TL;DR

1. Ordinals Protocol: New Milestones in the Bitcoin Ecosystem

Despite numerous narratives, innovations, and events that the Bitcoin network and assets have experienced in its tumultuous 14-year history, the emergence and pace of development of the Ordinals Protocol have been somewhat surprising. Here are some milestone events in just a few months:

(1) Release of the Ordinals Protocol

In December 2022, Casey Rodarmor released the Ordinals protocol, introducing NFT to the Bitcoin network through Ordinals and Inscriptions. This protocol allows any content, such as text, images, videos, or even applications, to be added to sequentially numbered “sats” (the smallest unit in Bitcoin) to create unique “digital artifacts” that can be transmitted through the Bitcoin network.

(2) Launch of Bitcoin Punks

Bitcoin Punks is an NFT project inspired by CryptoPunks on Ethereum, consisting of 10,000 unique 8-bit pixel-style character avatars, each with distinct attributes and rarity. Bitcoin Punks were minted on February 9, 2023, and traded on platforms like Gamma.

(3) Largest Block Mined in Bitcoin’s History, nearly 4M BTC

On February 1, 2023, the largest block in Bitcoin’s history has been minted, containing a transaction of nearly 4M BTC. This massive transaction was initiated by a Bitcoin NFT project called Taproot Wizard, and the primary data was an NFT, not a hash. It sparked significant controversy at the time.

(4) Launch of BRC-20 Protocol and the First Token “ORDI”

On March 8, 2023, Twitter user @domodata created BRC20, an experimental token standard. It utilizes Ordinal JSON data for token minting and transfers. The first BRC-20 token contract deployed was the “ordi” token, with a minting limit of 1,000 per transaction and a total supply of 21 million.

(5) Release of ORC-20

ORC-20 is an improved protocol for BRC-20 developed by OrcDAO. On April 30th, OrcDAO released a document titled “About ORC-20”. According to the introduction, ORC-20 is an open standard for Ordinal Tokens, aiming to enhance the functionality of the popular BRC-20.

(6) The First ORC-20 Token: $ORC

Based on ORC-20, OrcDAO deployed the first ORC-20 token called $ORC on the Bitcoin network. Official data indicates that as of 1:29 AM on May 4th, all $ORC tokens have been minted.

(7) Bitcoin Transaction Fees Surpass Block Rewards for the First Time Since 2017

Amid Bitcoin’s recent spike in transaction fees, block number 788695 represents a significant milestone for miners. For the first time since 2017, the transaction fees in a single block have surpassed the block rewards distributed to miners. In this particular block, transaction fees amounted to 6.7 Bitcoin, exceeding the block subsidy of 6.25 Bitcoin.

Since the first wave of excitement reached its peak, the enthusiasm for BRC20 and Ordinals has gradually cooled down in the following month. However, numerous localized hotspots have emerged, further demonstrating the sustained vitality of this field.

Protocols Overview:

2.Discussing the Value of BTC NFT and BRC20 from Cultural Differences

There are still many doubts and questions surrounding BTC NFT and BRC20. For example, some people argue that BTC NFTs are fully on-chain, while Ethereum’s NFTs do not. Ethereum often relies on off-chain hosting for images or multimedia data.

However, it is possible to create “BTC NFT” on Ethereum as well, as demonstrated by recent projects like Ethscriptions and ERC-20. These projects have seen significant price increases, surpassing hundredfold gains, by drawing inspiration from Ordinals.

BTC NFT are costlier to create, and although they have gained popularity due to the wealth effect, the question of their sustainability remains. Some individuals question whether BRC20 is just a short-lived trend, similar to other fleeting stars in the industry. From a long-term perspective, what is the value of Ordinals and BRC20 in the industry? Do they hold any meaningful significance?

Existence implies significance, but the value can vary. People who make those judgments may not understand the cultural differences between BTC and ETH. Why suddenly bring up cultural differences? Sometimes, when something is done in a particular way and another thing is done differently, it may not necessarily be driven by a logical reason. It’s simply because the people doing it that way believe it is right, while the ones doing it differently believe their way is right, and that’s it.

On Ethereum, people have become accustomed to storing things on Arweave or IPFS or even on a server and then providing a link. It’s not considered wrong to do so. Even if others wonder why the image has been modified or sometimes cannot be found, it doesn’t bother people. They think that’s just the way it is, storing a link is enough. Why would you store the entire thing? It’s meaningless. This mindset or culture has formed over time.

In contrast, BTC has cultivated a unique cultural atmosphere. If it doesn’t exist on-chain but is only stored as a link on your own server, the server might shut down. Engaging in such practices is considered dishonest and goes against the spirit unique to BTC. On BTC, everything must be fully on-chain, and even a slight compromise to the integrity is not tolerated. Users are willing to spend more money rather than compromise on discounts.

Expanding further, although BRC20 and ERC20 differ by just one letter in their names, their underlying logic is fundamentally different. After deploying a BRC20 token, the issuer still has to go through the trouble of minting it. From the perspective of participants, everyone starts on an equal playing field, which is a fairness aspect that Ethereum lacks. This reflects cultural differences, it’s more about recognizing the differences rather than determining whose stance is right or wrong.

3.Moving Forward in Controversy, Breaking Barriers in Prejudice

From the perspective of participants in the ecosystem, we can categorize them into bulls, bears, and observers:

Bulls:

Bears:

Observers:

BTC NFT and BRC20 have garnered interest from numerous stakeholders, growing amidst controversies and nurturing valuable consensus within prejudices. Several months later, we are surprised to see that this field is still under continuous development, with users steadily increasing. The previous controversies imply early consensus, and behind the prejudices lies an opportunity for participation. The controversies may be viewed as a positive signal that the Ordinals ecosystem will continue to evolve.

In the iterative process of paradigm cycles, the disruptors between each generation are isolated and often do not exhibit path dependence.

4.Focus of Consensus: $ORDI

The creator of the BRC20 protocol, @domodata, referred to it as an interesting experiment and believed that there would likely be better design choices and optimization improvements. Therefore, it is a highly dynamic experiment that encourages the Bitcoin community to refine the standard design and optimize it until best practices achieve widespread consensus (or determine that it is a bad idea altogether).

$ORDI is the first token based on BRC20, with no utility and can be seen as a meme token.

Currently, the price of $ORDI serves as a confidence support for the BRC20 track and even for Ordinals to some extent. The price of $ORDI has a certain correlation with on-chain minting activities.

At the protocol level, founders, builders, creators, and enthusiasts of various ordinals continue to generate fresh ideas, injecting new energy into this track. At this stage, people are less concerned about roadmaps or utilities and are more focused on the community and some cool/historically significant/rare attributes that are emerging within the Bitcoin community.

Looking back at $SHIB, $PEOPLE, and the recently popular $PEPE, these meme coins have generated significant wealth effects and reached their peak after being listed on top-tier exchanges like Binance. The concept of meme coins has become one of the most sought-after investment opportunities in crypto.

As for $ORDI, it has the following characteristics:

(1) Cultural Identity: As the first BRC-20 token, $ORDI has a narrative similar to punk and is the most eccentric and consensual BRC-20 token.

(2) Strong Community: $ORDI’s unique attributes have attracted a large number of investors and community participants. The early investors’ substantial profits often lead to shared interests, viewpoints, and beliefs in $ORDI, forming a consensus system. This consensus is built on social media, online forums, and other community communication channels, providing strong momentum for $ORDI.

(3) Social Dissemination: $ORDI has been observed to have a high frequency of appearance on social media, with broad dissemination.

(4) Capital Drive: Centralized exchanges such as OKX and investment institutions actively participating in the development of the BTC ecosystem have driven the prosperity of related tracks, further benefiting $ORDI.

$ORDI has now consolidated the largest consensus in the entire track and has been listed on exchanges such as OKX. As the top-tier MeMe in the BRC-20 track, we see its potential for future listing on Binance.

Looking back at $SHIB, $PEOPLE, and $PEPE, they all experienced significant price increases after listing on Binance (with returns of over 10x for early investors holding until the Binance listing). Compared to these, $ORDI has a relatively smaller market capitalization. Considering the current bear market context, we believe that $ORDI’s peak market value has yet to be reached.

Additionally, in conjunction with the narrative surrounding Bitcoin halving cycles and the long-term development of the BRC20 and Ordinals ecosystem, there is still a great deal of room for imagination regarding $ORDI’s future trajectory.

5. Conclusion and Outlook

In summary, as an innovative narrative of Bitcoin, BRC20 and BTC NFT have garnered significant attention and generated substantial wealth effects amid short-term speculation.

For investors, it is worth paying attention to the opportunities brought about by new changes in protocols such as BRC20 and BTC NFT, with particular focus on the investment potential of the leading token, $ORDI, especially after experiencing a significant downturn.

With the increasing wealth effects and user base, the competition among products within the ecosystem will continue, and the infrastructure will gradually improve. In the coming year, amidst the significant narrative of Bitcoin halving, it is believed that Ordinals will occupy an extremely important ecological position in crypto.

References

Declaration

The present report is an original work of @JellyZhouishere, @GryphsisAcademy trainees, under the mentorship of @CryptoScott_ETH. The author(s) alone bear the responsibility for all content, which does not essentially mirror Gryphsis Academy’s views or that of the organization commissioning the report. The editorial content and decisions remain uninfluenced by the readers. Be informed that the author(s) may own the cryptocurrencies mentioned in this report.

This document is exclusively informational and should not be used as a basis for investment decisions. It is highly recommended that you undertake your own research and consult a neutral financial, tax, or legal advisor before making investment decisions. Keep in mind, the past performance of any asset does not guarantee future returns.