BRC-20 and inscriptions have taken the East by storm—what's really going on?

Author: THORHARTVIGSEN

Translation: Yvonne, Mars Finance

A new week, a new story. If you've been active on Twitter over the past two weeks, you've likely already heard about it.

In this article, we’ll break down these emerging trends and discuss their broader implications.

Introduction

With the potential ETF approval date drawing closer, interest in the Bitcoin ecosystem has surged, as many anticipate a rise in Bitcoin’s asset value.

Global Interest in BRC-20 and Ordinals

Google search popularity for "BRC-20" and "btc ordinals" globally over the past 12 months.

Over the past 12 months, global Google search popularity for "BRC-20" and "btc ordinals".

Earlier this year, Ordinals and BRC-20 tokens built on its underlying technology regained the spotlight—this time bringing greater utility and disruption.

Regional Interest in BRC-20 and Ordinals

Average Google search interest for "BRC-20" and "btc ordinals" over the past 12 months, ranked by country.

Anecdotal evidence from various online communities and search engine data suggest that the breakout of these trends occurred primarily in China. Middle-aged individuals—and even grandmothers—have started learning how to buy and trade BRC-20 tokens.

As always, these topics also became hot on Twitter, with many joining in. Major exchanges have taken notice and begun listing BRC-20 tokens one after another.

Ordinals and Inscriptions

Launched in early 2023, Ordinals is a method for tracking and transferring the smallest denomination of Bitcoin (¹₁₀₀₀₀₀₀₀), known as a “sat” (short for “Satoshi”), assigning each sat a sequence number based on the order in which it was mined.

Without requiring smart contracts, Satoshis can be inscribed with arbitrary content (such as text or images), turning them into tokenless NFTs fully hosted on-chain. The inscription process requires only two transactions and can subsequently be displayed via off-chain indexers.

In fact, these inscriptions are behind the dramatic surge in Bitcoin network transaction fees and slower processing times.

The chain became congested, fees skyrocketed. Minters were overwhelmed as front-ends couldn't keep up with the speed of pending transactions—collections were sold out before they could even be processed. Did this mark the end of the frenzy? Not at all.

Instead, a massive exodus followed, with users fleeing to other chains. This, in turn, subjected many networks to unintended stress tests.

Unsurprisingly, nearly all blockchains passed the test, except for a few—including Arbitrum and TON—that completely “crashed” and had to pause temporarily to recover.

Take Avalanche, for example—minting activities once accounted for 90% of on-chain activity, with similar figures reported across other platforms. The situation became so dire that even testnets came under attack.

But how exactly are inscriptions being leveraged beyond Bitcoin? jtriley.eth provided a detailed summary on Twitter explaining the methodology:

This means inscriptions can be created by sending a 0-value transaction to oneself and including the desired media in the transaction note field. For transfers, the same logic applies, except the note field contains the hash of the previously created inscription transaction.

The widespread use of inscriptions beyond Bitcoin is evident—chains like Solana and Avalanche have completely dominated in terms of transaction volume.

Use Cases

Now that we’ve covered the technical aspects of Ordinals and how inscriptions work, let’s explore how people are actually using these Ordinals creatively.

Please note: the security of the following implementations is questionable and has not undergone thorough real-world testing.

NFTs

Although Bitcoin NFTs already had existing infrastructure, Ordinals offered an alternative approach and was immediately embraced by the community.

Ordinals NFTs differ significantly from the NFTs widely used on chains like Ethereum.

Compared to traditional NFTs, these digital artworks are far cheaper to produce and rely on a completely different tech stack and methodology. By tracking individual sats, developers and artists can create unique digital art instead of typical profile picture collections. From a collector’s perspective, this mechanism opens up new possibilities for determining rarity based on on-chain data.

An example of putting this concept into practice is BITMAP, a metaverse protocol offering plots represented by Bitcoin block numbers.

BRC-20

Emerging as an experimental (emphasis on experimental) token standard for creating fungible tokens on Bitcoin, BRC-20 represents a significant step toward expanding the Bitcoin ecosystem.

Many BRC-20 tokens have bridged to Ethereum through various bridges, attracting numerous speculators. The most famous tokens delivered double-digit daily returns, while Bitcoin trading activity gradually cooled after a rebound.

To date, the MultiBit bridge has cumulatively processed $611.86 million in bridged volume, supporting four different chains.

CBRC-20

CBRC-20 is another fungible token standard on Bitcoin, conceptually similar to BRC-20 but with several major improvements attributable to the use of a newer version of the Ordinals client.

• Reduced inscription costs through a more efficient embedding process;

• Simplified indexing;

• Making it a reliable alternative to BRC-20, worth watching in the foreseeable future.

Conclusion

Inscriptions and their applications are likely here to stay. They’ve already made a profound market impact in a remarkably short time, introducing alternative approaches to existing concepts. With ample room for improvement and innovation, there will be many attractive opportunities ahead—so there’s no need to dive in blindly without first understanding the landscape.