Ordinals and the BRC20 Market: 2024 Outlook

Understanding the ordinal mechanism is crucial for deep exploration of BRC-20 tokens. Essentially, 1 Satoshi is the smallest unit of Bitcoin, and 100 million Satoshis equal 1 Bitcoin. The ordinal technology gives each Satoshi a unique serial number, allowing it to be tracked and traded through inscriptions.

Every satoshi can inscribe data through Bitcoin transactions, such as images, text, or videos. Once the transaction is confirmed, this data will be permanently stored on the Bitcoin blockchain, giving each satoshi uniqueness and non-fungibility.

Since its launch in January 2023, the Ordinals inscription activity has shown significant growth, and the Bitcoin NFT market has thrived as a result. The advantage of Ordinals NFTs is that they can be created directly on the Bitcoin blockchain without relying on other platforms.

In March 2023, a new token standard BRC-20 was introduced, pioneering the way for fungible tokens (FT) on the Bitcoin blockchain. Unlike the ERC-20 standard, which relies on smart contracts, BRC-20 utilizes ordinal inscription technology to achieve token deployment, minting, and transfer by directly writing JSON data into satoshis.

It is worth noting that although BRC-20 is a type of ordinal inscription, not all ordinals are BRC-20 tokens. Standard ordinals can inscribe any information, while BRC-20 tokens always contain JSON data, which makes BRC-20 tokens fungible.

According to data platform statistics, the market value of BRC-20 is currently about $3.4 billion, growing 3.4 times in 7 months. Market-leading tokens include the first minted BRC-20 token ORDI, as well as SATS and others.

The advantages of BRC-20 include:

• Enhance Bitcoin's functionality, surpassing its "digital gold" positioning.
• Inheriting the high security of the Bitcoin PoW system
• Completely on-chain, no additional file system required
• Can attract a large user base from the Bitcoin network
• Compatible with existing Bitcoin infrastructure

However, BRC-20 also has some limitations:

• Limited by the block size of Bitcoin and transaction throughput, scalability issues may arise.
• The smart contract functionality is limited, making it difficult to implement complex features.
• There are challenges in interoperability with other blockchain networks.
• In the early experimental stage, support tools are limited, and there are certain risks.

BRC-20 brings new opportunities to the Bitcoin ecosystem by giving tokens fungibility. As the Bitcoin L2 ecosystem develops, more DeFi projects focusing on BRC-20 may emerge in 2024. Although BRC-20 is still in its early stages, its development trajectory somewhat resembles that of early Ethereum. The growing interest from users, project parties, developers, and investors in BRC-20 highlights the potential of this technology.