Original author: Fishery Isla, Biteye core contributor
Original editor: Crush, Biteye core contributor
Since the release of the new theory of Ordianls in January, Inscriptions (BTC NFT) and BRC-20 created based on this theory have been frantically sought after by market funds, and early investors of BRC-20 have received huge returns. After the review, the success of BRC-20 is inseparable from three major reasons:
1. "New technology": In the field of cryptocurrency and blockchain, the continuous innovation and development of technology has always been the focus of investors' attention.
(Note: The quotation marks are put here because BRC-20 is not the first token protocol of the BTC chain, which will be explained in detail below.)
2. Good narrative: From the perspective of market value, especially recently, BTC has been extremely strong. BTC’s dominance of the overall market is getting higher and higher, and the hegemony level exists in the encryption market.
BRC-20 is closely related to BTC. Even if there is no value behind it, as long as the story is listened to, BRC-20 is the narrative of a permissionless pass in the BTC ecosystem, and it has won most of the copycats from the starting line.
3. Well-designed issuance method: According to the Oridinals theory, BRC-20 can technically not limit the maximum amount of Mint in a single transaction, that is, the token issuer only needs to issue the total amount of Mint in one transaction, and then distribute in various ways ( such as the ICO model).
The advantage of this ideal method lies in the convenience and saving of BTC performance. On the contrary, although the batch Mint method that is now being praised greatly increases the network load and consumes a lot of handling fees, its process is very similar to the issuance of Ethereum NFT. A very mature distribution method suitable for hype.
Including: card pending orders, pulling gas, sweeping the floor and other operations, each link can greatly mobilize market sentiment. In addition, BRC-20 uses the ERC-20 title, but inherits the gameplay and trading strategies of ERC-721 (NFT), which is perfect for dealers with NFT trading experience.
The superposition of the above factors has led to the super-high popularity of BRC-20, which also makes it difficult for most investors with low risk appetite to start investing.
Looking back like this, it is indeed a pity to miss BRC-20 before, but there is no need to regret it. The author discovered a public chain-level project Counterparty released 9 years ago for everyone.
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01 Counterparty agreement
Counterparty is a message protocol based on the BTC main network launched in 2014. Its main purpose is to issue and index custom digital assets (NFT) on the BTC main network. It can be understood as a data layer L2 on top of the BTC network.
It features an order book-style decentralized exchange (DEX) and token (XCP) that allows users to mint and trade digital assets. Its token XCP was launched in 2014, adopting the Proof-of-Burn (PoB) token launch model.
Early BTC users sent BTC to the burning address in exchange for XCP tokens at a ratio of 1: 1000-1: 1500 (all tears).
From the "return to zero" trend of XCP, we can see a glimmer of light. After entering the era of smart contracts, Counterparty has been silent for a long time, until the market discovered an amazing fact——Bitcoin has a lot of digital art issued by the XCP protocol. It was born much earlier than the NFT on Ethereum.
The most famous of these is the Rare PEPE series of digital cards released in 2016. At present, Rare Pepe and other BTC NFTs (including Ordinals) can be traded through Emblem Vault cross-chain to Opensea of other EVM chains such as Ethereum.
The following are some technical explanations to help you understand the difference between the digital assets issued by Counterparty on BTC and the Ordinals that are currently on fire.
The Counterparty protocol uses Bitcoin's native command OP_Return and multi-signature transactions to store transaction data in the output of UTXO. The OP_Return function allows the user to store a small amount of additional information such as a comment, message or reference number up to 80 bytes of data.
However, if the file is larger than 80 bytes, the protocol uses ⅔ multisignatures to store data across multiple outputs.
It should be noted that due to the consideration of the cost and image quality of the main chain (not technical issues), most of the image assets of Counterparty do not upload all the image data to the chain like Inscriptions.
The solution is to store images on third-party storage services like most Ethereum NFTs, and only through the Counterparty client running on the Bitcoin node is responsible for interpreting these blockchain data and indexing the images contained in the assets.
On the other hand, Ordinals uses the Segregated Witness upgrade completed by BTC some time ago to upload all data in plain text to the chain at a relatively low cost.
Ordinals rely on brute force methods to achieve decentralized storage. And when discussing the degree of decentralization of the entire protocol, Ordinals is far inferior to Counterparty: Ordinals’ BRC-20 only uploads the transfer plaintext to the BTC mainnet at a high cost, only using the BTC storage layer, and executing Layer and consensus layer, so far still rely on third-party centralized services.
We can think of a normal blockchain as a packaged combination of ledger + accounting. The blockchain storage layer is the ledger, and the blockchain execution layer, namely the accountant, is responsible for verifying the balance of the account NFT and the pass.
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02 Rare Pepe
Many NFT players should have heard that before the concept of ETH NFT appeared, some "ancient" blockchains had launched digital assets. The Rare Pepe card series is a typical OG representative of such ancient digital assets. BTC main chain and Counterparty's digital assets.
Rare Pepe is a variation on the "Pepe the Frog" internet meme, itself based on a character created by Matt Furie.
Rare Pepe was created by artists around the world between 2016 and 2018, based on the above meme, and traded on the CounterParty platform in the form of non-homogeneous tokens (there was no concept of NFT at the time of release).
The project has released a total of 1,774 official cards in 36 series, of which the total number of issued cards of Nakamoto Card Pepe, which is regarded as the classic OG series, is 298.
In addition, due to the sluggish price of XCP tokens, some community members use the digital asset Pepecash (Pepe Cash) as the benchmark currency of the XCP ecosystem.
In September 2016, the first Rare Pepes were mined in Bitcoin block 428919, predating the popular Ethereum-based NFTs.
A Telegram chat group dedicated to Counterparty NFTs was created shortly thereafter. A Live Auction of Rare Pepes, including a rare Pepes based on Homer Simpson, sold for $38,500 in New York City on January 13, 2018, and was offered by the Metropolitan Museum of Art, the Museum of Modern Art and Sotheby's Institute of Art representative viewing.
Three years later, the buyer sold it for $312,000.
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03 Bitcoin "stamp" and SRC-20
Inspired by Oridinals Inscriptions and BRC-20, the Counterparty community launched BTC Stamp and SRC-20. Bitcoin stamps are similar to ERC-1155 semi-homogeneous tokens or digital collectibles.
However, they are stored directly on Bitcoin Unspent Transaction Outputs (UTXOs), which are recorded directly in the BTC transfer data - not in the witness data like Ordinals. Because of this, the gas cost of Stamp/SRC-20's Mint is much higher than that of Inscriptions, so it has not been able to form a market effect like Ordinals.
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04 Summary
Inscriptions, BRC-20, tokens and NFTs on the Bitcoin network, from the perspective of the development history of the blockchain, are not innovative things, but most users enter the market after 18 years, and they are indeed new things son.
Just as the three factors of success summarized at the beginning of the article: innovation, narrative and gameplay, Ordinals did the right thing at the right time.
Having said that, the price of investment products must return to value after all. Is the price of the same type of old projects on par with Ordinals? Or is Ordinals going the other way, following in the footsteps of older products?
Or is Ordinals continuing to be an independent market following the old saying "Stirring the new but not the old"? It remains to be seen.
