According to a report released last week by Galaxy Research, the rapidly emerging Bitcoin NFT market is expected to be worth $4.5 billion by 2025. So far, the Ordinals protocol has been used extensively for on-chain inscriptions, including artwork, profile pictures, playable games, and video-based web applications. Even Yuga Labs, the parent company of the Bored Ape Yacht Club, auctioned off its own original art collection through the Ordinals deal, raking in $16.5 million in the process.
Principles of the Ordinals protocol
The Ordinals protocol was released by Bitcoin core contributor Casey Rodarmor in January 2023; the principle is that the Ordinals protocol proposes an innovative design based on "Satoshi", allowing various information to be embedded in "Satoshi" - such as Pictures, texts, videos, etc., link the uploaded inscriptions to a specific "Satoshi". This process is called inscription, which is similar to the casting of Ethereum NFT. And these satoshis with inscriptions are Bitcoin NFTs. When each Satoshi has a unique mark and number, the corresponding content is also unique, transforming Satoshi from merely pricing units to NFT units.
Ordinals NFT
Bitcoin Ordinals NFT will be completely written on the Bitcoin chain and become a part of Bitcoin forever. At the same time, each NFT has a sats (Satoshi) value, which appreciates with the value of BTC. Additionally, the total amount of Bitcoin is limited, and the total number of inscriptions that can be inscribed is also limited. As time goes by, early inscriptions become more valuable due to their historical significance. In the field of NFT, uniqueness and scarcity contribute to a higher value, and earlier Bitcoin NFT inscriptions may become more and more precious.
BRC-20 brought about by the Ordinals agreement
Two months after the release of the Ordinals protocol, Twitter user @domodata proposed another token standard on Bitcoin — the BRC-20 standard — based on the Ordinals protocol. BRC-20 does not have a smart contract, and the inscription can be used as a ledger, but it is challenging to create an efficient and stable system with an immutable ledger. Moreover, "writing" on the Bitcoin chain consumes very precious resources, including paying a certain amount of Satoshi as a miner's fee and the time cost of waiting for transaction confirmation. BRC-20 is built on top of the Ordinals, creating instability on top of instability, making it highly fragile.
The Ordinals protocol has undoubtedly become a new direction for the expansion of the Bitcoin blockchain. As the Bitcoin network completes the Segwit and Taproot upgrades, more and more NFT enthusiasts have begun to mint "Bitcoin NFTs" on the original blockchain network. ". Although the function is not exactly the same as "Ethereum NFT", the end result is similar, and Ordinals began to dominate the encryption world.
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