Long story short
With the launch of ORDI on Binance, the field of Bitcoin ecological accounting is developing rapidly, and various innovative technologies and concepts are constantly emerging. The upgrades of SegWit and Taproot provide strong support for Bitcoin's programmability and scalability, and promote ordinals, BRC-20 and atomic numbers. These technological advances not only improve the transaction capacity and flexibility of the Bitcoin network, but also create additional sources of income for miners.
introduce
With ORDI launching Binance Exchange, we are witnessing the beginning of a new era: technological innovation and market prosperity led by the Bitcoin ecosystem. From the inscription at the beginning of the year to the craze again, the rapid development of the Bitcoin ecosystem and the huge growth in value have attracted widespread attention. But what is behind this that drives the rapid expansion of the BTC ecosystem?
technology
Before exploring this issue, we first need to understand several key technological advances in the Bitcoin ecosystem.
Segwit is a key upgrade to the Bitcoin Core Protocol launched in 2017, designed to address Bitcoin's scaling challenges and specific vulnerabilities. It mainly facilitates more transactions by correcting transaction scalability issues and expanding the Bitcoin block size. Segwit introduces the concept of block weight, replacing the traditional block size limit, allowing a fully loaded block to accommodate approximately 2,700 transactions, a significant increase from the previous 1,650.
By the end of 2021, Taproot will be upgraded and the Bitcoin ecosystem will begin to support more complex scripts and data types, bringing great progress to BTC's programming and scalability. This provides a key opportunity for the Bitcoin ecosystem to explode in 2023.
The Taproot upgrade mainly includes changing the transaction confirmation method and introducing the Schnorr signature algorithm. The introduction of Schnorr signature brings many benefits, including better privacy protection, especially in multi-signature wallets. It allows all private keys to be compiled together, so that multiple signature transactions look the same as other transactions, thereby improving privacy. In addition, Schnorr's signature supports batch confirmation, making transactions across the entire network cheaper and faster.
Taproot also brings the potential for creating smart contracts to the Bitcoin network. While it may be more expensive and limited compared to platforms like Ethereum, enabling smart contract interactions on Bitcoin is huge, worth $700 billion, and could push smart contract technology mainstream.
Miners’ interests
From the perspective of miners' interests, recent data shows that with the rise of projects such as Ordinals and Atomicals, the Bitcoin inscription market is experiencing an unprecedented boom. Oklink on-chain data shows that Bitcoin miners' income has increased significantly in the past three months, especially in November, when the contribution of on-chain transaction fees increased from 2.4% on August 19 to 23.46% on November 16. This increase is mainly due to the launch of Ordinals transactions. This shows that the development of the Bitcoin inscription market has significantly increased the proportion of miners' fee income. When Bitcoin production decreases in April 2024, this proportion may reach 50%.
At present, since the US Bitcoin mines are in a loss-making state most of the time and the semiconductor industry is facing process bottlenecks, the competition for mining machine computing power has eased. Therefore, miners may use Bitcoin inscriptions as a new source of income. For example, less than a year after ORDINALS went online, more than 50,000 tokens were issued in the market, and the number of MINTs and transactions increased rapidly, which greatly promoted the increase in mining fee income.
The expansion of the inscription field not only promotes the growth of miners' income, but may also become the main driving force of the Bitcoin inscription field. However, miners are more concerned about the increase in the number of transactions rather than the fluctuation of inscription prices.
The combined effect of these factors has promoted the rapid development of the Bitcoin inscription industry. But we must also recognize that this development is not just a simple market boom, it represents a deep change and technological progress in the Bitcoin ecosystem. As Bitcoin continues to show strong potential in all aspects, we have reason to believe that the Bitcoin inscription field will become a key factor in promoting the development of the entire cryptocurrency industry.
Other public chain inscriptions
As the wealth effect of Bitcoin inscriptions spreads to other public chains, various "RC 20" tokens have begun to arouse heated discussions in the community, forming a FOMO phenomenon, including Doge inscriptions, BSC inscriptions, Litecoin inscriptions, BASE inscriptions, Polygon inscriptions, Solana inscriptions, etc.
In particular, on November 16, the GAS cost of the Polygon network rose sharply, reaching 1,800 GWEI, because the community discovered the PRC-20 standard token Pols deployed in May this year, with a total circulation of 21 million POLS.
Inspired by the missed Bitcoin Inscription token, community members have begun to "take some defensive measures". Compared with the high costs of BRC and ERC, the simple and low-cost Pols quickly attracted the attention of the community. Users can mint Pols by visiting and paying less than 0.05 matic.
The community also shared methods to collect batch acquisition functions (need to import wallet private keys) or script batch minting of Pol. Polygon’s low GAS fee is considered one of the advantages of Pols as an inscription token. If 21 million POLS are fully minted, Polygon may become the one with the largest number of inscriptions on all EVM chains, including Ethereum. This naturally reminds people of the BRC inscription token SATS, which has received widespread attention from the community due to its significant increase.
Future Opportunities
In March 2023, Galaxy Research and Mining predicted that the Ordinals market would reach a market value of $500 million by 2025, when there were only 260,000 runes. However, the current number of runes has reached 33 million, a 126-fold increase in just six months. In addition, the market value of ORDI has reached $400 million, and the market value of SATS has reached $300 million. This clearly shows that the forecast for the entire rune market has been greatly underestimated.
A large number of different protocol products have emerged in the industry, and miners are the main beneficiaries. According to Tokenview on-chain data monitoring, the daily transaction fee of the Bitcoin network has reached 11.6 million US dollars, surpassing Ethereum for the first time since 2020. As the Bitcoin halving approaches, miners are in urgent need of supplementary income.
Overall, the inscription field is expected to continue to witness technological innovation and promote the realization of more complex functions. The market is expected to continue to grow, bringing more investment and participation opportunities. At the same time, it can be foreseen that more innovative projects and protocols will emerge, further enriching the inscription ecology of public chains such as Bitcoin. Miners' income is also likely to continue to grow as the inscription industry provides new income opportunities.
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