How to Play with BRC-20
What are the encrypted currencies based on the BTC concept? Perhaps the first thing that comes to mind is the derivative coins derived from the BTC ecosystem, such as BTD (Bitcoin Diamond), BTK (Bitcoin King), BTF (Bitcoin Faith), and so on... This statement was not wrong before this year. But since the BTC ecosystem introduced the Ordinals protocol this year, it is no longer accurate.
Now in the BTC ecosystem, it is possible to issue tokens based on the BRC-20 standard, as well as issue NFTs based on the BRC-721 protocol. veDAO Research Institute has already explained this in several articles.
"Understanding BTC NFT and Future Potential in One Article | veDAO Research Institute"
https://panewslab.com/zh/articledetails/d6rlbh0xot7w.html
The birth of the BRC-20 standard and the appearance of related tokens mean that BTC is no longer simply seen as the "benchmark of the Web3 world, exquisite but outdated antique." Instead, it truly has the driving force for development and innovation. As of now, the overall TVL of tokens issued based on the BRC-20 standard has reached around 62 million USD.
In the current burgeoning concept, we cannot help but ask: What exactly is the BRC-20 standard? How is it different from the ERC-20 standard? And what are the differences between the Ordinals protocol and the traditional Omni protocol?
What are the Ordinals protocol and BRC-20 standard?
First, we need to review the Ordinals protocol that was born at the beginning of this year.
Ordinals is an NFT protocol based on the BTC network, aiming to assign a unique identity to each satoshi (sat). By using the Ord software, this protocol adds data to these sats and allows software users to track them based on an ordinal numbers system. In other words, the Ordinals protocol represents the smallest unit of Bitcoin, sats, in the form of NFT and gives sats sufficient trading value and collectible value. When the smallest unit becomes a new speculative target, to some extent, it also counts as a capacity expansion for Bitcoin.
Since the birth of the Ordinals protocol, users can inscribe information on the Bitcoin chain, including text/pictures/audio/video, creating NFTs on the Bitcoin chain.
For example: The NFT with the number dd082adcb3aab2882185e3a2f927bbff53cf6ffe8ab472d57740ea9f95c0acdai0 is inscribed based on the smallest unit of Bitcoin, sats.
But it is worth noting: When different information is inscribed based on sats, NFTs can be obtained. So, when there is a certain regularity in the information inscribed, or when it is inscribed according to a unified standard, can homogeneous tokens be produced in the BTC ecosystem? The answer is yes. After community enthusiast @domodata proposed the first brc-20 standard, he also issued the first brc-20 token as an experiment, namely ORD, with a current market value of around 25 million, a total supply of 21 million, and a price of 1.2 USD (as of now, the floor price of ORD has risen to 2.83 USD, an increase of over 100%). This is also seen as the embryonic development of BRC-20.
So, now we can draw a conclusion about the BRC-20 protocol: Based on the Ordinals protocol, based on a certain rule or order, non-fungible tokens with the same form of representation based on text inscriptions are inscribed. Although its essence is NFT, in terms of representation, it is no different from ERC-20 standard tokens, to some extent, it can be seen as a roundabout solution.
Although the creator of the BRC-20 standard, DOM, has repeatedly emphasized that this is an experimental product, it is difficult to stop the surge of market sentiment and the influx of funds.
According to Dune Analytics data, on April 23, the daily minting volume of Ordinals reached 193,063, setting a record for the highest daily minting volume to date, and on April 26, the daily minting volume reached 151,000, the second highest minting volume record. As of now, the total minting volume based on the Ordinals protocol has reached 2,426,808, generating a total cost of over 213 BTC, equivalent to about 6.23 million USD.
According to WeChat Index data, on April 28, the search index for the term "odri" increased by 94.58% compared to the previous day, reaching 34,091, and the search index for the term "Ordinals" increased by nearly 30% compared to the previous day, reaching 65,702.
The enthusiasm has brought about the landing of demand scenarios. Currently, the BTC ecosystem has generated more than 30 related applications, as detailed in veDAO Research Institute's "Summary of the Bitcoin NFT Protocol Ordinals Ecosystem | veDAO Research Institute"
and "Inscriptions: Summary of 30 Most Promising BTC NFT Projects | veDAO Research Institute"
Not only that, due to the complex pre-operations required for participating in BTC ecosystem projects, the demand for proxy participation in BTC ecosystem projects is also exceptionally high. Related demands have also been launched.
Here, we need to consider two questions: Why is the BRC-20 protocol so popular? And how can we participate in it?
What are the advantages of BRC-20?
In strong contrast to BRC-20, one is the mainstream ERC-20 protocol in the industry, and the other is the traditional Omni protocol in the BTC ecosystem.
First, we need to explain these two contrasting benchmarks.
The ERC-20 protocol is a standard for homogeneous tokens based on the ETH ecosystem. In other words, they have a property that makes each token completely identical to another token (in type and value). For example, an ERC-20 token is like Ether, meaning one token is and will always be the same as other tokens.
Currently, since BRC20 itself is a characteristic of inscribing information on Sats, BRC-20 itself does not have the ability to interact with smart contracts. Compared to ETH-20, BRC-20 tokens can no longer be given decimal points, cannot be burned and locked, and do not have functions such as approval or authorization.
These disadvantages, in turn, become a certain advantage of BRC-20 tokens: the inability to interact with smart contracts means that the issuance of BRC-20 tokens will not have the so-called project party, VC reservation, and truly achieves the equal participation of everyone in the ecosystem. In addition, the core of BRC-20, sats, can be seen as the smallest unit of BTC, so the natural value of BRC-20 tokens is directly maximized. Even if the narrative of individual BRC-20 projects is insufficient, the description of trading "BTC" itself can ensure that BRC-20 tokens will not have the risk of zeroing out like ERC-20 tokens and more ERC-20 sidechain tokens.
On the other hand, the Ordinals protocol, the technical source of the BRC-20 standard, has many advantages over the Omni protocol:
The Omni protocol and the Ordinals protocol are two different protocols used for the issuance and transfer of digital assets on the Bitcoin blockchain.
The Omni protocol is a digital asset protocol based on the Bitcoin blockchain, and its biggest advantage is that it can fully utilize the security and decentralization of Bitcoin to issue and trade digital assets. The Omni protocol allows users to issue various types of digital assets on the Bitcoin blockchain, such as stablecoins, tokens, game coins, etc., and the issuance and transfer of these digital assets can be guaranteed by Bitcoin.
The Ordinals protocol is an extended Bitcoin protocol that allows users to issue interchangeable digital assets on the Bitcoin blockchain and exchange them between these digital assets. The Ordinals protocol adopts a new transaction structure that allows users to transfer digital assets between each other in a way similar to atomic swaps, thereby avoiding centralized exchanges and clearing institutions.
Therefore, although both the Omni protocol and the Ordinals protocol are used for the issuance and transfer of digital assets, they have different design concepts and application scenarios.
Regarding the Omni protocol: The Bitcoin community proposed the protocol for issuing tokens very early on, and the Omni protocol was developed actively in 2014, with more than ten versions iteratively developed, and the protocol's software implementation, Omni Core, matured in 2014. The most influential token based on the Omni protocol is USDT, which is the only productive-level token released in 2015.
Our most common understanding of the Omni protocol is that when transferring tokens such as USDT on CEX exchanges, users can often choose to transfer via ERC-20, Matic, TRC-20, and Omni, but due to the significant friction in transferring via the Omni protocol and the slow transaction speed, almost no one chooses it. Also, because Omni itself operates on the logic of colored coins (its core idea is to first divide Bitcoin addresses into a certain size and then write data into the Bitcoin network. It is not as straightforward as the Ordinals protocol using sats), the scalability of Omni is also limited.
In addition, the Omni protocol was introduced too early, and during the ICO boom from 2015 to 2017, the BTC ecosystem was embroiled in a civil war of forks and expansions, and did not have sufficient development time, so the Omni protocol was jokingly referred to as the "correct protocol proposed at the wrong time." But in any case, Omni has missed the opportunity, and now the rise of the Ordinals protocol has brought new growth momentum to the BTC ecosystem.
After all this, how can we participate in the BTC ecosystem?
How to Play with BRC-20?
Currently, there are many cases online about how to buy BRC-20 tokens. veDAO Research Institute will summarize them for everyone here:
According to the Little Pig Rating content, users need to do the following to buy BRC-20 tokens:
To buy BRC-20 tokens:
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First, register a Unisat wallet and deposit enough BTC.
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Then enter ordinalswallet and link to the Unisat wallet.
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Go to the brc-20.io website, select the inscriptions you want to buy, and pay attention to the price and quantity.
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Finally, click Buy now after selecting and make the purchase in the wallet.
To sell BRC-20 tokens:
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First, generate an inscription for transfer, and transfer as much as you want.
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After generating it, wait for confirmation on the chain. After successful confirmation, go back to the OW wallet and scroll to the bottom to see the inscription just generated.
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Enter the price you want to sell (total price), and then place the order.
The above plan allows users to buy and sell BRC-20 tokens through third-party services. If users want to complete the purchase through protocol commands, they can refer to the explanation by Zhihu user Wang Feng: BRC20 operations are divided into Deploy, Mint, and Transfer, which are inscription minting operations for users.️️
Deploy:
{
"p": "brc-20",
"op": "deploy",
"tick": "ordi",
"max": "21000000",
"lim": "1000"
}
Mint inscriptions, fill in the tick field to indicate the token name, max to indicate the supply, and lim to indicate the maximum amount for each transfer.
️️Mint:
{*
"p": "brc-20",
"op": "mint",
"tick": "ordi",
"amt": "1000"
}
Fill in the username and the amount to be minted, and the amount cannot exceed the maximum limit that can be minted and the balance after deploying the inscription.
️️Transfer:
{ *
"p": "brc-20", *
"op": "transfer", *
"tick": "ordi", *
"amt": "100", *
"to": "1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa" *
} *
Fill in the token code quantity and the destination address
In addition, for video tutorials on how to buy/sell BRC-20 tokens, users can visit:
https://www.youtube.com/watch?v=ck7loCKK140\u0026feature=youtu.be
Below, veDAO Research Institute will list some projects related to BRC-20 tokens for everyone to participate in:
- BRC-20 project summary website:
- BRC-20 wallet:
- Ordinals native wallet:
https://ordinalswallet.com/wallet
- Trading market:
- Mint tool:
- Browser:
Summary:
Overall, BRC-20 has the following advantages:
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BRC-20 tokens are more valuable, with almost no risk of zeroing out
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The distribution of BRC-20 tokens is fairer, with all participants starting from the same line
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The potential market for BRC-20 tokens is huge, opening a new narrative, and the BTC consensus is also the strongest consensus in the market
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Compared to the "old wine in new bottles" DeFi play in the current ETH ecosystem, the BTC ecosystem and the BRC-20 standard are in a completely new concept in the industry, making it easy to attract market sentiment and funds.
However, the industry also has related concerns:
-
The threshold for user participation is high: whether it is the cumbersome node setup or the high cost of BTC, it will to some extent isolate retail investors from entering.
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It is currently uncertain whether the Ordinals protocol is in its early development or a flash in the pan, and whether the industry will recognize the expansion of the BTC ecosystem, after all, whether it is issuing NFTs based on the BTC ecosystem or BRC-20 tokens, it is the use of sats, which can be seen as a manual expansion. Different people in the industry have different views on whether the price of BTC can be maintained after expansion.
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In addition, in the early part of this year, due to the rising cost of the Bitcoin network for inscriptions, the Bitcoin ecosystem experienced severe congestion in the memory pool, which was criticized by the industry.
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On April 11, a Github user discovered a code vulnerability in the Ordinals protocol, which prevented more than 1,200 inscriptions from being verified. The vulnerability comes from the indexer function of the protocol, which only calculates the inscriptions in the first input of transactions submitted up to and including protocol version 0.5.1. When it comes to whether it is necessary to correct this error by changing the inscriptions, 67.5% of the 1,266 voters do not agree. The young Ordinals protocol seems to have also fallen into the dilemma of ecological governance.
But in any case, after preparing in advance and taking risk prevention measures, the Ordinals protocol and BRC-20 tokens, as an early emerging track and one of the hottest topics in the industry, still have a need for participation.
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