Decoding Ethscriptions, the New Digital Assets Trend on Ethereum

In the past 12 months, based on the analysis of search keyword data from Google Trends, Ethscriptions has experienced significant growth in searching between June and October 2023. This phenomenon marks a breakthrough and vitality of Ethereum Inscriptions technology in the context of the bear market, leading to an Ethscriptions frenzy.

Search Keyword Data Analysis (Source: Google Trends, 2023.11.10)

The Origin and Definition of Ethscriptions

The Proposal and Development of Ordinals

The Ordinals protocol was released by software engineer Casey Rodarmor on January 21, 2023. It allows individuals running Bitcoin nodes to inscribe data on each satoshi (the smallest unit of Bitcoin), creating entities known as Ordinals. This data can include smart contracts, enabling the direct minting of NFTs on the Bitcoin blockchain.

In creating this new protocol, Rodarmor aimed to address a flaw in many NFTs: the reliance on off-chain data. In contrast, Ordinals inscribe all data on-chain, leading Rodarmor to describe them as digital artifacts rather than Bitcoin NFTs. Additionally, unlike typical NFTs that include creator royalties, digital artifacts do not.

The Origin and Definition of Ethscriptions

The concept of Ethscriptions was first proposed in 2016. However, the formal development of its protocol is attributed to developer Tom Lehman (alias Middlemarch), who was inspired by Bitcoin inscription technology and the “proto-Ethscription” mentioned during the Poly Network hacking incident while conceptualizing Ethscriptions.

Inspired by Bitcoin’s Ordinals, Ethscriptions were introduced by Tom Lehman on June 17, 2023, as a new type of NFT protocol. This protocol allows for the design of image-based NFTs on the Ethereum network in the form of image data. Tom Lehman announced the launch of the Ethscriptions project via Twitter on June 17, 2023, noting that nearly 30,000 Ethscriptions were created within the first 18 hours of the protocol’s launch. He described Ethscriptions in his tweet as “a new way of creating and sharing digital artifacts on Ethereum using transaction calldata.”

Founder’s official X post (Source: X)

Simply put, Ethscriptions is an innovative method for creating and storing digital artworks on the Ethereum blockchain. It differs from traditional non-fungible tokens (NFTs) by using a different technological framework. Ethscriptions rely on calldata contained in Ethereum transactions, allowing users to save images or other forms of information directly on the Ethereum blockchain. Unlike traditional methods that depend on smart contracts, Ethscriptions use a mechanism called URI (Uniform Resource Identifier) to ensure the uniqueness and non-replicability of each digital artwork.

Official Whitepaper（Source: Ethscriptions）

Case Example

Imagine that an artist has created a unique digital artwork. Traditionally, they might represent ownership of this piece through an NFT. However, with Ethscriptions, the artist can directly store the image of this artwork on the Ethereum blockchain. This means that the artwork is not only digitized but also stored in a completely decentralized manner, without relying on any centralized platform or database.

When the artist stores this painting on the blockchain, they create a special URI, a unique fingerprint for the painting, ensuring no other work can replicate it. Thus, not only is the artist’s work protected, but anyone can verify the authenticity and uniqueness of the piece by accessing the Ethereum blockchain. This way, Ethscriptions provide a new way for digital artists to store and share their work and offer collectors a reliable method to verify the authenticity of the pieces.

Founder’s YouTube（Source：Middlemarch）

Ethscriptions is an intriguing and innovative blockchain application, complex in its operation but also full of charm.

The Status and Value of eths

eths has received public support from the founder of Ethscriptions, positioning it as a leading entity among all Ethscriptions inscriptions. Its status is considered stable due to the backing of the protocol founder and the community, especially as it becomes the primary token following the implementation of the ecosystem.

The Status and Value of eths in Ethscriptions

The eths token in Ethscriptions, inspired by Bitcoin inscriptions, is a special data entry within the Ethereum ecosystem, following a specific format. For instance, eths tokens can increase the holder’s balance by minting Ethscriptions, and transferring such an Ethscription results in the movement of 1,000 tokens.

Ethscriptions utilize Ethereum’s calldata to store information and create eths tokens. For example, an entry like {“p”:”erc-20”,”op”:”mint”,”tick”:”eths”,”id”:”10944”,”amt”:”1000”} would create an eths token, adding 1,000 tokens to the supply.

In Ethscriptions, multiple tokens similar to ERC-20, such as eths, gwei, and ercs, have emerged. Although an ERC-20 token standard is not defined in Ethscriptions, the community has adopted experimental standards akin to ERC-20.

The Functionality and Innovation of eths

• Token Fractionalization: As the Ethscriptions ecosystem matures, the demand for trading these tokens is growing. Ethscriptions has introduced an official solution for token fractionalization, allowing users to hold and trade fragments of tokens like eths.
• Decentralized Exchange (DEX): To facilitate seamless trading of these fractional tokens, Ethscriptions announced the development of a fully-featured Dumb Contract DEX. This DEX enables users to easily exchange tokens based on Ethscriptions, bridge ETH, and native Dumb Contract tokens.
• Integration with Centralized Exchanges (CEX): The Dumb Contract token standard is consistent with ERC20, enabling centralized exchanges (CEX) to list these tokens as well. Ethscriptions is committed to collaborating with CEXs to ensure a smooth integration process.

In summary, the status and value of eths in Ethscriptions are primarily reflected in its role as a special Ethereum data input and its functionality within the ecosystem. Its resemblance to ERC-20 lies in the use of an experimental token standard similar to ERC-20, endowing it with characteristics of ERC-20 tokens. Additionally, the development of token fractionalization, decentralized exchanges (DEX), and integration with centralized exchanges (CEX) in the Ethscriptions ecosystem further enhances the market position and application value of eths.

eths Price（Image source: EtchMarket, 2023.11.22)

How Ethscriptions Operate

Ethscriptions operate on the Ethereum blockchain, guided by the following three key rules:

Unique Data URI: A successful Ethereum transaction must contain a unique Data URI (Uniform Resource Identifier). This URI acts as a unique fingerprint for each piece, ensuring its uniqueness.

Ownership and Transfer Verification: A valid Ethscription transfer requires that the sender is the owner of the asset. Moreover, each Ethereum transaction must include a valid Ethscription transaction hash to prove the transfer of ownership.

Uniqueness of the URI: Each URI must be unique and not duplicate the content of any previous blocks or other Ethscriptions in the same block.

Additionally, a notable feature of Ethscriptions is that the file size of a single asset must meet the requirement of 96KB. Currently, Ethscriptions are primarily used for storing images, but they may expand to include other types of files in the future.

Steps to Create Ethscriptions

Creating an Ethscription generally involves the following steps:

Choose and Prepare an Image: Select an image less than 96KB and convert it into a base64 encoded data URI.

Data Conversion: Use an online tool (such as Hexhero) to convert the data URI into a hexadecimal format.

Make the Transaction: In a 0 ETH transaction, add the converted hexadecimal data to the “Hex Data” field designated for the recipient.

Confirmation and Tracking: After completing the transaction, you can track the information of the new owner on the ethscriptions.com website. If the information does not appear, it may mean that the same content has already been used by someone else.

Example Explanation

Suppose you have a picture of a cute dog, and you want to save it on the Ethereum blockchain using Ethscriptions technology. First, you convert this picture into a special code (data URI) and then send this code to your friend through a special Ethereum transaction. After a while, you can check on ethscriptions.com and see that the ownership of the dog picture has now been transferred to your friend. This method is not only unique but also provides a secure, decentralized way to share and verify digital artwork, thanks to blockchain technology.

Ethscriptions Market（Source：Ethscriptions）

Ethscriptions offer a unique, secure, and decentralized framework, which is very important for the creation and trading of digital artworks on the Ethereum blockchain.

The Security of Ethscriptions

Ethscriptions adopts a unique approach to providing security. As it allows users to directly store data on the Ethereum blockchain, this significantly reduces the dependence on external services. It has the following characteristics:

Integrity and Immutability of Data: Data stored on Ethereum is protected by the inherent security of the blockchain, including the immutability and permanence of data.

User-Driven Verification: Users can independently verify data stored on the blockchain without relying on third-party services like Etherscan. This offers a more transparent and trustworthy way to confirm the authenticity of information.

The Decentralized Nature of Ethscriptions: Another key advantage of Ethscriptions is its decentralized nature. It does not depend on any central authority or third-party entity for management or control, which means:

User Autonomy: Using Ethscriptions does not require approval from any centralized institution. This provides users with greater freedom and control.

Reduced Dependence: Compared to some NFT solutions, Ethscriptions do not rely on any specific smart contracts or controlling entities. This reduces dependence on specific platforms or services, thereby enhancing the degree of decentralization.

Practical Explanation

Suppose you are a digital artist who has created a unique digital painting. Using Ethscriptions technology, you can store this painting and its related information directly on the Ethereum blockchain. This method not only protects your work from unauthorized modification and replication but also allows you to independently verify the authenticity and ownership of the work without relying on any centralized platform. In contrast, NFTs that depend on specific smart contracts may be subject to control by the contract creators, which could potentially impact the security and independence of the work to some extent.

This way, Ethscriptions protect the creative freedom of artists while also enhancing the security and transparency of artwork storage and verification.

Comparison Between Ethscriptions and NFTs

In summary, Ethscriptions and NFTs differ in terms of definition, fungibility, application scope, market positioning, and technical implementation. Ethscriptions may represent a broader platform or protocol, while NFT specifically refers to a unique and non-fungible form of digital asset. Understanding these differences helps to gain a deeper understanding of the diverse applications and development trends of blockchain technology.

Comparison Between Ethscriptions and Ordinals Inscriptions

Platform Differences

Ethscriptions: When operating on Ethereum, it faces limitations dictated by the nature of the Ethereum blockchain. These limitations include the functionalities of smart contracts and the processing capacity of Ethereum.

Ordinals Inscriptions: When functioning on Bitcoin, it depends on the essential characteristics of the Bitcoin blockchain. These characteristics include the network of miners and the methods used to record transactions on the Bitcoin network.

Protocol Operation

Ethscriptions: Uses the calldata part of the Ethereum blockchain to store information, allowing images or other forms of data to be directly embedded into blockchain transactions. This method makes each Ethscription unique within the Ethereum network.

Ordinals Inscriptions: Utilizes Bitcoin’s smart contracts (although Bitcoin’s smart contract capabilities are limited) and transaction data fields to store information. Ordinals Inscriptions allow the same image or data to be used in different Bitcoin transactions, enabling the same content to appear on different Bitcoin tokens multiple times.

Support for Data Size and Types

Ethscriptions: Have a 96KB limit per asset and currently mainly support image-type files.

Ordinals Inscriptions: Can handle data up to 4MB and support a variety of file types, including text, video, music, and games.

Application Example

Imagine you have a unique digital artwork, a 96KB image. Using Ethscriptions, you can store this image as a unique asset on the Ethereum blockchain. It will exist as an unrepeatable digital inscription, meaning no other identical image on the Ethereum network can be inscribed as the same Ethscription.

In contrast, if you choose to use Ordinals Inscriptions to store the same image on the Bitcoin network, you can handle larger data, possibly including animated or music files. The same image can appear as Ordinals Inscriptions in different Bitcoin transactions, offering a more diversified range of application possibilities.

Through this comparison, the different applications and potentials of Ethscriptions and Ordinals Inscriptions in the field of digital inscriptions become clearer. Ethscriptions provide a unique and efficient way to store and verify digital content on the Ethereum blockchain, while Ordinals inscriptions offer greater flexibility and a broader range of data support on the Bitcoin blockchain.

The Future Outlook of Ethscriptions

Importance in the Web3 Domain

Decentralized Solutions: Ethscriptions are seen as one of the key technologies in the Web3 domain. It provides a decentralized solution that helps unlock the full potential of the Ethereum network, especially in efficiently and economically handling data and transactions.

Enhancing User Autonomy: This technology will further enhance user autonomy in the digital world. Through decentralized data storage and verification, users can more freely manage and share their digital assets in the Web3 environment.

Community Response and Future Innovations

Community Feedback: Although there are varying opinions within the community, including questions about the innovation of Ethscriptions, its launch has undoubtedly sparked widespread discussion and interest. This feedback is an important part of technological development, contributing to future iterations and improvements.

Future Development Plans: Middlemarch has expressed interest and plans to expand the Ethscriptions protocol in the future. More features are expected to be added to enhance its application scope and efficiency.

Founder’s official X account (Source: X)

Potential Disadvantages and Risks of Ethscriptions

Disadvantages

Technical Limitations: Currently, Ethscriptions only support files up to 96KB in size, which is a limitation for users who want to store larger files on the blockchain.

Functional Limitations: Compared to traditional NFTs, Ethscriptions may have limited functionality in certain aspects, such as ownership tracking and complex smart contract interactions.

Risks

Technical Maturity: As a relatively new technology, the long-term stability and scalability of Ethscriptions have not yet been extensively tested in practice.

Legal and Regulatory Risks: As blockchain technology evolves, the related legal and regulatory environment may change, potentially impacting Ethscriptions and its users.

Market Acceptance: Although Ethscriptions have sparked interest in the community, their acceptance and prevalence in the broader market remain to be seen.

Conclusion

Ethscriptions undoubtedly represent an emerging trend in the field of cryptographic technology, displaying significant potential, especially in terms of decentralization and user autonomy. As a novel blockchain application, it not only opens up new avenues for data transactions on Ethereum but may also become a key factor in driving the broader application of blockchain technology.

While Ethscriptions are still in the early stages, they have already shown their significant potential in handling digital assets. As the technology matures and the community further explores its functionalities, we can expect more innovative application cases and technical developments, signaling that Ethscriptions could become an important milestone in the cryptocurrency and blockchain technology fields.

However, we must also be aware of the challenges Ethscriptions face in terms of technical limitations, potential legal and regulatory risks, and the fact that their long-term prospects have not yet been fully tested. As the market continues to evolve and user demands increase, Ethscriptions may need more adjustments and improvements to adapt to these challenges and opportunities.

In summary, it is worth paying close attention to the future of Ethscriptions. It represents not only a promising new direction in the crypto field but also may have a profound impact on the entire digital asset ecosystem in the future.