Recent developments within the Bitcoin ecosystem, including giving Satoshis identities and meaning through Bitcoin Ordinals and Inscriptions, indicate a transformative shift within the cryptocurrency landscape, broadening possibilities and relevance for users.
Ordinal Inscriptions offer a unique identification of ownership of digital assets, just like NFTs. Inscribing on Satoshis is possible owing to the Taproot upgrade, launched on the network in November 2021 to enhance scalability, privacy, and composability.
Ordinals can be anything, such as text files, images, audio, or video.
Ordinal Inscriptions need Bitcoin for minting, transferring, and storage. According to data from Binance, people are buying Bitcoin as an asset not a payment tool, so it’s rarely purchased for the purpose it exists.
Getting back on topic, the Bitcoin Ordinals marketplace is less active compared to NFTs on other blockchains, meaning there’s less liquidity and interest, so do your homework before jumping on the bandwagon.
Bitcoin wallets don’t typically support the Ordinals protocol, so if you’re interested in buying, selling, or trading Bitcoin NFTs, get a non-custodial wallet to safeguard your treasures.
Table of Contents
The BRC-20 Token Standard Brings Promise and Challenges to The Bitcoin Blockchain
The BRC-20 token standard was advanced in March 2023 by an anonymous developer for the Bitcoin blockchain.
Unlike popular token standards on EVM-compatible blockchains, the BRC-20 standard doesn’t deploy smart contracts but enables users to store/download a file on Bitcoin, attributing tokens to Satoshis and allowing them to be transferred among users.
The most popular BRC-20 tokens are ORDI and WOJAK, which have gained market capitalization due to their novelty and innovation.
BRC-20 tokens are considered fungible, yet they’re rather semi-fungible, given they can only be exchanged in set increments. They’re experimental, as users are struggling to reach an understanding of how they work.
BRC-20 tokens allow for new use cases on the Bitcoin network like DeFi, as they can be used for services such as lending, borrowing, insurance, and flash loans.
Since they’re compatible with the Bitcoin blockchain, it’s simple to integrate BRC-20 tokens into the ecosystem, which is more secure than Ethereum because it uses a Proof of Work consensus mechanism.
Bitcoin Ordinals are more immutable than other NFTs, meaning they can take up quite a lot of space within the blockchain. The Bitcoin community is divided over BRC-20 tokens. While some view it as a groundbreaking experiment, others believe it’s a shift from Satoshi Nakamoto’s initial vision for Bitcoin.
Inscriptions Created Using the Ordinals Protocol Might Be a Threat to Bitcoin
According to the National Vulnerability Database, the most detailed publicly accessible repository of vulnerability intelligence, BRC-20 standard tokens exploit a weakness in the Bitcoin code.
Bitcoin Inscriptions have received a 5.3 medium base severity score, so they represent a cybersecurity risk. It’s possible to bypass the carrier size limit in specific versions of the Bitcoin Core and Bitcoin Knots, meaning it’s possible to insert data in the form of code.
Being listed on the National Vulnerability Database signifies the security vulnerability is widely recognized by the general public, but it’s still in the analysis stage.
The Bitcoin network has witnessed enhanced congestion over the past couple of months due to Ordinals Inscriptions and BRC-20 token minting.
Network congestion is measured by the memory pool size (mempool) and the queue of pending valid transactions waiting to be added to the blockchain. A high mempool indicates more network traffic that brings about longer average confirmation time and higher priority fees.
The mempool size is a good metric to determine how long the congestion will last, while the chart lets us know how many transactions are causing the congestion. The congestion on the Bitcoin network is the highest it’s ever been since the 2017 bull run.
BRC-20 Tokens Unveil New Prospects for Bitcoin Buyers
In case you didn’t already know, the Bitcoin Ordinals market experienced an unprecedented surge in trading enthusiasm, witnessing a remarkable uptick in activity.
Roughly $36 million worth of Bitcoin-based assets exchanged hands on December 12, which can be attributed to the listing of NFTs on Binance, one of the biggest cryptocurrency exchanges in the world.
Prior to depositing or withdrawing BRC-20 tokens on Binance, it’s imperative to sign up for an account on their official website and complete your KYC verification.
As the name clearly suggests, BRC-20 tokens take inspiration from ERC-20 tokens that live on the Ethereum network.
As the market advances continuously, enthusiasts and investors alike are left contemplating whether now is the right time to bet on the Bitcoin ecosystem.
The spike in the Bitcoin Ordinals market and the unparalleled trading volumes imply that Ordinal Inscriptions are gaining prominence as a viable investment option. If you’d like to invest in Ordinals, scan the collections to find something you want to purchase; pay close attention to the floor price and the volume.
You can find out more about a collection by viewing the project’s website and social media accounts. Once the purchase is finalized, wait for the Bitcoin Ordinal to hit your wallet.
Bitcoin is more than just a store of value and a medium of exchange. It’s now possible to insert arbitrary data into the blockchain, but the Bitcoin community is divided as to whether this use is an appropriate one.
To be more precise, many developers are of the opinion that this practice is abusive and, therefore, discourage it.
NFTs on the Bitcoin blockchain don’t benefit those who use Bitcoin as a payment method because they contribute to a high-fee environment. The number of individuals who can afford to store Bitcoin on-chain drops by the day.
All in all, not all Bitcoiners are happy about Ordinal Inscriptions because the blockchain’s resources are scarce. Some purists call them an attack on Bitcoin, while others load as much data onto the blockchain as possible.
Bitcoin Ordinals might be censored to bring an end to the DoS attack on the network, which would ultimately impact the price of ORDI and WOJAK. The Ordinals protocol may be removed, but it might not happen if the risk is annihilated. For now, the US government is still evaluating whether Ordinals may be a cybersecurity threat.