Recently, various L2 and some NFT airdrop projects in the Bitcoin ecosystem are developing in full swing, but only inscriptions seem to be silent. From the beginning of this year to now, several leading inscriptions have not only not risen, but also fallen. How come this hot concept that attracted a large number of newcomers to enter the market last year is lacking in stamina? What about the recently popular Runes? Is it possible to reproduce the wealth-making effect of inscriptions in the early days? Let's talk about it today.
In June last year, I systematically introduced the new track of inscriptions on the official account and briefly reviewed the past and present of the inscription track.
In December 2022, Casey launched the Ordinals protocol. It assigns a unique serial number to each satoshi and tracks them in transactions. Anyone can use the Ordinals protocol to attach additional data to satoshis, including text, pictures, videos, and more. We can speculate that Casey's initial idea was most likely to make Ordinals an NFT issuance protocol. After all, Bitcoin mainnet transactions are expensive, slow, and do not support smart contracts. Peer-to-peer buying and selling of NFTs on the Bitcoin network is a more feasible solution. And using the Bitcoin network with the strongest consensus and the highest security to store NFT data, this eternal meaning sounds very sexy. However, the Ordinals protocol only gives everyone a solution to engrave data on satoshis. The protocol itself is completely open source. Open source means that anyone can use the protocol, and anyone can develop new protocols based on Ordinals. Therefore, community developers have begun to modify Ordinals.
In March 2023, an anonymous developer named domo launched BRC-20 based on the Ordinals protocol. BRC-20 stipulates that users can deploy, inscribe, and transfer tokens on the Bitcoin network using specified fields, which has achieved the unprecedented issuance of altcoins on Bitcoin. Because there are no smart contracts on Bitcoin, compared with the issuance method of Ethereum developers deploying tokens in advance and then formulating rules, the completely fair casting provided by BRC-20 has won the favor of retail investors. As a result, BRC-20, a technically backward issuance method, became popular twice last year, and the transaction volume of BRC-20 also dominated the entire Ordinals protocol.
However, the massive amount of transactions also immediately exposed the shortcomings of the Ordinals protocol: the protocol will generate junk UTXOs, causing congestion in the Bitcoin network. Although the Ordinals protocol is nominally the father of BRC20, Casey can't love this silly son who came out of nowhere. He almost ran to the community fitness equipment and shouted, domo, domo, I want to diss you. The main reason is that Casey himself hates altcoin transactions. His original words were 99% scams and MEMEs. Secondly, altcoin transactions tarnished his beloved Ordinals protocol. A protocol for issuing NFTs on Bitcoin was changed into a protocol for issuing altcoin FTs. It also generated a large amount of junk UTXOs that blocked the network. A large number of Bitcoin fundamentalists criticized the Ordinals and BRC20 protocols. Casey himself was afraid that he couldn't save face.
But now that things have come to this, diss BRC-20 will not stop the FOMO and enthusiasm of retail investors. Casey made up his mind secretly, although I think 99% of altcoins are scams, I now admit that altcoins are just like casinos, they will not disappear, and their existence is reasonable. Since everyone has the need to trade altcoins on the Bitcoin network, I might as well tailor a clean and simple FT issuance protocol for everyone, which can not only meet everyone's needs for deployment, minting, and forwarding on the Bitcoin network, but also will not bring additional burden to the Bitcoin network. Even a good token protocol may bring considerable transaction fee income to Bitcoin, attract more developers and users, and ultimately expand the use of Bitcoin.
So, last September, Casey released his idea for the Runes protocol, which is a new homogeneous token protocol on the Bitcoin chain. Compared with BRC-20, RGB, Taproot and other protocols, Runes is more concise and does not rely on off-chain indexes. Most importantly, Runes will not generate redundant junk UTXO.
The Runes protocol will be launched on the mainnet at Bitcoin block height 840,000, which is the time of BTC’s fourth halving. At present, the time is about April 20th in a few days.
Some friends may ask, is the inscription really dead after the rune comes out? Generally speaking, the competition between blockchain projects is divided into three steps, namely, the competition of technical paradigms, the competition of specific protocols, and the competition of tokens. For example, on Ethereum L2, Rollup first competes with Plasma, sidechain and other technical paradigms, and is more favored by VCs. Then there are the two major factions of zk and op and their specific protocols such as zkSync and Arbitrum. Finally, various project tokens compete with each other around specific empowerment, economic models and market makers.
However, since neither Rune nor Inscription has raised funds and has not released its own tokens, the competition is mainly focused on user acceptance and usage at the protocol level. Users are the least sensitive group to technical paradigms. For example, last year's ORC20, Stamp and other protocols, as improved protocols of BRC20, theoretically optimized some pain points of BRC20, but reality has proved that they did not win the consensus of users. I think this problem can be put into the field of public chain and MEME for consideration.
First of all, we think that both Inscription and Rune are asset protocols. It has been said before that Inscription is an expansion of Bitcoin, so we might as well regard them both as public chains that can issue MEME. Inscription, as the big brother, can be regarded as Ethereum, which has innovations in smart contracts, but has been criticized for high gas prices and tps congestion; Rune can be regarded as Solana, which has the latest technology, lower gas and higher processing speed.
When Solana came out, it was called the Ethereum killer. Isn’t the purpose of retail investors coming to the chain to copy MEME? Solana is cheap and smooth. Logically, MEME on Ethereum must have no room for growth. But the facts have proved that with the existence of many new public chains such as Solana, MEMEs that are ten thousand times more valuable such as PEPE and Troll can still be born on Ethereum.
Therefore, my point of view is that for MEME hype projects such as Rune Inscription, technological innovation is just a narrative, not the key to life and death. Why do people want to speculate MEME on Bitcoin? Isn’t it because they think it’s interesting? It has nothing to do with cheapness and convenience. After all, the gas and tps of any EVM public chain can beat inscriptions and runes. In addition, the attitude of Casey and many Bitcoin developers is not to block inscriptions, but to develop runes that are healthier for the Bitcoin network as an alternative.
Therefore, I think Inscriptions will not die. The future pattern of this track may be a three-way competition among Ordinals, Runes and Atomicals. This pattern is more like today's Ethereum, Solana and Base. Today, a troll appeared on Ethereum, and everyone hyped it up. The day after tomorrow, a boomerang appeared on Solana, and everyone rushed into the market again. The day after tomorrow, a BOLD may appear on Base.
People are more concerned about projects rather than protocols, and it depends on whether the projects can attract attention and create popularity. In the short term, Rune, as the orthodox sequel of Ordinal, has a number of projects such as Runestone and RSIC that are capable of making things happen. Everyone's attention is on Rune, so there will definitely be opportunities to get rich when the Rune mainnet is launched. However, in the long term, BRC20, as The First, is unlikely to decline.
Runes will be available this weekend
