Bitcoin ecosystem: What is its true value? This article outlines its historical context and long-term value.
Original Author: Shenchao TechFlow
"Ordinals marks the return of the builder culture!"
On July 7th, Ethereum founder Vitalik Buterin praised the development of Ordinals and BRC-20 in the Twitter Space session "What can Bitcoin learn from Ethereum," stating that they are a response to the "stagnant politics" in the Bitcoin ecosystem and bring about a culture of "actual doing" among builders, revitalizing the ecosystem.
Since Bitcoin's inception in 2009, 14 years have passed. During this period, the addition of miners, the emergence of trading platforms/ Lightning Network / RGB/STX, and other innovative platforms have led to an increasing number of retailers accepting Bitcoin payments, gradually raising awareness of Bitcoin among more people.
However, looking at the Bitcoin ecosystem, it has been lukewarm until the unexpected emergence of Ordinals and BRC-20. Developers flocked in, and the OKX Web3 team started providing technical support for Bitcoin's development, marking the first time a development team with an exchange background participated in the construction of Bitcoin's ecosystem infrastructure. Bitcoin's ecosystem once again returned to the center stage of the crypto narrative.
What is the long-term value of the Bitcoin ecosystem? Who are the "big players" behind it? This article will take you through the supporters, long-term value, and historical context of Bitcoin.
1. The Origin of Ordinals
When it comes to the Bitcoin ecosystem today, it is inseparable from Ordinals.
In December 2022, software engineer Casey Rodarmor released the NFT protocol "Ordinals," and on January 20th of this year, the Ordinals protocol released V4, officially introducing NFTs to the Bitcoin network through Ordinals and Inscriptions (ordinal numbers and inscriptions).
Bitcoin NFTs are not a new concept, as there have been many NFTs on Bitcoin's Layer 2 networks like STX in the past. However, Ordinals NFTs are native to Bitcoin. They work without changing the Bitcoin protocol, do not rely on Layer 2 networks, and are backward-compatible with the network.
CryptoPunks, born in June 2017, is one of the earliest NFT projects on Ethereum and is regarded by many investors as the "Bitcoin" of NFTs. Now, on the Bitcoin network, it has its own Punks.
On February 9, 2023, Bitcoin Punks were minted on the Ordinals protocol, with inscriptions numbering within the first 40K, very early on. It is worth noting that in early March, the OKX NFT marketplace launched this NFT collection, marking the beginning of the intersection between OKX and the BTC ecosystem.
Just like Ethereum's NFT ecosystem has seen the emergence of numerous blue-chip projects, Bitcoin NFTs have also seen the rapid emergence of well-known projects, such as TwelveFold, Taproot Wizard, Bitcoin Frogs, and more.
According to the trading data of BTC NFT on OKX on July 18th, Bitcoin Frogs has the highest trading volume.
If Ethereum became popular with tokens first and then NFTs, the Ordinals ecosystem took the opposite path.
Inspired by the Ordinals protocol, Twitter user @domodata created the experimental Bitcoin substitute token standard BRC-20 on March 8th, 2023. The first BRC-20 token contract deployed was for the "ORDI" token, with a minting limit of 1000 tokens and a total supply of 21 million tokens.
While @domodata sees BRC-20 as just an interesting social experiment, speculators see it as a groundbreaking and enticing narrative.
Since ORDI, various types of BRC-20 tokens have sprung up like mushrooms. According to the OKX Web3 wallet, as of July 18th, 2023, there are currently 613 BRC-20 tokens listed on the platform.
With the strong market enthusiasm, BRC-20 is constantly innovating and iterating, giving rise to various derivative protocols and standards.
ORC-20: An improved protocol for BRC-20 developed by OrcDAO, aiming to enhance the functionality of BRC-20.
BRC-20 S: Proposed by the OKX Web3 team, it is an extended version of the BRC-20 protocol that introduces functions such as deposit, minting, and withdrawal. According to the proposal, users can pledge their BRC-20 tokens and Bitcoin to receive corresponding BRC-20 S tokens as rewards.
BRC-21: Proposed by Alexei Zamyatin, the founder of Interlay, a cross-chain interoperability project, BRC-21 aims to introduce fully decentralized cross-chain assets on the Bitcoin network and use them in the Lightning Network.
BRC-721: An experimental standard for issuing Non-Fungible Tokens (NFTs) on the Bitcoin network, providing more functionality and flexibility by addressing the limitations of native Ordinals NFTs. For example, BRC-721 can support storing images on IPFS or other off-chain services.
II. The "supporters" behind
Behind the thriving Bitcoin ecosystem, what forces are building the infrastructure for this new industry?
According to Dune Data Dashboard, in the marketplace of the Ordinals ecosystem, OKX/Unisat/Magic eden have consistently held the top three positions. Among them, OKX Web3 Ordinals Marketplace has become the largest marketplace in terms of trading volume, occupying over 70% of the market share. Although some volume-boosting projects were attracted due to its fee exemption policy, it still holds around 40% market share after being screened.
Unisat, pioneering the industry.
With the emergence of Unisat, the demand for BRC-20 transactions was met, providing a place for liquidity. This led to the first wave of explosion for tokens like ORDI, attracting attention across the network.
In retrospect, the Unisat team made an exceptionally correct choice when they entered this track. They bet on incremental markets rather than existing ones while the Bitcoin ecosystem market infrastructure was still barren and bleak. They understood how to leverage the power of a grand narrative to acquire traffic.
OKX, rising to the top, rooted in the ecosystem.
On May 20th, OKX became the first exchange to launch spot trading for ORDI.
Currently, OKX Web3 Wallet supports functionalities such as BRC-20 trading market, BRC-20 Token trading, BTC cross-chain swap, Ordinals inscription, BRC-20 Token minting, and Ordinals NFT trading. It officially launched the staking function for BRC-20 Tokens on July 19th.
In addition to the construction of trading tools and other infrastructure, OKX Web3 Wallet's support for the Bitcoin ecosystem extends to the protocol standard level.
BRC-20S, an extended version of the BRC-20 protocol led by OKX, introduces equity operation functions such as deposit, minting, and withdrawal. Users can pledge their own BRC-20 Tokens and Bitcoin to obtain corresponding rewards.
Dr. "BRC-20 BaiCai," an economics scholar and Bitcoin ecosystem enthusiast, believes that OKX's move aims to replicate DeFi Summer. While BRC-20 only has transfer functionality, BRC-20S provides staking functionality. Therefore, new projects can distribute project tokens by staking BRC-20 tokens like Ordi, attracting early users.
"The BRC 30 agreement of OKX (now renamed as BRC 20-S) did not touch BRC-20 nor did it promote itself as BRC 21. This was a mild attempt. OKX did not forcefully push for the development of the BRC ecosystem, nor did it block the road for improvement of BRC-20 by community developers like Domo. It merely provided compatibility for a semi-decentralized BRC DeFi implementation, which is the true approach of a builder."
"From wallet tools, browsers, to trading markets, OKX has become the first trading platform to provide technical support for the development of the Bitcoin network."
"But all of this didn't happen overnight. Jason Lau, the Chief Innovation Officer of OKX, mentioned in a media interview, 'OKX noticed the BTC ecosystem at a very early stage and went through several stages from discovery, research, skepticism, internal discussions and finally embracing the BTC ecosystem comprehensively starting from the end of April.'
"Why did OKX ultimately choose to fully embrace the Bitcoin ecosystem?"
"Jason Lau believes that zero-knowledge proofs, MPC multi-signature wallets, and the BTC ecosystem are the current mainstream narratives, and the BTC ecosystem narrative might have the most potential."
"In the past, BTC has always been considered as digital gold, but based on the Ordinals protocol, users can mint NFTs on the Bitcoin mainnet, and the original data of these NFTs will never be lost. This opens the door for future innovation and possibilities. The introduction of BRC-20 and BRC-20-S could potentially lead to a real breakthrough for Bitcoin in the future."
Furthermore, Jason Lau also revealed that OKX's Web3 wallet will soon launch a decentralized liquidity market, which is an innovation comparable to the Lightning Network. This technology enables buyers and sellers to complete transactions in a self-custodied manner without relying on any third-party services."
III. What is the value of the Bitcoin ecosystem?
Nowadays, OKX has gradually taken a leading position in the Bitcoin ecosystem market. Trading BTC NFTs and BRC-20 on the OKX Web3 wallet has become a habit. However, whether it's BTC NFTs, BRC-20, or even STX and other Bitcoin Layer 2 solutions, they always face many doubts.
For Bitcoin purists, Ordinals disrupts the narrative logic of Bitcoin, filling the main chain with a bunch of garbage and causing on-chain congestion. Bitcoin should maintain its purity as a "store of value."
So, does building an ecosystem on Bitcoin have long-term value?
Since the launch of the Ordinals mainnet at the end of January until now, after six months, it seems that the market has provided an answer to this question. The value of the Bitcoin ecosystem is not determined by a group of people engaging in theoretical debates online, but rather from the bottom up, based on developers and users voting with code, on-chain actions, and assets.
What Vitalik criticizes as "stagnant politics" within the Bitcoin ecosystem can be described in popular domestic terms as "lying flat," waiting for Bitcoin to reach new heights."
Now, Ethereum has extended its narrative from smart contracts to "value storage", and it may be better to lie flat and wait for a better tomorrow than Bitcoin.
In our opinion, the Bitcoin ecosystem, including Ordinals, is still undervalued and presents long-term construction and investment opportunities.
1. The Most Powerful Consensus Foundation
When we talk about blockchain and cryptocurrency, the first thing that comes to mind is Bitcoin. Whether it is the decentralized "cultural orthodoxy" or security, the Bitcoin ecosystem has the widest consensus foundation. This is precisely the "cultural premium" and moat, which is also an important distinction from other ecosystems.
2. The Most Powerful Fund Accumulation
For a new public chain ecosystem, it is necessary to consider how to "attract investment" and attract foreign capital, but the Bitcoin ecosystem does not have this problem. Currently, the market value of Bitcoin exceeds 580 billion U.S. dollars, with more than 6.4 billion U.S. dollars of Bitcoin cross-chain to Ethereum and other public chain ecosystems, providing them with nutrients. For the Bitcoin ecosystem, there is naturally the most powerful fund accumulation, and the focus is on how to activate stock assets.
Source: CryptoFlows
3. Urgent Needs of the Market and Industry
In the expectation-driven cryptocurrency market, the market needs a new narrative to enter new sectors. As Bitcoin undergoes another halving, Bitcoin miners will face more difficult survival challenges in the future. The development of the Bitcoin ecosystem can bring a large amount of transaction fees, giving miners the motivation to maintain the security of the Bitcoin network, which was the original idea of Satoshi Nakamoto.
4. Influx of Developers in the Ecosystem
Driven by market prospects and wealth effects, more and more developers are pouring into the Bitcoin ecosystem, from Ordinals to BTC Layer 2. Among them are developers from ecosystems such as Solana/BSV, as well as the support and construction of the OKX Web3 team.
On July 17th, Star Xu stated on social media: "OKX Web3 Wallet starts open sourcing the signature algorithm of all chains. We hope to contribute a little to the industry."
It is precisely with the efforts of these innovators and builders that the technological development and ecological prosperity of Bitcoin are changing rapidly.
On July 19th, there are less than 282 days left until the next Bitcoin halving.
After 282 days, the block reward for Bitcoin mining will be halved to 3.125 coins, and the Bitcoin ecosystem will usher in new narrative expectations.
Of course, they are faced with one difficult problem after another. For example, due to BRC-20, the Bitcoin network has become unusually congested, and how to scale Bitcoin once again becomes a topic of discussion.
Ethereum founder Vitalik Buterin said on Twitter Space, "If we want Bitcoin to be more than just a means of payment, it needs scaling solutions like Plasma or ZK Rollup, both of which have been tested on Ethereum."
While BTC has been running on the path of store of value, the Bitcoin ecosystem is still in the exploratory stage, with everything being unknown. For those who venture bravely, we can perhaps provide more tolerance and encouragement.
The crypto world is inherently a game for brave innovators and builders.
