals community and the early core builders of BTC, represented by the creators of Unisat, Xverse, Ordinals wallets, and various protocols. Such people are expanding the BTC ecosystem by actually acting; the other category is developers in other ecosystems that see opportunities to make a profit, such as project parties on ETH and Solana, who come to reap the BRC20 dividends.

sky:

1. Bitcoin developers: Some developers believe it has destroyed Bitcoin’s narrative logic and caused on-chain congestion; some developers of Lightning Network and sidechains will think that Ordinals is filling the main chain with a bunch of garbage;
2. An ephemeral trend: Some investors, including exchanges, will feel that BRC20 is only a short-term hot spot, fleeting, and will not last long;
3. Bitcoin NFTs are valueless theory: Some people will say that BTC NFTs are equivalent to full data on the chain, but Ethereum’s NFTs are not. Ethereum often hosts most of the images or multimedia data off-chain, but in fact, NFTs on Ethereum can also be used as BTC NFTs, but in the past, they haven’t used this method, which indicates that users probably didn’t really care about this thing. Furthermore, the BTC NFT format is relatively expensive. Although it is now popular due to the wealth effect, it has no value to the industry in the long run;
4. Insufficient liquidity: Without large-scale entry of external funds, BTC NFTs will encounter the same difficulties as other chain NFTs;
5. Waiters: Opensea, Blur, etc. have shown interest in BTC NFTs and may enter Ordinals; Opensea wrote an article introducing Ordinals on May 5.

The Ordinals and BRC20 have many potential stakeholders, and they have grown out of controversy and nurtured valuable consensus in prejudice. After a lapse of several months, we were surprised to see that this field continues to be built, and users continue to pour in. The previous controversy meant that in the early stages of consensus, the reverse side of prejudice was an opportunity to participate. The controversy may be a positive sign that the Ordinals ecosystem will continue to develop; during the iteration of the paradigm cycle, game breakers from generation to generation are isolated, and there is often no path dependency.

Consensus Pioneer: $ORDI

@domodata, the creator of the BRC20 protocol, called it just a fun experiment when creating the BRC20, and he believes there will almost certainly be better design choices and optimization improvements. As such, this is a very dynamic experiment that encourages the Bitcoin community to patch standard designs and optimizations until there is a general consensus on best practices (or decide that this is an entirely bad idea).

$ORDI is the first token based on BRC-20. It has no utility and can be viewed as a meme-like token.

Currently, the price of $ORDI is in a sense the confidence support of the BRC20 circuit and even the Ordinals, and there is a certain correlation between the price of $ORDI and on-chain minting activities.

At the level of the agreement, the founders and various Ordinals builders, creators, and enthusiasts continue to generate fresh ideas to inject new impetus into this circuit. At this stage, people are less concerned about the roadmap or utility, and more concerned about the community and some cool/historical/rare attributes, and these are being played out in the Bitcoin community.

Looking back at $SHIB, $PEOPLE, and the recent popularity of $PEPE, these MeMe coins all had a strong wealth effect and reached their peak after being launched on first-tier exchanges such as Binance. The MeMe coin concept has become one of the most watched investment opportunities in the cryptocurrency sector.

As far as $ORDI is concerned, it has the following characteristics:

(1) Cultural recognition: The first BRC-20 token, with a Punk similar narrative, is also the most popular and most agreed upon BRC-20 token;

(2) Community building: $ORDI’s unique attributes have attracted a large number of investors and community participants. The rich profits of early investors made them often share common interests, views, and beliefs about $ORDI, forming a consensus system. This consensus, based on social media, online forums, and other community communication channels, provided a strong impetus for $ORDI;

(3) Social communication: It has been observed that $ORDI appears very frequently on social media and is widely spread;

(4) Capital preference: Centralized exchanges and investment institutions represented by OKX are deeply involved in the construction of the BTC ecosystem, which has promoted the prosperity of related tracks and further benefited $ORDI.

$ORDI has now gathered the greatest consensus on the entire circuit and has launched exchanges such as OKX. As MeMe at the top of the BRC20 circuit, we are optimistic about its potential to launch Binance in the future.

Looking back at the past $SHIB, $People, and $PEPe, they all had high gains after the launch of Binance (the initial investment increased by more than 10 times on Binance), and compared to MEMEs such as $SHIB, $ORDI is relatively small in market capitalization. Combined with the current background of the bear market, we tend to think that $ORDI’s peak market capitalization status is far from being reached.

Furthermore, in line with the narrative of Bitcoin’s halving cycle and the long-term development of the BRC20 and Ordinals ecosystem, $ORDI leaves a lot of room for imagination in the future.

Conclusions and Prospects

In short, as a recent innovative narrative for Bitcoin and the entire Crypto field, BRC20 and BTC NFTs have attracted a lot of attention, and along with short-term hype, they have also had many wealth effects.

For investors, they can pay attention to the opportunities brought about by subsequent changes in protocol standards such as BRC20 and BTC NFT, and also pay particular attention to the allocation opportunities of $ORDI, the leader after the collapse.

As the wealth effect and number of users increase, there is continuous competition among products within the ecosystem, and infrastructure will gradually be built and improved. Under the major narrative of Bitcoin halving in the coming year, I believe BRC20 and BTC NFTs will occupy an extremely important position in the entire Crypto field.

Reference materials

[1] Bitcoin 101: past, present and future https://www.musclesatz.com/articles/bitcoin-past-present-future/#step-by-step

[2] Redline DAO: BTC NFT - Ordinals Transformation and Bitcoin Discussion
https://mp.weixin.qq.com/s/4-2iKxK03cDvmmJEzu0C0w

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