Will the coming of each "X" RC-20 standard be the future of Bitcoin?

In January 2023, Bitcoin Ordinals (ordinal numbers) were launched to create Bitcoin NFTs by adding information to a single satoshi through “engraving”. The protocol allows text, images, and videos to be put into the Bitcoin blockchain, and things that were previously only possible in a blockchain with smart contracts are now possible in the Bitcoin network.

Domo subsequently created the BRC-20 token standard based on the Ordinals protocol, a new experiment in creating and transferring tokens by publishing text on Satoshi Nakamoto. The standard gained momentum in April, as the number of BRC-20 tokens increased and transaction fees on the Bitcoin chain rose. At its peak, the Bitcoin network even had more than 500,000 pending transactions.

As the BRC-20 token becomes more popular, the token value also increases. ORDI is the first token in the BRC-20 standard. Its initial price was US$0.1 and rose 310 times to US$31 at its peak, with a market valuation of approximately US$650 million. The formulation of the BRC-20 standard has rekindled people’s interest in Bitcoin. With the popularity of the BRC20 concept, various token standards have sprung up. Two of the more noteworthy ones are ORC-20 and SRC-20. . During the 2023 Singapore Token2049, these experiments were also discussed specifically at the Ordinals Summit hosted by Birthday Research.

Why do these innovative experiments appear on the Bitcoin network, and what potential does the development of these token standards bring to the future development of the Bitcoin network. In the article Aiming for the Next Bull Market Opportunity: Ordinals Ecology, we have discussed in detail the concepts related to the Ordinals protocol and the development process of the BRC-20 token standard, and also introduced related projects, tokens and generation platforms. In this article, we will discuss the development of token standards after BRC-20 and the impact of these “X” RC-20 token standards on the future development of the Bitcoin blockchain.

ORC-20

ORC-20, like BRC-20, is a token standard that runs on the Bitcoin blockchain. It is encoded as a JSON (Java Object Notation) file and logged on Satoshi with a serial number. ORC-20 is an upgraded version of the BRC-20 standard, which solves some of its shortcomings.

Although BRC-20 can create tokens using the Ordinals protocol on the Bitcoin network, as a very early project, BRC-20 still has many shortcomings: First, the BRC20 standard sets the token supply and maximum minting amount that cannot be changed. The model has poor flexibility, which limits the development of tokens; secondly, token naming is limited to 4 digits; finally, the transfer and accounting of BRC-20 tokens completely rely on external centralized indexers. Since the inscription process itself simply writes random data to Sat, the consensus-level Bitcoin network cannot prevent inscriptions that violate the BRC-20 standard. In other words, additional minted non-BRC-20 standards will also be recorded, which will lead to hackers to conduct double-spend attacks on BRC-20 tokens, causing economic losses.

In order to solve the above problems, the ORC20 standard came into being. ORC-20 is also an open standard launched by OrcDAO and aims to enhance the functionality of Ordinals tokens on the Bitcoin network to improve the current BRC-20. ORC20 removes token naming restrictions and increases the upgradeability of tokens, allowing projects to do more empowerment based on tokens. At the same time, advanced functions such as setting royalties and setting whitelists have been added. ORC-20 is backward compatible with BRC-20 and improves adaptability, scalability and security, eliminating the possibility of duplication of consumption.

1. Use the UTXO model of ORC-20 to ensure that there is no repeated consumption during the transaction process, solving the BRC-20 double-spend problem (when sending a transaction, the balance will also be sent to the change address as a transaction) ).

2. The initial supply and maximum coin amount can be changed, and the form of coin issuance is more flexible.

3. To solve the four-letter naming limitation of BRC-20, ORC-20 can use names of any size.

4. Can be customized, such as transaction tax, royalties, special minting address, token image, token ID, token information URL, etc.

5. Allow deployers to subsequently upgrade ORC-20.

6. Allow transaction cancellation. Use “op”: “cancel” to cancel the nonce transaction.

7. Allow deployed BRC-20 coins to be transferred to ORC-20. Only the deployer of the BRC-20 can operate the transfer order.

However, since the infrastructure of ORC20 has not yet been fully developed and the wealth effect is still concentrated on BRC20, ORC20 has currently received very limited attention. Since its launch in May, the total transaction volume involving ORC-20 has been approximately 370,000, with fees of approximately 24.17 BTC.

It should also be noted that according to the official description, ORC-20, like BRC-20, is also an experimental project. There is no guarantee that tokens created using this standard will have any value or utility. Currently, only the first deployed project, ORC, is worth it. focus on.

Summary of ORC-20 common tools:

ORC-20 token list:

Mint tools:

Statistics: http://

SRC20

Although ORC-20 solves some shortcomings of BRC-20, it still uses JSON files and does not solve the centralization problem of BRC-20. Moreover, the BRC-20 token issuance process is further complicated, making it inconvenient for promotion and use. At the same time, the emergence of ORC-20 is more like the emotional product of BRC-20, and it did not bring a particularly eye-catching technical iteration, so that similar competing products such as SRC-20 appeared at the same time.

Unlike BRC-20 and ORC-20, which are based on Ordinals theory, SRC-20 uses Bitcoin Stamps to write text. Bitcoin Stamps are similar to ERC-1155 semi-fungible tokens or digital collectibles in that they are stored directly on Bitcoin’s Unspent Transaction Outputs (UTXOs) – which are the unspent Bitcoins when a transaction is made between two addresses. Records instead of being stored in witness data like Ordinals. This difference creates an important feature of Stamps, which is that it can always exist on the Bitcoin chain, and all nodes must synchronize the data, which enhances data immutability. Similar to BRC-20, the text used to deploy, mint, and transfer SRC-20 tokens is also in JSON format.

Bitcoin Stamps are minted based on the Counterparty protocol, an open source P2P protocol built on the Bitcoin blockchain in 2014. Users burn BTC in exchange for the native Counterparty (XCP) token they pay when executing smart contracts.

In order to store up to 80 bytes of data, the protocol uses the “OP_Return” function. If the file is larger than 80 bytes, the data will be stored in multisigs across multiple outputs.

To mint Bitcoin tokens, Counterparty converts the image to text and encodes it into a Base64 file, appending “Stamp:” in front of the text. The protocol then broadcasts the encoded file to the Bitcoin network, where it is isolated, verified, and recompiled to restore the original image.

The current market controversy over Bitcoin Stamps mainly includes discussions of immutability and bloated UTXO sets. When comparing Bitcoin Stamps to Ordinals, Bitcoin Stamps are less prunable because the image data is stored in Bitcoin’s UTXO rather than its witness data. Discussions about UTXO set inflation largely revolve around the uncertainty of the increasing hardware requirements of users running Bitcoin nodes.

Beyond this, there is overall disagreement among various members of the Bitcoin community on the purpose of using block space for digital artwork. There has been ongoing debate over the size of blocks on the Bitcoin blockchain and how the increase in settled transactions on the chain has bogged down the network, leading to increased transaction fees. Some community members have proposed increasing the block size, but many believe this would make the network more vulnerable to attacks and increase costs for miners due to increased data storage requirements.

For investors, the most important factor is whether the project has investment value. As cryptocurrencies gradually merge with traditional finance, a project’s profitability depends on two key factors: hot money and cash flow. Hot money determines whether a project has enough funds for development, and cash flow determines whether the project can be profitable. Hot money is the primary factor as it creates FOMO and attracts a large number of retail investors to invest too much money into the project, with the result that the project’s book value and token price increase.

Currently, the largest token on the BRC-20 platform is Ordi, with a market capitalization of $65 million as of September 13, 2023. BRC-20 trading platform Unisat is valued at US$1 billion. The main source of hot money is OKX’s acquisition of Unisat, which has a very obvious first-mover advantage. Since there is currently no market to support SRC20 and the only way to trade it is through OTC, SRC-20 still needs a lot of support. Therefore, the project mainly attracted retail investors who missed out on the opportunity of BRC-20’s Ordi token. Since the entry of hot money is limited, careful observation is still needed. Although Binance conducted an investigation into SRC-20, it did not have substantive financial measures like OKX did for BRC-20, and the market is currently still leaning towards BRC-20.

Summary of SRC-20 common tools:

BitcoinStamps related information:

SRC-20 token related information:

Mint, deploy and transfer SRC-20 tokens: src20/

Tip: Due to the high latency of SRC-20 and the flooding of the Conterparty protocol with non-digital assets, the Stampchain team has temporarily halted new minting.

The impact of the “X” RC-20 experiment on the Bitcoin network

As we have seen before, the development of the BRC-20 token has had a considerable impact on the Bitcoin network. While these coins have attracted much of the Bitcoin community, they have caused the Bitcoin blockchain to grind to a halt multiple times. After a long time, there were more than 500,000 transactions waiting to be processed on the network, with transaction fees exceeding $30. Although the miners and validator communities benefit greatly, such incidents have caused concern among members of the Bitcoin community, with BRC-20 tokens generally believed to have a negative impact on Bitcoin:

1. BRC-20 tokens clog the Bitcoin network: With the addition of BRC-20 tokens, transaction data for these tokens must now be saved on all Bitcoin blocks.

2. BRC-20 Token Destroys Bitcoin’s Credibility: Many other cryptocurrencies have lost credibility due to the large number of scams happening on the blockchain, while Bitcoin does not have to deal with scam projects happening on its blockchain Negative news, although Bitcoin is currently not related to any BRC-20 project, it may be affected by this aspect in the future.

3. BRC-20 Tokens Lack of Purpose: The biggest problem with BRC-20 tokens is the lack of purpose for these tokens. ERC-20 tokens and ERC-721 tokens have at least some functionality as they have smart contract compatibility. BRC-20 tokens do not have smart contract compatibility, so they have little use other than creating tokens on the Bitcoin network.

BRC-20 tokens have become very popular in a short period of time. Much of this growth is due to Ethereum’s gas fees being so high that many investors can’t buy meme coins on Ethereum, so they flock to the Bitcoin chain. It’s hard to say whether BRC-20 tokens are a fad or a true cryptocurrency game-changer. The biggest hurdle they have to overcome is the lack of smart contract functionality. BRC-20 tokens currently have something more important than smart contracts. ——meme. In other words, BRC-20 tokens have widespread support because they are based on a blockchain with widespread popularity. With this in mind, BRC-20 tokens are likely to become part of Bitcoin.

In the long term, the surge in BRC-20 tokens may attract a large number of investors who have not previously interacted with cryptocurrencies to Bitcoin, which may have a positive impact on Bitcoin. We have seen how BRC-20 token development has progressed in the months since its launch. As the token standard has the functionality (deployment, minting, and transfer) needed to facilitate the emerging ecosystem, interoperability with other blockchain systems and digital assets also opens up more possibilities, and future developments may also allow for these experiments. Tokens interact with Ethereum smart contracts, are used as collateral on DeFi platforms or are incorporated into dApps.

Maybe we just need some time to move to the next stage, and for crypto enthusiasts with faith, this is an opportunity to try out the emerging field of Web3, which may become an important part of the future decentralized economy.

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