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Comprehensive Interpretation of BRC-20: New Narrative or Bubble Feast?
Original author: August; Cao Yihan, Song Hao, Dusko, Deng Xiaojuan, Nora, Tim Hu
Mentors: Jademont, Elaine,;Bill @Waterdrip Capital;
As of;5;month;31;day;17:;59;, more than;24000;BRC-20;tokens were deployed, with a total market capitalization of more than;4;billion dollars, of which, $ordi; still ranks first . Undoubtedly, BRC-20; is an important recent innovation of the Bitcoin network. However, we believe that as the "BRC-20; heat dissipates and people no longer "FOMO;BRC-20;," various "BRC-20;
BRC-20; what is it?
BRC-20; is a standard that can mark the state of the ledger with an inscription. Ordinals; is a numbering scheme that allows tracking and trading of each individual Satoshi. Bitcoin is a homogeneous token, there is no difference between each bitcoin. However, "BRC-20" numbered each basic unit "Satoshi" of Bitcoin in order, making "Satoshi" non-homogeneous. It should be noted that BRC-20; is not an alternative to Bitcoin, but a solution that is still based on the Bitcoin network.
Mint and Transfer of BRC-20; function, source:
BRC-20; release; token achieved the original idea of the encryption industry - everyone can simply release; token, the greatest value is that it is on Bitcoin, it occupies a part of "Satoshi", these; BRC-20 token ;Like a clone of Bitcoin, Bitcoin gives it value. Of course, it can also be compared to issuing currency on RMB, which is similar to RMB limited funds, and each "BRC-20" is a Bitcoin limited fund and has a basic Bitcoin value.
Its essence is NFT, which is no different from the ERC-20 standard token in terms of expression, making up for the missing part of the Bitcoin ecology compared to the Ethereum ecology.
The first BRC-20 token "Ordi" deployed by @domodata, source:
BRC-20; mainly provides for the issuance of tokens on the Bitcoin network; 3; implementation standards, including; BRC-20; deployment of tokens; deploy, casting; mint, transfer; transfer; etc. Developers can complete the implementation of this standard; BRC-20; the creation and issuance of tokens.
The user can change the field after "op" to represent the operation performed, deploy; means the deployment of tokens, mint; means token casting, transfer; means the transfer of tokens; tick; means which name code is executed Token, the user can enter the name of the token to be executed.
Both the market value and the total number of users of Bitcoin are higher than that of Ethereum, but the establishment of the ecological system is relatively backward compared with that of Ethereum. After the ;BRC-20; standard is released, it may change the ecological situation of Bitcoin in the future, so the currency circle is called "domo" as "the creator of BRC-20; the V God of Bitcoin ecology; "domo".
BRC-20; generate background
Since the release of the "Ordinals" protocol, domo; has cast his Twitter avatar into an "NFT" on "BTC".
Domo; then made statistics on the transaction volume of the "Ordinals" market, and found that as of this year; March;6; It took 14 months for the product "opensea" to achieve this goal, so "domo" gave the conclusion that the "Ordinals" agreement must be preserved, and he discovered the "Ordinals Market" Great potential.
Twitter user @satsnames; and end of this year; 2; introduced the . , all name states exist on Bitcoin, and no one person is privileged. The general default is that the writer of the first name on Bitcoin owns that name, but anyone else may have a duplicate name (i.e. naming collisions), so the "first is first" rule is used to resolve this. Since the introduction of the naming system, minted .sats; transactions have accounted for 45%; of minted;Ordinals;.
Twitter user @redphonecrypto; explained the "NFT" on Bitcoin, and believes that it cannot be called "NFT", but can be called a digital artifact. And gave negative reasons for the misunderstanding of "Bitcoin inscriptions are only on Bitcoin; JPG, no innovation, no programmability, and will definitely die soon": ①The inscription can almost contain the information that modern web browsers can display Any media, such as: movies, games, web pages, etc. and; JPG; ②The biggest use case is to simply publish text on Bitcoin, which can be copied and pasted, which makes this function a similar "IPFS" in the encrypted world. Service ③Bitcoin inscriptions are similar to a database of immutable timestamps; tx;, they are numbered sequentially, the first inscription is always the first inscription, and it is associated with an immutable timestamp. Previously Bitcoin only stored timestamped ;tx, now it can store anything its users collectively imagine.
At the same time, it is believed that the "NFT" on Bitcoin is better than that on Ethereum in at least two aspects: (;1) it is really scarce (cannot be infinitely minted like Ethereum) (;2) it has a Bitcoin security mechanism; POW; ensure. (;3) On-chain lettering (instead of linking to ;IPFS/Arweave/centralized servers). @redphonecrypto; got an inspiration from the ;sats; file system, and looked forward to who would create a standard like "BRC-20;" to allow token issuance on ;Ordinals;, and gave his own assumptions, as shown below :
So the "domo" released the "BRC-20 experiment", and by this logic, anyone can use the "Ordinals" inscription to deploy, mint or transfer, and the "first is first" rule applies.
BRC-20; vs. ERC-20;
BRC-20; is more like a special; NFT, NFT; it says how many homogeneous tokens this; NFT; represents.
BRC-20; vs. ERC-20;Advantages:
A fairer distribution method. This is mainly due to the low programmability of the Bitcoin chain. The low programmability itself is the disadvantage of the Bitcoin chain, which cannot compare with Ethereum, which is Turing complete and capable of carrying smart contracts. But this "disadvantage" makes it possible for the issuance of "BRC-20" to not reserve tokens, while "erc-20" can be reserved for tokens at the time of issuance.
Has fundamental value. BRC-20; attached to "Satoshi", therefore; BRC-20; the minimum value of tokens can be considered as the value of a "Satoshi", erc-20; but there is no support for the minimum value.
BRC;20;compared to;ERC;20;Disadvantages:
The programmability is not high, and the original lack of smart contract support on the Bitcoin chain makes the "defi" of "BRC-20" not highly scalable.
BTC; invalid inscriptions cannot be rejected. The inscription is data in ;json; format, and the Bitcoin node will not parse the data.
UniSat; dominant in determining the legitimacy of inscriptions, not decentralized enough. UniSat; already occupies a dominant position in the market of "BRC-20", because the content of "BRC-20" is "json" data, and tools are needed to interpret the data, and UniSat; plays the role of this interpreter, which is; BRC -20; Insufficient decentralization.
In fact, two technical upgrades to the Bitcoin protocol in ;2017; and ;2021; Possibilities are offered, but they are not upgrades to create Bitcoin;NFT;
Segregated witness is to take the script signature (Sig) information out of the basic structure (base block) and put it in a new data structure. Nodes and miners doing verification work will also verify the script signature in this new data structure to ensure that the transaction is valid [;4;]. Segregated Witness relaxes the limit on signature size, essentially increasing the effective capacity of Bitcoin blocks.
David A. Harding; Schematic diagram of serialization of new and old transactions posted, data source:
The soft fork implemented in 2021; Taproot; upgrade includes three; BIP: Schnorr Signatures, Taproot; and; Tap. Their goal is to enhance the privacy and efficiency of transactions on the Bitcoin network, and to address security concerns. Schnorr Signature; is; Claus Schnorr; proposed a digital signature algorithm. They can aggregate multiple signatures into one, increasing efficiency and privacy. Taproot; is a scheme that uses a "Merkle" abstract syntax tree to hide complex transactions under common public keys, again improving efficiency and privacy. And ;Tap; is a new scripting language for writing conditional branching logic in ;Taproot;. It optimizes the ;Schnorr; signature and adds some new opcodes. The core of this upgrade is the "Schnorr" signature. Signature algorithms can bring higher performance and better use cases to Bitcoin. Bitcoin blocks are limited in size to ;1;MB, but since each transaction included in a block on the Bitcoin network can add additional data, each block can store up to ;4;MB; of data[; 5;].
In the end, the composition of Ordinal; Theory + Segregated Witness + Taproot; creates Bitcoin; NFT, so that each "sat" can have a special meaning.
Bitcoin Punks(Inion 34400)
With the potential of the "Ordinal" theory tapped, the BRC-20; comes, and as we write, the newest inscriptions are the;BRC-20;.
2023/5/6 1:;00; inscription
Situation Analysis
According to the "BRC-20" website, sentiment toward the "BRC-20" is still very high, with more than; 24,000; BRC-20; ;Among them, $ordi; still ranks first, with a market cap of $230 million, accounting for 53% of the total market cap of the BRC-20. (as of;2023;year;5;month;31;day;17;::;25; data)
BRC-20; the trading volume of the token remains high, and the BRC-20; market continues to be active. At present, the total number of BRC-20; transactions exceeds; 8.43; million, and the total handling fee exceeds; 1280; BTC. (as of;2023;year;5;month;31;day;17;::;27; data)
Now the daily trading volume continues to exceed; 10; w.
brc20
Judging from the mine pool data of "mempool", in less than a month in early May, the gas fee; never reached; 10; sats/vb; all the way up; 40; times, even at the high point Reached; 600; sats/vb. The centralized generation and trading platform; UniSat; users increased to hundreds of thousands in just a few weeks, and the server was overwhelmed and repaired every once in a while. In March; when the UniSat platform just came out, the active users of the platform were only Only; 50; people.
The time of the above three pictures are;2023;year;4;month;30;number,;5;month;8;number,;5;month;31;number;mempool;
Data Sources:
UniSat Market Crash Chart
Data Sources:
At present; BRC-20; has directly ignited Bitcoin transactions, and it still maintains a very hot momentum.
brc20
The large number of transactions caused the Bitcoin network to become congested, and gas; fees skyrocketed rapidly, but have fallen back sharply in recent days.
brc20
At present, many users have poured into the "BRC-20" market, the most mainstream "ordi" holders have exceeded; 11000;, meme,; pepe; holders have exceeded; 4000;.
brc20
Most of the people who take over are from an investment perspective and mentality, with expectations of rising currency prices and fantasies of getting rich overnight. The increase in currency prices is often based on the consensus of the community and the fantasy of a group of people who want to get rich. So when "BRC-20" is listed on the exchange, vested interests expect more people to participate in the transaction and take over their "BRC-20" tokens. But actually:
The number of people entering the; BRC-20; market is unlikely to maintain a long-term substantial increase
Most of the people involved in the "BRC-20" market transactions also have a lot of chips waiting to be sold, and they are more inclined to play new coins in the market rather than take over worthless old coins.
So when the "BRC-20" was listed on the exchange, the dealers sold a lot, but no one took the orders. When the expectations did not match the reality, the bubble burst step by step, and this panic would cause more people Selling at lower prices ushered in a round of declines in currency prices. Many "MEME" coins such as; bank, vmpx; etc. directly drop in price by more than; 90%.
(Figure 8: VMPX; market trend chart) Data source:
The above picture - VMPX; market trend chart as an example, VMPX; before the "gate.io" exchange, due to the consensus of the community, the price has risen steadily, and the price has reached; 0.8; US dollars. When the news of the listing came out but the listing was not yet officially listed, the transaction price on the chain reached 2; US dollars, and then there was a large amount of selling, and the price had dropped to around 0.3 an hour before the listing. After being listed on the exchange, the highest point only came to ;0.3;, and then continued to fluctuate and fall, and the price can be regarded as retreating step by step, and there is not much left.
At present, BRC-20; Token; is just "Token;". We don't know where they will go, and we don't know what their future applications are; because; BRC; 20; is currently mostly a local dog project, without any value And application scenarios, some original users of the Bitcoin community are opposed to ;BRC;20; because they think it will only increase the congestion of the Bitcoin network, which is not good for Bitcoin. However, there are also users who believe that because users need to use Satoshi to pay for any;BRC;20;Token on the blockchain, this adds new application scenarios to the Bitcoin network and attracts a new wave of enthusiasm for the Bitcoin community. Users and developers, who believe this will increase the demand for "BTC", will benefit the price of "BTC".
As the ;pepe; official website said, the value of pepe is only entertainment value (
BRC-20; Ecosystem
When mentioning "BRC-20", we must say "UniSat". It is undeniable that BRC-20; was born with its own narrative, but UniSat; can be said to have contributed to the fire of "BRC-20;".
UniSat; what did it do right?
UniSat; first of all, is a browser plug-in wallet, its installation and usage habits are very close; Metamask, in view of; Metamask; huge user base, users who often use the compatible; evm; chain can quickly adapt to Bitcoin chain operations . In addition to the wallet function, UniSat; also provides inscriptions, retrieval, market services, UniSat; has become a "BRC-20" one-stop service application.
UniSat; Service
UniSat; with one-stop service, solves; BRC-20; users' various needs and pain points, users only need one tool to complete casting, selling, searching, etc.; BRC-20; related services.
Why did UniSat; add fire to the "BRC-20" market?
Excluding the one-stop service mentioned above, when UniSat launches the "Marketplace" function, users need to have certain points, and to obtain points, users need to use "UniSat" casting tools, which allows users to buy in "fomo" mood My favorite; BRC-20 token; before, must be fast; mint; some new projects; token. For the project party, this is obviously in line with their interests. Not only that, but UniSat gives BRC-20 Inscription deployers a 0.2% transaction royalty. Therefore, in a short period of time, a large number of projects have been launched together, making this market even more intense. Until May 11th, according to the official Twitter, BRC-20; trading market; UniSat Marketplace; the access threshold was removed, that is, UniSat points were no longer needed for use.
What did UniSat; gain in the ;BRC-20; frenzy?
We think that first of all, "UniSat" has cultivated user habits. When users want to enter the "BRC-20" world, the first thing that comes to mind is "UniSat." Just like when a user wants to enter the world of Ethereum, the first thing that comes to mind must be; metamask. Secondly, UniSat; also harvested real money in this frenzy. Taking the purchase of "Beng" as an example, in addition to paying the "total value" and "network fee" of the "BRC-20 token", the user also needs to pay a "1.6%" platform fee[;2;].
Purchase; Beng token; Confirmation (source: )
UniSat; what does the team want to do in the future?
According to the interview with Lorenzo of the UniSat team, the UniSat team has financing plans in the near future. In terms of products, Lorenzo; only revealed that; UniSat; will improve the user's experience on the whole platform, safely save the user's inscription in the wallet, improve the mobile phone user's access experience, and optimize the casting process.
In addition to;UniSat, quite a few ecological projects have emerged around the;Ordinals; and;BRC-20;narratives, and we will make a brief inventory here.
Ordswap
Ordswap; is also making a one-stop tool, users can mint, buy and sell; Ordinals; inscriptions on; Ordswap; However, "Ordswap" is not particularly friendly to "BRC-20;'s inscriptions, market; is not specifically optimized for "BRC-20;", market; only supports four ways of sorting inscriptions (Recent, Number, Price ASC, Price DESC), obviously, BRC-20; enthusiasts will not regard; Ordswap; as the preferred trading market.
Ordswap market; interface
But what's interesting is that Ordswap; provides an interface to "inscribe orc-20" (an upgrade protocol compatible with "BRC-20"), which facilitates related operations for users.
Inscribe orc-20;
Ordmint
Ordmint; currently primarily a minting tool, supports payments via Lightning Network; btc; to mint inscriptions. It also has some search functions, but it is not very complete. It currently helps users to see if a .sat; domain has been minted, although it has added other lookup options to the front end, so far it doesn't work.
Ordmint; casting function
It currently helps users to see if a .sat; domain has been minted, although it has added other lookup options to the front end, so far it doesn't work.
Ordmint; Find function
Ordinals wallet
Ordinals wallet; is a web wallet and inscription browser specially developed for; Ordinals; it currently provides functions such as casting, trading, etc., and is very friendly to; Currently, the project has airdropped to early adopters; Pixel Pepes NFT.
Ordinals wallet; Medium; BRC-20; Kanban
In addition to some others; Ordinals/BRC-20; part of the infrastructure of the ecology.
BRC-20; the; Dex
The script of Bitcoin is not Turing-complete, and the inscription of "BRC-20" needs to be parsed by tools, the former makes Bitcoin's "DeFi" not scalable, and the latter makes "BRC-20" too dependent on assets Centralized explanation tool. These two reasons make it not easy to build a transaction; BRC-20; DEX; Most of the trading markets such as "UniSat" and "BRC-20" adopt the form of pending orders, which require artificial market making to match transactions.
BisoSwap; on; May; 9; announced the deployment of the; BRC; 20; the first in the ecosystem; AMM DEX. BisoSwap; The workflow of adding liquidity, swapping tokens, and removing liquidity is described in the official documentation.
According to the workflow description of adding liquidity, users need to send; BRC-20; and; BRC-21; transaction pair to; BisoSwap, by; BisoSwap; on the chain; Deploy LP Token; inscription, and; mint; after; transfer; to the user.
Adding Liquid Workflows (source: )
The description of the function of exchanging tokens in the document is that the user sends; BRC-20; of; TokenA transfer; inscription to; BisoSwap, BisoSwap; read deployed; LP Token "contract", calculate and update the pool; TokenA; and; TokenB ;, and send the ;transfer; inscription of TokenB; to the user, and the user can redeem the locked assets on the target chain according to their own needs.
Swap token workflow (source: )
Workflow for removing liquidity
To remove liquidity, the user will "LP Token"; mint; inscription; transfer; The latest value, and the ;transfer; inscription of ;TokenA; and ;TokenB; is sent to the user.
Remove Liquidity Workflow (source: )
We have seen that although; BisoSwap; claims to be a; DEX, it actually still relies heavily on tools for parsing inscription content. Secondly, BisoSwap; currently does not implement these three functions, but only has a non-core requirement "stake" function online. We think that due to the characteristics of the Bitcoin network and "BRC-20" itself, it is very difficult to implement an "AMM DEX" based on the Bitcoin network, and it may be necessary to focus on the Lightning Network and some Bitcoin sidechains.
Future Outlook
BRC-20; is; domo; a major innovation on the Bitcoin network, which has re-ignited the ecology and narrative of the Bitcoin network, and brought back the long-lost Lightning Network to people's vision. As the potential of "BRC-20" is gradually tapped by people, more and more people start to "FOMO BRC-20;". BRC-20; also gradually formed an ecosystem. However, the various "tokens" of BRC-20; are still mainly local dogs at present, and most of them have entertainment value. The price of the currency is bound to drop significantly.
BRC-20; trading market; UniSat Marketplace; the access threshold for points has been cancelled;
Take the giant Beng as an example, BRC;20 Buy Hands-on Tutorial;
Exclusive interview; UniSat: Valuation rumors; 1 billion; 1 billion US dollars, ; 10; a new leader in the bitcoin track with a small team;
4.BRC;20;compared with;ERC;20;advantages;
Why do you say that;BRC-20; will not become another;ERC-20;?
ord/bip.mediawiki;
Ordinal Theory Handbook;
Ordinal; what is it? BTC NFT; explained;
Three minutes to let you know what is; Segwit; Segregated Witness;
10.Bitcoin NFT? A Deep Dive into Ordinals Protocol and BRC-20;