01 Inscription,
The essence of BRC20 was recorded on the Bitcoin Genesis Block on January 3, 2009, when the first inscription on Bitcoin was recorded. Satoshi Nakamoto engraved the title of the front-page article of The Times on that day in hexadecimal on the chain - The Times 03/Jan/2009 Chancellor on brink of second bailout for banks (January 3, 2009, the Chancellor of the Exchequer was on the verge of implementing a second round of emergency assistance for banks). The two words "engraved" and "inscribed" are used because the information recorded on the decentralized blockchain with anti-fragility is like engraved on a hard stone, which will never be erased. In the past, some people also engraved words on the Bitcoin chain, 1314, and swore an oath of love to remember special information. Now, the issuance and circulation of tokens can be tracked by assigning serial numbers to the smallest unit of Bitcoin, Satoshi. If you think about it carefully, the current BRC20 and the ancient Yap Island stone coin have the same purpose.
There are actually quite a few very similar examples in modern society, which can also help us understand the inscription and BRC20: In 1990 and 1991, in order to commemorate the submission of Disney banknotes to the US government bill for approval and the first time they became circulating currency, a special $1 banknote was issued (with a first day cover, a Walt Disney image stamp and a postmark, with Mickey Mouse as the pattern).
Of course, there are also commemorative coins printed on different denominations of coins, such as the "Dragon Notes" that are being snapped up in China. With the help of the super anti-counterfeiting, independent numbering, and circulation of legal tender banknotes, these commemorative notes have become very unique collectibles. Obviously, a commemorative note with a face value of $1 is much greater than $1. The carrier of the inscription is to replace the banknotes with the smallest unit or minimum face value of Bitcoin: Satoshi. When some Satoshi are engraved with NFT patterns, BRC20 Token issuance, transaction and other script information, Bitcoin also gives these information special properties such as anti-counterfeiting and non-tampering. With these properties, the NFT and BRC20 engraved on Bitcoin have the strongest network in the encryption industry as a "backing", anti-fragility is full, and with the meme Fomo, the Bitcoin inscription craze is not like many new concepts that are short-lived, but has a certain vitality, and BRC20 even shows a spiral upward trend. Of course, the driving factors behind the inscription craze are not just these...
02
The driving force behind the inscription fever It is not easy to explain the logic behind the inscription fever phenomenon. It may not be as simple as we think. It is composed of at least the following factors: 1) meme: a mysterious force that is difficult to explain clearly. Fomo emotion is the main driving force of meme. Most memes are always sneered at by people as "air". However, perhaps it is precisely because it is "air" that it opens the ceiling of imagination compared to other things with detailed roadmaps and accurate concepts. It is no longer limited to the positioning of the white paper, but is considered to be endowed with consensus and value. Whether it is early Bitcoin or BRC20, it is air and not air. At this time, it is more of a carrier of emotional trend speculation.
This phenomenon has long existed in other markets. Therefore, when we see some special phenomenal hot events and figures, such as the Spring Festival Gala, some suddenly popular celebrities, and Musk’s tweets, there will be a lot of memes to carry people’s emotions in the short term. Whether it is fomo or gossip, as long as there is market demand, it will appear. Of course, there is also the support of some capital and institutions behind it.
2) BRC20 brings innovative tokens to the market BRC20 looks very similar to NFT but is not NFT, similar to homogeneous tokens but a little different. Compared with ERC20 (Ethereum's mainstream homogeneous token protocol), BRC20 seems to be more open and fair, and is backed by the consensus of the number one crypto asset. When ERC20 was popular in 2017, Ethereum's position was not particularly stable.
Compared with ERC721 (Ethereum's mainstream NFT protocol), BRC20 can be minted one by one like NFT, but it is easier to add liquidity, very convenient for homogeneous accounting, and can be directly listed on the trading pairs of major leading platforms, without the problem of NFT liquidity being easily exhausted in the past.
3) Bitcoin ecosystem expectations meme has been changing over the past few years, and now this thing is attached to the Bitcoin ecosystem that is about to emerge, it has become even more uncontrollable. Bitcoin's status as the big brother is as stable as Mount Tai, and it exists as a consensus totem in the crypto community. Bitcoin ecosystems such as BitcoinFi and Bitcoin NFT have actually been brewing for a long time. In fact, there have been voices and attempts to expand the function of digital gold since 2013, but due to the impossible triangle problem, the expansion has not been solved, and predecessors have been groping. Ethereum is also developed from the idea of expanding smart contracts proposed by Vitalik, who was still in the Bitcoin community in the early days. In recent years, the explosion of the Ethereum ecosystem and the implementation of Layer2 have stimulated the development of the Bitcoin ecosystem to a certain extent. The successful experience and path explored by the Ethereum ecosystem as a test field have given Bitcoin ecosystem developers a direction and sufficient confidence.
Therefore, based on the existing Bitcoin Segregated Witness and other extensions, the Ordinals protocol and BRC20 protocol, which were first implemented, successfully launched a combination of punches...
4) Pressure from halving and internal motivation of Bitcoin community Although the previous Bitcoin halvings were accompanied by a bull market, most people in the Bitcoin community know that the system rewards are getting less and less, and it is unlikely that block producers can maintain stability every time simply by relying on system rewards. Therefore, the Bitcoin community, including the block producer group, is eager for the Bitcoin ecosystem to prosper and solve this problem that affects the sustainable development of the Bitcoin system before the halving. On January 12, according to Dune data, the cumulative fee income from the casting of Bitcoin Ordinals inscriptions exceeded 5506 BTC, equivalent to US$254 million (calculated at the current price of 46032/BTC). Obviously, the inscriptions have begun to bring quite high returns to block producers, and block producers have also become one of the main beneficiaries of Bitcoin inscriptions, especially BRC20.
5) The end of the US dollar interest rate hike cycle in 2024 or even the entry into the interest rate cut channel means that the US dollar liquidity will increase and more funds will flow into the market. In addition, with the upcoming Bitcoin halving, the Bitcoin ecosystem expectations will rise further under the superposition of multiple major expected positives. The expected foreshadowing will bring more certainty to funds, and the sustainability of the inscription craze will be maximized again.
03 Will the Bitcoin Inscription meme, which is considered a vulnerability by core developers, return to zero? With the Bitcoin consensus as a backing, Bitcoin Inscription memes seem to have a good opportunity to develop at the right time and in the right place, but they are still questioned by some people, and many opponents have issued sharp criticisms. Recently, the attitude of some Bitcoin core developers has attracted the most attention, such as Luke Dashjr, who is a Bitcoin core developer and the founder of Eligis mining pool. Luke has previously denounced Inscription and BRC20 on social platforms many times, believing that Inscription is using a vulnerability in BitcoinCore to send spam to the blockchain. In short, Luke and other opponents want to treat these protocols as vulnerabilities and fix them. Subsequently, Luke submitted a relevant proposal. A stone stirs up a thousand waves! Because Bitcoin core developers hold the "power" to modify the Bitcoin client, many people think that Inscription is over, because once the "vulnerability" they claim is fixed, then the NFTs on the Ordinals protocol, including all BRC-20 Tokens, will be wiped out and directly return to zero.
However, the "loophole" theory and the panic of a few people did not cause a sharp fluctuation in the market. After a simple adjustment, some BRC20 even continued to rise "as if nothing had happened." So, in the face of opposition from core developers, why are people so calm? In fact, Bitcoin core developers are a large decentralized organization, and Luke is just one of them. It does not mean that if someone opposes this thing, Bitcoin core will make changes. Even if most people in Bitcoin core agree, it is not necessarily possible to successfully upgrade the client, because the power to upgrade the client is in the hands of block producers. In the Bitcoin community, the identities of block producers and developers also overlap. Inscriptions have long been closely related to their interests. Maintaining the stable and sustainable development of the inscription protocol is more beneficial than harmful to the Bitcoin ecosystem and most people in the Bitcoin community.
Most people are sure that Luke and other opponents will not be able to make waves. Even though Luke controls a mining pool, it should be noted that there are several mining pools with the largest computing power behind BRC20, and these mining pools actually represent the interests of block producers. According to recent news, as expected, Luke's proposal to ban inscriptions was rejected by many core developers. Bitcoin Core developer Ava Chow concluded that the proposal was so controversial that there was no need to continue discussing it. Existence is reasonable, and inscriptions will surely continue to exist under the consensus driven by strong interests.
04 Obviously, the inscription craze is not a coincidence. The Bitcoin community and ecosystem have been prepared for it, and this bottom-up innovation has surprised capital, from being arrogant to joining in. Even if BRC20 is not a perfect protocol, there may be better protocols to replace it in the future. But what is certain at present is that it has opened the door to the Bitcoin ecosystem, and the rise of the Bitcoin ecosystem is a foregone conclusion.
