The "underestimated" BTC ecosystem: the big players, value and history behind it

“Ordinals marks the return of builder culture!”

On July 7, Ethereum founder Vitalik Buterin praised the development of Ordinals and BRC-20 in his Twitter Space “What Bitcoin Can Learn from Ethereum”, believing that they are a counterattack against the “stagnation politics” in the Bitcoin ecosystem, allowing the ecosystem to revive a culture of “actually doing things” for builders.

It has been 14 years since Bitcoin was launched in 2009. During this period, the participation of miners, the gradual emergence of trading platforms/Lightning Network/RGB/STX and other platforms and innovations have allowed more and more retailers to accept Bitcoin payments, and Bitcoin has gradually become known to more people.

But from the perspective of Bitcoin ecology, it has been tepid until Ordinals and BRC20 came out like thunder. A large number of developers poured in, and the OKX Web3 team began to provide support for the development of Bitcoin from a technical perspective. This is also the first time that a development team with an exchange background has participated in the construction of Bitcoin ecological infrastructure. The Bitcoin ecology has once again returned to the center of the crypto narrative stage.

What is the long-term value of the Bitcoin ecosystem? Who are the "big players" behind it? This article will take you to understand the supporters behind Bitcoin, its long-term value and historical context.

1. Origin of Ordinals

When talking about the Bitcoin ecosystem today, Ordinals are indispensable.

In December 2022, software engineer Casey Rodarmor released the NFT protocol "Ordinals". On January 20 of this year, the Ordinals protocol released V4, officially introducing NFTs to the Bitcoin network through Ordinals and Inscriptions.

Bitcoin NFT is not a new concept. In the past, there have been a large number of NFTs on Bitcoin's second-layer networks such as STX, but Ordinals NFTs are native to Bitcoin. They work without changing the Bitcoin protocol, do not rely on the second-layer network, and are backward compatible with the network.

CryptoPunks, which was launched in June 2017, is one of the earliest NFT projects on Ethereum. It is regarded by many investors as the Bitcoin of NFT. On the Bitcoin network, it has also welcomed its own Punks.

On February 9, 2023, Bitcoin Punks was minted on the Ordinals protocol, and the inscription number was ranked in the first 40K, which is very early. It is worth noting that in early March, the OKX NFT market launched the NFT collection, which also kicked off the intersection of OKX and BTC ecology.

Just as a large number of blue-chip projects have emerged in the Ethereum NFT ecosystem, a large number of well-known projects have emerged in the Bitcoin NFT in a very short period of time, such as TwelveFold, Taproot Wizard, Bitcoin Frogs, etc.

According to the transaction data of BTC NFT on OKX on July 18, Bitcoin Frogs' transaction volume is in an absolute leading position.

If Ethereum was popular first for Tokens and then for NFTs, then the Ordinals ecosystem took the opposite path.

Inspired by the Ordinals protocol, Twitter user @domodata created the Bitcoin experimental alternative token standard BRC-20 on March 8, 2023. The first BRC-20 token contract deployed the "ORDI" token, with a minting limit of 1,000 at a time and a total of 21 million.

Although demodata believes that BRC-20 is just an interesting social experiment, in the eyes of "speculators", this groundbreaking sexy narrative is undoubtedly the best hype target.

Since ORDI, various BRC-20 tokens have sprung up like mushrooms after a rain. According to the OKX Web3 wallet, as of July 18, 2023, 613 BRC-20 tokens have been launched on the platform.

Under the strong market popularity, BRC-20 is also constantly innovating and iterating, and various derivative protocols and standards have emerged one after another.

ORC-20: An improved protocol for BRC-20 developed by OrcDAO, which aims to improve the functionality of BRC-20.

BRC-20S: Proposed by the OKX Web3 team, it is an extended version of the BRC-20 protocol, introducing equity operation functions such as deposits, minting, and withdrawals. According to the proposal, users can pledge their own BRC-20 tokens and Bitcoin and receive corresponding BRC-20S tokens in return.

BRC-21: Proposed by Alexei Zamyatin, founder of the cross-chain interoperability project Interlay, to introduce fully decentralized cross-chain assets to the Bitcoin network and use them in the Lightning Network.

BRC-721: An experimental standard for issuing non-fungible tokens (NFTs) on the Bitcoin network, providing more functionality and flexibility by addressing the limitations of native Ordinals NFTs. For example, BRC-721 can support saving images in off-chain services such as IPFS.

2. The “supporters” behind the scenes

Behind the increasingly prosperous Bitcoin ecosystem, what forces are building the infrastructure of this new business?

According to the Dune data panel, among the trading platforms of the Ordinals ecosystem, OKX/Unisat/Magic eden have long occupied the top three positions. Among them, the OKX Web3 Ordinals market has become the market with the largest trading volume, accounting for more than 70% of the market share. Due to its fee-free policy, it has also attracted some volume-boosting projects, but it still occupies about 40% of the market share after being blocked.

Unisat, a first in the industry.

The emergence of Unisat met the BRC-20 transaction needs and provided a venue for liquidity. BRC-20 tokens such as ORDI were able to experience their first wave of explosion, thus attracting the attention of the entire network.

Looking back, the Unisat team’s decision to enter this field was extremely correct. They entered the market when the infrastructure of the Bitcoin ecosystem market was still barren and bleak, bet on the incremental market rather than the existing market, and knew how to leverage and use emerging grand narratives to gain traffic.

OKX, coming from behind, is firmly rooted in the ecosystem.

On May 20, OKX became the first exchange to launch ORDI in real time.

Currently, the OKX Web3 wallet already supports BRC-20 trading market, BRC-20 Token transactions, BTC cross-chain swaps, Ordinals inscriptions and BRC-20 Token minting, Ordinals NFT transactions and other functions, and officially launched the BRC20 token staking function on July 19.

In addition to the construction of infrastructure such as trading tools, OKX Web3 wallet's support for the Bitcoin ecosystem goes even deeper into the protocol standard level.

BRC-20S, an extended version of the BRC-20 protocol led by OKX, introduces equity operation functions such as deposits, minting and withdrawals. Users can pledge their own BRC-20 tokens and Bitcoin and receive corresponding returns.

"BRC-20 Baicai", a PhD in economics and Bitcoin ecosystem enthusiast , believes that OKX's move is an attempt to copy DeFi Summer. BRC-20 only has a transfer function, and BRC-20S provides a staking function. Therefore, new projects can completely distribute project tokens by staking BRC-20 tokens such as Ordi to attract early users.

“OKX’s BRC30 (now renamed BRC20-S) protocol did not touch BRC-20, nor did it promote it in the name of BRC21. This is a gentle attempt. OKX did not force the construction of the BRC ecosystem on its own, nor did it block the way for community developers such as Domo to improve BRC-20. It just provided a possibility for the realization of a semi-centralized BRC DeFi for compatibility. This is the approach of a true builder.”

From wallet tools, browsers to trading markets and protocol standards, OKX has become the first trading platform in history to provide technical support for the development of the Bitcoin network.

But all this did not happen overnight. Jason Lau, Chief Innovation Officer of OKX, once said in an interview with the media, "OKX noticed the BTC ecosystem very early on, and went through several stages from discovery, research, to pessimism, internal discussions and disagreements, to fully embracing the BTC ecosystem at the end of April."

Why did OKX finally choose to fully embrace the Bitcoin ecosystem?

Jason Lau believes that zero-knowledge proof, MPC multi-signature wallet, and BTC ecology are the three major mainstream narratives at present, and the BTC ecology narrative may have the most potential.

“BTC has always been considered digital gold in the past, but based on the Ordinals protocol, users can mint NFTs on the Bitcoin mainnet, and the original data of these NFTs will never be lost. This opens the door to future innovations and possibilities, including the introduction of BRC-20 and BRC-20-S, which may lead to a real explosion of Bitcoin in the future.”

In addition, Jason Lau also revealed that OKX's Web3 wallet will launch a decentralized liquidity market next, which is an innovation similar to the Lightning Network level. This technology allows buyers and sellers to complete transactions through self-custody without the help of any third-party services.

3. What is the value of the Bitcoin ecosystem?

Today, OKX has gradually taken a leading position in the Bitcoin ecosystem market. Trading BTC NFT and BRC-20 in the OKX Web3 wallet has become a habit. However, whether it is BTC NFT or BRC-20, or even Bitcoin Layer2 such as STX, it always faces many doubts.

In the view of Bitcoin fundamentalists, Ordinals destroy the narrative logic of Bitcoin, fill the main chain with a bunch of garbage, and cause congestion on the chain. Bitcoin should maintain the purity of "value storage".

So, is there any long-term value in building an ecosystem on Bitcoin?

In the six months since the launch of the Ordinals mainnet at the end of January this year, the market seems to have given an answer to this question. The value of the Bitcoin ecosystem does not rely on a group of people's online debates, but is determined from the bottom up by developers and users voting with code and on-chain behavior/assets.

The "stagnation politics" in the Bitcoin ecosystem criticized by Vitalik can be described in popular Chinese terms as lying down and waiting for Bitcoin to break new highs.

Today, Ethereum has expanded its narrative from smart contracts to "value storage", and lying low may not bring a better tomorrow for Bitcoin.

In our view, Bitcoin ecosystems such as Ordinals are still undervalued and present long-term construction and investment opportunities.

## 1. The most powerful consensus foundation

When we talk about blockchain and cryptocurrency, the first thing that comes to mind is Bitcoin. Whether it is the decentralized "cultural orthodoxy" or security, the Bitcoin ecosystem has the broadest consensus basis, which is precisely where the "cultural premium" and moat lie, and it is also an important point that distinguishes it from other ecosystems.

## 2. The most powerful capital accumulation

For a new public chain ecosystem, it is necessary to consider how to "attract investment" and attract foreign capital, but the Bitcoin ecosystem does not have this problem. At present, the market value of Bitcoin exceeds 580 billion US dollars, and more than 6.4 billion US dollars of Bitcoin has been transferred to public chain ecosystems such as Ethereum, providing them with nutrients. For the Bitcoin ecosystem, it naturally has the strongest capital accumulation, and what needs to be considered is how to activate the existing assets.

Source: CryptoFlows

## 3. Urgent needs of the market and industry

In the crypto market that is supported by expectations, the market needs a new narrative to enter a new sector rotation. As Bitcoin is halved again, Bitcoin miners will face more arduous survival challenges in the future. The development of the Bitcoin ecosystem can bring a large amount of transaction fees, giving miners sufficient motivation to maintain the security of the Bitcoin network, which is also Satoshi Nakamoto's original idea.

## 4. The influx of developer ecosystem

Driven by market prospects and wealth effects, more and more developers are pouring into the Bitcoin ecosystem, from Ordinals to BTC Layer2. Among them are former developers of ecosystems such as Solana/BSV, as well as those supporting the construction of the OKX Web3 team.

On July 17, Star Xu said on social media: "OKX Web3 wallet has begun to open source the signature algorithms of all chains. We hope to make a small contribution to the industry."

It is thanks to the efforts of these innovators and builders that Bitcoin's technological development and ecological prosperity will change with each passing day.

On July 19, there are less than 282 days left until the next Bitcoin halving.

After 282 days, the reward for a single Bitcoin mining block will be halved to 3.125 coins, and the Bitcoin ecosystem will usher in new narrative expectations.

Of course, they are faced with one difficult problem after another. For example, due to BRC-20, the Bitcoin network has become extremely congested, and how to expand the capacity of Bitcoin is once again on the table.

Ethereum founder Vitalik Buterin said on Twitter Space, "If we want Bitcoin to be more than just a payment method, it needs scaling solutions like Plasma or ZK Rollup, both of which have been tested on Ethereum."

BTC has been running on the road of value storage. Compared with the Ethereum ecosystem, the Bitcoin ecosystem is still in the exploration period of crossing the river by feeling the stones. Everything is unknown. For those who bravely move forward, perhaps we can give more tolerance and encouragement.

The crypto world is a game for the brave that rewards innovation and construction.