Source: CoinWorld
Author: Web3 Sniffing Observation
Bitcoin has always been a leader in the blockchain field and remains the cryptocurrency with the largest market value. Since the second half of last year, the development of the Bitcoin ecosystem has shown explosive growth.
With the emergence of Ordinals protocol, BRC-20 and Bitcoin Inscription, people began to pay attention to the development of Bitcoin ecology and the possibility of expansion. Therefore, people's eyes are no longer limited to Bitcoin as an asset, but to see it as a more dynamic ecosystem, providing different ways to build decentralized applications and various speculative opportunities.
Since the birth of Bitcoin, many developers have been focusing on exploring asset issuance and expansion solutions, and are committed to expanding the Bitcoin network. The launch of Layer 2 is seen as a new expansion solution, hoping to build more applications on it. In addition, the popularity of inscriptions has made people pay more attention to the Bitcoin Layer 2 field, further promoting the development of the Bitcoin ecosystem.
This article will conduct an in-depth discussion from the dimensions of Bitcoin NFT, Ordinals market, Layer 2, etc., and analyze its current development status.
Current status of Bitcoin ecosystem
Bitcoin Ordinals Performance in the NFT Market
Ordinals is a protocol that enables people to mint NFTs on Bitcoin similar to those on Ethereum. In the past month, Bitcoin Ordinals has performed well in the NFT ecosystem, ranking second with a transaction volume of $130,912,638, surpassing Polygon and Solana, and second only to the Ethereum NFT ecosystem. This data shows that the Bitcoin ecosystem is increasingly important in the NFT market.
According to coingecko, currently popular Bitcoin NFTs include Ordinals Market, Quantum Cats, Bitcoin Puppets, NodeMonkes, etc.
Growth in the number of inscriptions
Inscriptions are Bitcoin native digital items (NFTs) issued based on the Ordinals protocol. With the birth of BRC-20, it quickly detonated the entire inscription market because it provided a convenient way to issue assets on the Bitcoin network.
Data shows that as of June 24, the number of inscriptions has exceeded 67 million, and there seems to be no sign of slowing down. This growth is mainly due to the support of BRC-20 tokens and mainstream wallets for the Ordinals protocol. Like UniSat, it allows retail investors to easily purchase Ordinals and BRC-20 tokens and put them on the chain, further promoting the prosperity of the inscription market.
Ordinals and Miner Income
The importance of Ordinals to Bitcoin is often underestimated because it introduces a new fee stream for miners. Due to the correlation between file size and fees, the cost of including data in a Bitcoin block can be high. Data shows that the total fees paid to miners by recording Ordinals have exceeded 6,865 BTC to date. This not only increases miners' income, but also further drives activity on the Bitcoin network.
Ordinals Marketplace
In the Ordinals market, OKX and Magic Eden have been competing for market dominance for most of the time. Magic Eden initially took the upper hand in the third quarter of last year, but began to face strong competition from OKX starting in August.
According to GeniiData data, as of June 24, 2024, OKX's daily trading volume was $2.059 million, Magic Eden's was $1.702 million, and UniSat's was $362,000. Currently, OKX ranks first and has the most Ordinals users.
The current status of Bitcoin Layer 2
Bitcoin Layer 2 technology has attracted much attention since the birth of Stacks in 2015, aiming to introduce smart contract functions to the Bitcoin network or enhance payment applications through sidechain or state channel technology. However, until 2023, the technology has not received widespread attention and application, and Bitcoin is mainly regarded as a value storage and investment tool, and the on-chain ecology is relatively barren.
2023 will become a turning point for Bitcoin Layer 2 technology. With the explosion of the mainnet asset issuance protocol, on-chain transaction activity has increased significantly, and the Bitcoin network fee rate once soared to 600sat/vB. At the same time, the emergence of a number of high-quality assets such as ordi, bitmap, nodemonkes, etc. has injected new vitality into the Bitcoin ecosystem.
Bitcoin Layer 2 projects around 2023 present different characteristics. Early projects mainly focus on bringing smart contract functions and scalability to Bitcoin, similar to Ethereum Layer 2 functions.
Since the beginning of this year, people have begun to realize the huge potential of Bitcoin Layer 2 in building diversified applications including DeFi, GameFi, NFT crypto art, etc. This year's new projects are more focused on meeting practical needs (such as pledge needs) and enhancing the liquidity and playability of high-quality assets. Although these projects have been questioned by some traditional forces, they have undoubtedly injected new impetus into the diversified development of the Bitcoin ecosystem. Overall, the Bitcoin ecosystem is still in its early stages, and Bitcoin Layer 2 will continue to drive innovation and growth of the Bitcoin network.
(Some popular Bitcoin Layer 2 projects)
Thoughts on Bitcoin Ecosystem
Currently, most applications in the Bitcoin ecosystem are imitations of existing Ethereum applications, lacking real innovation. This model can attract funds in the early stages, but without innovation, funds and attention will gradually fade. Although the Bitcoin ecosystem has taken shape and there are many applications, most of them are imitations of Ethereum applications.
Recently, Bitcoin ecosystem projects such as B² Network and Nervos CKB seem to have fallen into silence. The reason may not be simply that funds are flowing into the Ethereum ecosystem, but that the Bitcoin ecosystem has not yet developed powerful and innovative applications.
The development of Bitcoin Layer 2 can promote the diversification and activity of the Bitcoin ecosystem to a certain extent, but there are still many technical and trust challenges to overcome. In the future, whether the Bitcoin ecosystem can prosper in the long run depends on whether it can innovate on the existing basis and build unique and attractive applications.
