Ordinals and BRC20 Market: 2024 Outlook

The Bitcoin ecosystem is undergoing a transformation driven by Ordinals and BRC20. Before delving into BRC-20 tokens, we need to first understand how the ordinal (Ordinal) works.

Ordinal technology allows for each satoshi of Bitcoin to be assigned a unique serial number, enabling the tracking and trading of individual satoshis. This technology allows users to inscribe various data on a single satoshi, such as images, text, or videos. Once the transaction is confirmed, this data is permanently stored on the Bitcoin blockchain, making each satoshi unique and non-fungible.

Since the launch of the Ordinals technology in January 2023, the inscription activity has shown explosive growth, and the Bitcoin NFT market has also thrived. The main 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 emerged. This is an experimental standard for implementing fungible tokens (FT) on the Bitcoin blockchain. Unlike Ethereum's ERC-20 standard, BRC-20 does not rely on smart contracts but instead utilizes ordinal inscription technology. The deployment, minting, and transfer of BRC-20 tokens are all achieved by directly writing JSON data into satoshis.

It is worth noting that while BRC-20 is a type of ordinal inscription, not all ordinals are BRC-20 tokens. Standard Bitcoin ordinals can inscribe any information, whereas BRC-20 tokens are specifically designed to inscribe JSON data. In short, BRC-20 gives tokens fungibility, which is the main distinction from standard ordinals.

According to market data, the current market value of BRC-20 is approximately $3.4 billion, having grown 3.4 times in 7 months. Notable tokens in the market include ORDI(, the first minted BRC-20 token ), and SATS, among others.

The advantages of BRC-20 include:

• Provides a tokenization function for Bitcoin that goes beyond "digital gold".
• Inherited the high security of the Bitcoin proof-of-work ( PoW ) system.
• Fully operates on-chain, no additional file system required
• Can attract a large user base for the Bitcoin network
• Has good interoperability with existing Bitcoin infrastructure ( such as wallets and exchanges ).

However, BRC-20 also faces some challenges:

• Due to the limitations of Bitcoin's block size and transaction throughput, scalability issues may arise.
• Compared to ERC-20, the smart contract functionality is relatively limited.
• There are challenges in interoperability with other blockchain networks.
• As an emerging technology, it is still in the experimental stage, with limited support tools and certain risks involved.

Nevertheless, BRC-20 has created new possibilities in the Bitcoin ecosystem by introducing fungibility. With the continuous development of Bitcoin Layer 2 solutions, we are likely to see more decentralized finance ( DeFi ) projects emerging in 2024 that are centered around BRC-20.

Although BRC-20 is still in its early stages, its development trajectory somewhat resembles the rise of Ethereum. The growing interest from users, project teams, developers, and investors in BRC-20 fully demonstrates the potential of this technology. With the continuous improvement of the ecosystem, BRC-20 is expected to play an increasingly important role in the future cryptocurrency landscape.