Analysis of the Current Development Status of Bitcoin Ecosystem Projects

Kabir903

In the process of developing the Bitcoin ecosystem, we can see that Bitcoin currently faces two main challenges:

1. Low scalability of the Bitcoin network, requiring better scalability solutions to build applications on top of it.
2. Limited number of applications in the Bitcoin ecosystem, requiring some blockbuster applications/projects to attract more developers and foster innovation.

To address these challenges, the Bitcoin ecosystem is primarily focusing on three areas:

1. Asset issuance protocols.
2. Scalability solutions: On-chain scalability and Layer 2.
3. Infrastructure projects such as wallets and cross-chain bridges.

As the entire Bitcoin ecosystem is still in its early stages of development, with emerging applications like DeFi still in their infancy, this article will mainly analyze the development of the Bitcoin ecosystem in four aspects: asset issuance, on-chain scalability, Layer 2, and infrastructure.

**1. Asset Issuance Protocols**

The recent excitement in the Bitcoin ecosystem, starting from 2023, can be attributed to protocols like Ordinals and the introduction of BRC-20 tokens, which expanded Bitcoin's use cases beyond mere value storage and exchange.

In terms of asset issuance protocols, following Ordinals, various protocols like Atomicals, Runes, and PIPE have emerged to facilitate asset issuance on Bitcoin.

**Ordinals & BRC-20**

Let's first look at the Ordinals protocol. Essentially, Ordinals allow people to mint NFTs on Bitcoin, similar to those on Ethereum. The Bitcoin Punks and Ordinal punks, among others, are based on this protocol. Subsequently, the popular BRC-20 standard emerged, based on the Ordinals protocol, leading to the rise of the "Bitcoin summer" for these assets.

The Ordinals protocol was introduced in early 2023 by Casey Rodarmor. With a background in technical work at Google, Chaincode Labs, and Bitcoin Core, Casey became interested in NFTs in 2017. However, dissatisfied with building NFTs on Ethereum due to its perceived complexity, Casey abandoned the idea until early 2022 when he conceived the idea of implementing NFTs on Bitcoin.

The Ordinals protocol, inspired by Bitcoin's founder Satoshi Nakamoto's reference to something called "atomics" in the original Bitcoin codebase, aimed to make Bitcoin interesting again by allowing for NFTs. This protocol essentially assigns serial numbers to each Satoshi and supports attaching arbitrary content to individual Satoshis to create unique Bitcoin-native digital items called "inscriptions."

Through Ordinals, people can have NFTs on Bitcoin similar to Ethereum. The protocol involves two main elements:

1. Assigning serial numbers to Satoshis.
2. Attaching arbitrary content to Satoshis to create inscriptions.

Following the introduction of the Ordinals protocol, many interesting NFTs have been created, such as Oridinal punks and TwelveFold, with over 54 million Bitcoin inscriptions to date. Building upon the Ordinals protocol, BRC-20 was introduced, laying the groundwork for the subsequent surge of BRC-20 tokens.

Shri333

I didn't realize NFTs could be used like this.

Jafar224

I really can't keep up with the times.

Isha000

Here comes another unfamiliar knowledge.