What are Bitcoin Stamps and SRC-20?

On December 6, Bitcoin core developer Luke Dashjr stated on social media, “Inscriptions are exploiting a loophole in the Bitcoin Core client to send junk data to the blockchain. Since 2013, Bitcoin Core’s code has allowed users to set extra data size limits for transactions during forwarding or mining (-datacarriersize). Inscriptions circumvent this limit by disguising data as program code.” He plans to fix this vulnerability in the upcoming v27 release next year. Later, addressing questions about Ordinals, he claimed, “Inscriptions themselves are nonexistent, it’s a scam.”

Source: Twitter@LuckDashjr

Luke Dashjr’s comments have dampened enthusiasm for the booming Ordinals ecosystem, causing rollercoaster price movements in various BRC-20 tokens, with ORDI’s price plunging over 25% in a single day. Critics argue that the Bitcoin network belongs to the community, not to any specific developer, and developers should not decide the fate of the Ordinals protocol based on personal preferences. Even if Luke updates the Bitcoin software, the upgrade won’t be implemented across the Bitcoin network unless miners adopt the new program.

Despite the ongoing developer-community dispute over inscriptions, this controversy has prompted reflections on the essence of Ordinals and blockchain technology, shifting attention to another token standard similar to BRC-20 but without the controversies brought by Ordinals - the SRC-20 standard and Bitcoin Stamps protocol.

Ordinals and Bitcoin Stamps

The Basic Principle of the Ordinals Protocol

Essentially, the Ordinals protocol is a derivative protocol that uses Bitcoin’s UTXO as a data storage medium. It assigns sequential numbers to each “Satoshi,” the smallest unit of Bitcoin, and then “inscribes” corresponding text or image information. Specifically, it uses Bitcoin’s OP_RETURN function to store arbitrary data in the blockchain, an unintended result of Bitcoin’s SegWit and Taproot upgrades.

Source: An Ordinals inscription engraved with the text “Hello, world!”

After the completion of the SegWit and Taproot upgrades, it became economically feasible to write data in the Witness field of a Bitcoin block, forming the data basis for Ordinals inscriptions. However, this process results in larger Bitcoin blocks, potentially increasing centralization risks and operating costs for the Bitcoin network.

Because Ordinals assets are written in the witness data of Bitcoin, in extreme cases, they could be permanently removed from the Bitcoin public ledger through “full node pruning.” In contrast, Bitcoin Stamps data is directly written in Bitcoin’s UTXO, requiring full nodes to download and store this data, eliminating the risk of removal.

What is Bitcoin Stamps

Bitcoin Stamps, created by software engineer Mike In Space (@mikeinspace), is based on the 2014 Counterparty (XCP) protocol, the first NFT token protocol standard on the Bitcoin chain. In 2017, developers significantly updated the Counterparty protocol, greatly enhancing its usability. Currently, Stamps no longer uses the Counterparty protocol for blockchain propagation and can run directly on the Bitcoin blockchain.

The working principle of the Stamps protocol is to encode image data (GIF, PNG, or SVG format) into a Base64 string, placing it as a suffix in the “STAMP:” inside the transaction description key, sorted by timestamp and stored in the Bare Multisig of the Bitcoin UTXO. Subsequently, the Base64 string in the blockchain is decoded into an image, which is uploaded to stampchain.io for users to view.

Source: An example of a stamp (Stamps) on stampchain.io

In terms of data structure, the design of the Stamps protocol is closer to the underlying layer of the Bitcoin blockchain, but at the same time, it is subject to more limitations from the network itself. After the Segwit upgrade, the data block size available for Ordinals inscriptions reached 4 MB. However, due to the limited data storage capacity in Bitcoin transaction outputs, only 8 KB, Bitcoin Stamps can only store 24×24 pixels, 8-bit depth PNG, and GIF images. Moreover, the transaction cost of Stamps is higher; for instance, an Ordinals inscription transaction might cost a few dollars, while a Stamps transaction could reach $60.

For more technical details about SRC-20, you can visit developer Mike In Space’s GitHub link: https://github.com/mikeinspace/stamps

What is SRC-20

SRC-20 is a Bitcoin network token standard inspired by the BRC-20 token standard and designed based on the Stamps protocol. We know that the BRC-20 uses text inscriptions in JSON format to implement the deployment, minting, and transfer of token assets. Similarly, SRC-20 is also a token standard implemented in JSON format, with a data structure similar to that of BRC-20. For more details on the BRC-20 token standard, you can refer to What is the Ordinals Protocol? Overview of Bitcoin NFT Ecosystem and BRC20.

Source: An SRC-20 STAMP on stampchain.io

Compared to BRC-20, SRC-20 removes some restrictions on token specifications. For instance, while BRC-20 only supports token names with 4 characters, SRC-20 supports token names ranging from 1 to 5 characters, without case sensitivity, and includes support for underscores and various special characters. Currently, PEPE, STAMP, and KEVIN are among the higher market-value tokens in the SRC-20 token category.

How to Trade SRC-20 Tokens

The Bitcoin Stamps team has released its official wallet, Stamp Wallet, on Github, which you can download and use from https://www.thestampwallet.com/. You can also use third-party wallets like Unisat or Leather wallet (formerly Hiro wallet) for storing and managing SRC-20 tokens, and view current prices of various SRC-20 tokens on Coinranking.

Source：leather.io

For trading, you can visit openstamp or stampscan.xyz for SRC-20 token trading, and rarestamp.xyz for trading Stamp NFTs.

Source: stampscan.xyz

Conclusion

Compared to the Ordinals Protocol and BRC-20 standard, the STAMP Protocol and SRC-20 standard are closer to Bitcoin’s native data storage, which has garnered significant attention for SRC-20 following the recent controversy among Bitcoin developers. Currently, compared to the BRC-20 standard, the SRC-20 ecosystem is still in a relatively early stage of development, and the trading volume of its tokens is noticeably smaller. We remind users to be aware of the associated risks when trading or minting SRC-20 assets.