The popularity of Bitcoin ecosystem since 2023 is inseparable from the promotion of Ordinals protocol and BRC-20, which allows Bitcoin, which was originally only used for value storage and exchange, to be used as a place for asset issuance, greatly broadening the use scenarios of Bitcoin.

In terms of asset issuance protocols, after Ordinals, various different types of protocols such as Atomicals, Runes, PIPE, etc. were born to help users and project parties issue assets in BTC.

1. Ordinals & BRC-20

First, let's take a look at the Ordinals protocol. In short, Ordinals is a protocol that enables people to mint NFTs similar to Ethereum on Bitcoin. The Bitcoin Punks and Ordinal punks that attracted attention at the beginning were minted based on this protocol; later, the BRC-20 standard that has been popular until now was also based on the Ordinals protocol, which opened the subsequent summer of inscriptions.

The birth of the Ordinals protocol can be traced back to the beginning of 2023 and was launched by Casey Rodarmor. He has been working in technology since 2010, and has worked at Google, Chaincode Labs, and Bitcoin core. He is now a co-host of SF Bitcoin BitDevs (a Bitcoin discussion community).

Casey has been interested in NFTs since 2017 and was inspired to use Solidity to develop Ethereum smart contracts, but because he did not like building NFTs on Ethereum and thought it was a "Goodberg machine" (implementing simple things in an overly complex way), he gave up building NFTs on Ethereum. In early 2022, he once again came up with the idea of ​​implementing NFTs on Bitcoin. In his research on Ordinals, he said that he was inspired by the fact that Bitcoin's founder Satoshi Nakamoto cited something called "atoms" in the original Bitcoin codebase. It can be seen that Casey's motivation was to make Bitcoin interesting again, so Ordinals was born.

So how does the Ordinals protocol implement Ordinal Inscriptions, commonly known as BTC NFTs? There are two core elements:

· The first element is to assign serial numbers to each Satoshis (Satoshi), implement the numbering of the smallest unit of Bitcoin, and track these Satoshis when transactions are spent, so that Satoshi can be non-homogeneous, which is a very creative approach.

· The second element is to support the attachment of any content to a single Satoshis, including text, pictures, videos, audio, etc., to create a unique Bitcoin native digital item-inscription (also commonly known as NFT).

By numbering Satoshi and attaching content, Ordinals allows people to have NFTs similar to Ethereum on Bitcoin.

Next, let's go into the technical details to better understand how Ordinals is implemented. In the first element of serial number allocation, a new serial number can only be born in a Coinbase Transaction (the first transaction in each block). Through the transfer of UTXO, we can trace back to the corresponding Coinbase transaction to determine the number of Satoshi in this UTXO. But it should be noted that this numbering system does not come from the Bitcoin chain, but is numbered by the off-chain indexer. So in essence, the off-chain community has developed a numbering system for Satoshi on the chain.

After the birth of the Ordinals protocol, many interesting NFTs have emerged, such as Oridinal punks, TwelveFold, etc. As of now, the number of Bitcoin inscriptions has exceeded 54 million. On the basis of the Oridinals protocol, BRC-20 was also born, opening the summer of BRC-20.

(Source: Dune - Total number of Ordinals inscriptions)

The BRC-20 protocol is based on the Ordinals protocol, and writes functions similar to ERC-20 Tokens into the script data, thereby realizing the process of Token deployment, minting and trading.

· Deploy tokens: Specify "deploy" in the script data, and indicate the token name, total issuance and quantity limit of each one. After the indexer recognizes the information of token deployment, it can start recording the minting and trading of the corresponding token.

· Token minting: specify "mint" in the script data, indicate the name and quantity of the mint token. After the indexer recognizes it, it adds the balance of the corresponding token of the recipient to the ledger.

· Token trading: specify "transfer" in the script data, indicate the name and quantity of the token. The indexer deducts the corresponding number of tokens from the sender's balance on the ledger and adds it to the balance of the recipient's address.

From the technical principle of minting, it can be seen that since the balance of BRC-20 tokens is engraved in the script data of the isolated witness, it cannot be recognized and recorded by the Bitcoin network, so the indexer needs to record the BRC-20 ledger locally. In essence, Ordinals only uses the Bitcoin network as a storage space, recording metadata and operation instructions on the chain, but the actual calculation and status update of all operations are processed off-chain.

After the birth of BRC-20, the entire inscription market exploded. BRC-20 occupies the vast majority of Ordinals asset types. As of January 2024, BRC-20 assets account for more than 70% of all Ordinals asset types. In addition, from the perspective of market value, the current market value of BRC-20 tokens has reached 2.6 billion US dollars, of which the leading token Ordi has a market value of 1.1 billion US dollars, and the market value of Sats is also around 1 billion US dollars. The emergence of BRC-20 tokens has brought a new booster to the Bitcoin ecosystem and even the Crypto world.

(Source: Dune - Ordinals The proportion of different asset types)

There are many reasons behind the popularity of BRC-20, and the core can be summarized into the following 2 aspects:

· Wealth-making effect: The explosion of Web3 protocols and projects is inseparable from the wealth-making effect, and BRC-20, as a new asset category on the BTC chain, has a natural appeal and can attract a large number of users' attention and occupy their minds.

· Fair Launch: BRC-20 inscriptions have the characteristics of fair launch, and no one is a natural dealer. Compared with traditional Web3 projects, Fair Launch allows retail investors to stand on the same starting line as VC in token investment, so that retail investors are more willing to participate in Fair Launch projects; even if some scientists want to maliciously swipe a large number of BRC-20 tokens, there is a casting cost.

In general, although the Ordinals protocol has been controversial in the Bitcoin community since its birth, it is believed that Bitcoin NFT and BRC-20 will rapidly increase the block size, resulting in higher requirements and fewer node operating equipment, thereby reducing the degree of decentralization; but from a positive perspective, the Ordinals protocol and BRC-20 have shown a new value use case for Bitcoin (in addition to digital gold), brought new vitality to the ecosystem, and attracted many developers to re-focus on and develop the Bitcoin ecosystem, and work hard in expansion, asset issuance and infrastructure.

1. Atomicals & ARC-20

The Atomiclas protocol was released by an anonymous developer in the Bitcoin community in September 2023. In essence, it hopes to achieve asset issuance, minting and trading without the need for an external indexing mechanism, and to build an asset issuance protocol that is more native and complete than the Ordinals protocol.

So what are the differences between the Atomicals protocol and the Ordinals protocol? The core technical differences can be summarized in the following two aspects:

· In terms of indexing, the Atomicals protocol does not use the mechanism of numbering Satoshi off-chain, but chooses to index in units of UXTO.

· In terms of content attachment or "engraving", the Atomicals protocol does not attach the content to the script data of the isolated witness of a single Satoshis, but engraves it in UXTO.

In addition, the Atomicals protocol also introduces a PoW mechanism, which controls the difficulty of mining by adjusting the length of the prefix characters. The minter needs to use the CPU to calculate the matching hash value, thereby achieving a fairer distribution method.

Under the Atomicals protocol, three types of assets are generated: NFT, ARC-20 Tokens, and Realm Names. Among them, Realm is an innovative domain name system on the Atomicals protocol. Unlike traditional domain names that add suffixes, Realm uses the domain name as a prefix.

Next, we will focus on analyzing ARC-20. Unlike BRC-20, which is based on the Ordinals protocol, ARC-20 is the token standard officially supported by the Atomicals protocol. Unlike BRC-20, which writes tokens into the script data of the isolated witness, ARC-20 is a colored coin mechanism. The registration information of the token is recorded on UXTO, and the transaction is completely processed by the BTC network. Therefore, it is different from BRC-20 in many aspects. For details, see the table below:

In general, the transactions of the Atomicals protocol rely on the BTC network, and will not repeatedly create a large number of meaningless transactions, which has a small impact on the transaction cost of the network; and it does not rely on the off-chain ledger to record transaction information, which is more decentralized; in addition, the transfer process only requires one transaction (while BRC-20 requires two transactions), so the transfer performance of ARC-20 is significantly higher than that of BRC-20.

However, on the other hand, unlike retail investors participating in fair launch, the mechanism of ARC-20 mining will cause the market to pay for miners to some extent, so the advantage in inscription fair launch will be weakened. In addition, it is also a challenge that ARC-20 tokens are difficult to prevent users from spending by mistake.

1. Runes & Pipe

As mentioned above, the emergence of BRC-20 has led to the generation of many meaningless UTXOs. Casey, the developer of Ordinals, was very dissatisfied with this, so he proposed the token protocol Runes based on the UTXO model in September 2023.

Overall, the Runes protocol is similar to the ARC-20 standard. Token data is also engraved in the UTXO script, and the transaction of tokens also depends on the BTC network. The difference is that the number of Runes can be defined, unlike the minimum precision of 1 in ARC-20.

However, the Rune protocol is currently only in the conceptual stage. One month after the Runes protocol was proposed, Benny, the founder of Trac, launched the Pipe protocol, which is basically the same as Rune; in addition, according to the founder Benny’s remarks in the official Discord, it is also hoped to support more asset types (similar to ERC-721 and ERC1155 assets on Ethereum)

1. BTC Stamps & SRC-20

BTC Stamps is a completely different asset issuance protocol from Ordinals. Since Ordinals data is stored in the script data of the segregated witness, it may be "pruned" by the full node and erased once the network hard forks. To address this risk, Twitter user @mikeinspace created the BTC Stamps protocol, which embeds data in an indivisible way in the blockchain by storing it in BTC's UTXO.

This integration ensures that data remains on the chain permanently, free from deletion or modification, making it more secure and tamper-proof. Once data is embedded as a Bitcoin Stamp, it is kept on the blockchain forever. This feature is invaluable for ensuring the security and integrity of data. It provides a powerful solution for applications that require unchangeable records, such as legal documents, digital art authentication, and historical archives.

From the specific technical details, the Stamps protocol uses the method of embedding base64 format image data in transaction output, encoding the binary content of the image into a base64 string, placing the string as the suffix of STAMP: in the transaction description key, and then broadcasting it to the Bitcoin ledger using the Counterparty protocol. This type of transaction splits the data into multiple transaction outputs and cannot be deleted by the full node, thus achieving permanent storage.

Under the Stamps protocol, the SRC-20 token standard also appeared, which is comparable to the BRC-20 token standard.

· In the BRC-20 standard, the protocol stores all transaction data in the data of the isolated witness. Since the adoption rate of Segwit is not 100%, there is a risk of pruning.

· In the SRC-20 standard, data is stored in UTXO, making it a permanent part of the blockchain and cannot be deleted.

Among them, BTC Stamps supports multiple types of assets, including NFT, FT, etc. The SRC-20 Token is one of the FT standards. It has the characteristics of more secure data storage and difficult to tamper with. However, the disadvantage is that the cost of minting is very expensive. Initially, the mint fee of SRC-20 was around 80U, which is several times the mint cost of BRC-20. However, on May 17 last year, after the SRC-21 standard upgrade, the cost of a single mint dropped to 30U, which is similar to the mint fee of ARC-20. However, after the reduction, the fee is still expensive, about 6 times that of BRC-20 token (the recent mint fee of BRC-20 is 4-5U).

Although the mint fee of SRC-20 is expensive, like ARC-20, SRC-20 only needs one transaction during the mint process; in contrast, the mint and transfer of BRC-20 tokens require two transactions to complete. When the network is smooth, the number of transactions has little impact, but once the network is congested, the time cost of initiating two transactions will increase significantly, and users need to pay more gas to speed up transactions. In addition, it is worth mentioning that SRC-20 Token supports 4 types of BTC addresses, including Legacy, Taproot, Nested SegWit and Native Segwit, while BRC-20 only supports Taproot addresses.

In general, SRC-20 tokens have obvious advantages over BRC-20 in terms of security and transaction convenience. The non-cuttable feature is very consistent with the needs of the Bitcoin community that focuses on security. Its free split feature is more flexible than the ARC-20 limit of 1 token per satoshi. On the other hand, transfer costs, file size and type restrictions are the challenges currently faced by SRC-20, and we also look forward to the future exploration and further development of SRC-20.

1. ORC-20

The ORC-20 standard aims to improve the use scenarios of BRC-20 tokens and optimize the existing problems of BRC-20. On the one hand, the current BRC-20 tokens can only be sold in the secondary market, and the total amount of tokens cannot be changed. There is no way to activate the entire system like ERC-20 by staking and issuing additional tokens.

On the other hand, BRC-20 tokens rely heavily on external indexers for indexing and accounting. In addition, there may be double-spending attacks. For example, if a BRC-20 token has been minted, it is invalid to mint additional identical tokens using the mint function according to the BRC-20 token standard, but since the transaction pays fees to the Bitcoin network, this minting will still be recorded. Therefore, it is completely dependent on external indexers to determine which inscription is valid or invalid. For example, in April 2023, a hacker performed a double-spending attack in the early stages of Unisat's development. Fortunately, it was repaired in time and did not expand the impact.

In order to solve the dilemma of BRC-20, the ORC-20 standard came into being. ORC-20 is compatible with the BRC-20 standard and improves adaptability, scalability and security, as well as eliminating the possibility of double spending.

In terms of technical logic, ORC-20 is a JSON file added to the Bitcoin blockchain, just like BRC-20 tokens, with the following differences:

· ORC-20 has no restrictions on names and namespaces, and has flexible keys. In addition, ORC-20 supports a wider range of JSON-formatted data formats, and all ORC-20 data is case-insensitive.

· BRC-20 has a maximum minting value and an immutable supply after initial deployment, while the ORC-20 protocol allows the initial value and maximum minting value of the issuance to be changed.

· ORC-20 transactions use the UTXO model, where the sender specifies the amount the receiver receives and the remaining balance to be sent to himself. For example, if you have 3333 ORC-20 tokens and want to send 2222 tokens to someone, you will also send 1111 to yourself as a new "input". The process of this entire model is the same as the process of Bitcoin UTXO. If the two steps are not completed, the transaction can be canceled midway; since UTXO can only be used once in the UTXO model, double payment is fundamentally prevented.

· ORC-20 tokens add ID identification when deployed, and even tokens with the same name can be distinguished by ID.

Simply put, ORC-20 can be regarded as an upgraded version of BRC-20, which gives BRC-20 tokens higher flexibility and richer economic models. Due to ORC-20's compatibility with BRC-20, it is also easy to package BRC-20 tokens into ORC-20 tokens.

1. Taproot assets

Taproot assets is an asset issuance protocol launched by Lightning Labs, the second-layer network development team of Bitcoin, and is also a protocol directly integrated with the Lightning Network. Its core features and current status can be summarized in the following three aspects:

· Completely based on UTXO, it means that it can be well integrated with Bitcoin native technologies such as RGB and Lightning.

· Unlike Atomicals, Taproot assets, like the Runes protocol, allow users to customize the number of token transactions and create or transfer multiple tokens in a single transaction.

· Directly integrated with the Lightning Network, users can use Taproot transactions to start a Lightning channel and deposit Bitcoin and Taproot Assets into the Lightning channel in a single Bitcoin transaction, thereby reducing transaction costs.

However, it should be noted that there are also some disadvantages at present:

· There is a risk of malicious behavior: Taproot Assets metadata is not stored on the chain, but relies on the off-chain indexer to maintain the state, requiring additional trust assumptions. Data is stored locally or in the Universe (a collection of servers containing historical data and verification information for specific assets) to maintain token ownership.

· Not a fair launch: Users cannot mint tokens on the Bitcoin network themselves, but all tokens are issued by the project party and transferred to the Lightning Network. The issuance and distribution are controlled by the project party, which essentially loses the characteristics of fair launch.

Elizabeth Stark, co-founder of Lightning Labs, is committed to leading the Bitcoin revival through Taproot Assets while promoting the Lightning Network to become a multi-asset network. Due to the native integration of Taproot Assets and Lightning, users do not need to cross-chain assets to side chains or other Layer2s. They can directly deposit Taproot Assets into Lightning channels for trading, making transactions more convenient.

1. Summary of current situation analysis

In summary, the birth of the Oridinals protocol and the BRC-20 token standard has brought about a craze for inscriptions, and has also made people turn their attention to asset issuance protocols on Bitcoin. A variety of asset issuance protocols such as Atomicals, Runes, BTC Stamps, and Taproot Assets have emerged, and ARC-20, SRC-20, and ORC-20 have also been produced.

In addition to the mainstream asset issuance protocols introduced above, there are many asset protocols that are also being conceived and developed. For example, BRC-100 is a decentralized computing protocol based on the Ordinals theory, hoping to enrich the use scenarios of assets and support the development of applications such as DeFi and GameFi; the BRC-420 standard is similar to ERC-1155, which can combine multiple inscriptions into a complex asset, so that there are more application scenarios in games and metaverse (for example, the ERC-1155 protocol is suitable for game scenarios of the combination of NFT and FT.); even some memecoin communities have begun to launch new asset protocols on BTC (for example, the Dogecoin community launched DRC-20), presenting a situation of flourishing.

From the current status of the project, the current asset issuance protocols can be divided into BRC-20 and UTXO. The former includes BRC-20 and the upgraded and expanded version of BRC20, ORC-20, which engraves data in the script data of the isolated witness and relies on the off-chain indexer for indexing and accounting; the latter mainly includes ARC-20, SRC-20, Runes and Pipe’s desired asset types, as well as Taproot Assets.

The popularity of Bitcoin ecosystem since 2023 is inseparable from the promotion of Ordinals protocol and BRC-20, which allows Bitcoin, which was originally only used for value storage and exchange, to be used as a place for asset issuance, greatly broadening the use scenarios of Bitcoin.

In terms of asset issuance protocols, after Ordinals, various different types of protocols such as Atomicals, Runes, PIPE, etc. were born to help users and project parties issue assets in BTC.

1. Ordinals & BRC-20

First, let's take a look at the Ordinals protocol. In short, Ordinals is a protocol that enables people to mint NFTs similar to Ethereum on Bitcoin. The Bitcoin Punks and Ordinal punks that attracted attention at the beginning were minted based on this protocol; later, the BRC-20 standard that has been popular until now was also based on the Ordinals protocol, which opened the subsequent summer of inscriptions.

The birth of the Ordinals protocol can be traced back to the beginning of 2023 and was launched by Casey Rodarmor. He has been working in technology since 2010, and has worked at Google, Chaincode Labs, and Bitcoin core. He is now a co-host of SF Bitcoin BitDevs (a Bitcoin discussion community).

Casey has been interested in NFTs since 2017 and was inspired to use Solidity to develop Ethereum smart contracts, but because he did not like building NFTs on Ethereum and thought it was a "Goodberg machine" (implementing simple things in an overly complex way), he gave up building NFTs on Ethereum. In early 2022, he once again came up with the idea of ​​implementing NFTs on Bitcoin. In his research on Ordinals, he said that he was inspired by the fact that Bitcoin's founder Satoshi Nakamoto cited something called "atoms" in the original Bitcoin codebase. It can be seen that Casey's motivation was to make Bitcoin interesting again, so Ordinals was born.

So how does the Ordinals protocol implement Ordinal Inscriptions, commonly known as BTC NFTs? There are two core elements:

· The first element is to assign serial numbers to each Satoshis (Satoshi), implement the numbering of the smallest unit of Bitcoin, and track these Satoshis when transactions are spent, so that Satoshi can be non-homogeneous, which is a very creative approach.

· The second element is to support the attachment of any content to a single Satoshis, including text, pictures, videos, audio, etc., to create a unique Bitcoin native digital item-inscription (also commonly known as NFT).

By numbering Satoshi and attaching content, Ordinals allows people to have NFTs similar to Ethereum on Bitcoin.

Next, let's go into the technical details to better understand how Ordinals is implemented. In the first element of serial number allocation, a new serial number can only be born in a Coinbase Transaction (the first transaction in each block). Through the transfer of UTXO, we can trace back to the corresponding Coinbase transaction to determine the number of Satoshi in this UTXO. But it should be noted that this numbering system does not come from the Bitcoin chain, but is numbered by the off-chain indexer. So in essence, the off-chain community has developed a numbering system for Satoshi on the chain.

After the birth of the Ordinals protocol, many interesting NFTs have emerged, such as Oridinal punks, TwelveFold, etc. As of now, the number of Bitcoin inscriptions has exceeded 54 million. On the basis of the Oridinals protocol, BRC-20 was also born, opening the summer of BRC-20.

(Source: Dune - Total number of Ordinals inscriptions)

The BRC-20 protocol is based on the Ordinals protocol, and writes functions similar to ERC-20 Tokens into the script data, thereby realizing the process of Token deployment, minting and trading.

· Deploy tokens: Specify "deploy" in the script data, and indicate the token name, total issuance and quantity limit of each one. After the indexer recognizes the information of token deployment, it can start recording the minting and trading of the corresponding token.

· Token minting: specify "mint" in the script data, indicate the name and quantity of the mint token. After the indexer recognizes it, it adds the balance of the corresponding token of the recipient to the ledger.

· Token trading: specify "transfer" in the script data, indicate the name and quantity of the token. The indexer deducts the corresponding number of tokens from the sender's balance on the ledger and adds it to the balance of the recipient's address.

From the technical principle of minting, it can be seen that since the balance of BRC-20 tokens is engraved in the script data of the isolated witness, it cannot be recognized and recorded by the Bitcoin network, so the indexer needs to record the BRC-20 ledger locally. In essence, Ordinals only uses the Bitcoin network as a storage space, recording metadata and operation instructions on the chain, but the actual calculation and status update of all operations are processed off-chain.

After the birth of BRC-20, the entire inscription market exploded. BRC-20 occupies the vast majority of Ordinals asset types. As of January 2024, BRC-20 assets account for more than 70% of all Ordinals asset types. In addition, from the perspective of market value, the current market value of BRC-20 tokens has reached 2.6 billion US dollars, of which the leading token Ordi has a market value of 1.1 billion US dollars, and the market value of Sats is also around 1 billion US dollars. The emergence of BRC-20 tokens has brought a new booster to the Bitcoin ecosystem and even the Crypto world.

(Source: Dune - Ordinals The proportion of different asset types)

There are many reasons behind the popularity of BRC-20, and the core can be summarized into the following 2 aspects:

· Wealth-making effect: The explosion of Web3 protocols and projects is inseparable from the wealth-making effect, and BRC-20, as a new asset category on the BTC chain, has a natural appeal and can attract a large number of users' attention and occupy their minds.

· Fair Launch: BRC-20 inscriptions have the characteristics of fair launch, and no one is a natural dealer. Compared with traditional Web3 projects, Fair Launch allows retail investors to stand on the same starting line as VC in token investment, so that retail investors are more willing to participate in Fair Launch projects; even if some scientists want to maliciously swipe a large number of BRC-20 tokens, there is a casting cost.

In general, although the Ordinals protocol has been controversial in the Bitcoin community since its birth, it is believed that Bitcoin NFT and BRC-20 will rapidly increase the block size, resulting in higher requirements and fewer node operating equipment, thereby reducing the degree of decentralization; but from a positive perspective, the Ordinals protocol and BRC-20 have shown a new value use case for Bitcoin (in addition to digital gold), brought new vitality to the ecosystem, and attracted many developers to re-focus on and develop the Bitcoin ecosystem, and work hard in expansion, asset issuance and infrastructure.

1. Atomicals & ARC-20

The Atomiclas protocol was released by an anonymous developer in the Bitcoin community in September 2023. In essence, it hopes to achieve asset issuance, minting and trading without the need for an external indexing mechanism, and to build an asset issuance protocol that is more native and complete than the Ordinals protocol.

So what are the differences between the Atomicals protocol and the Ordinals protocol? The core technical differences can be summarized in the following two aspects:

· In terms of indexing, the Atomicals protocol does not use the mechanism of numbering Satoshi off-chain, but chooses to index in units of UXTO.

· In terms of content attachment or "engraving", the Atomicals protocol does not attach the content to the script data of the isolated witness of a single Satoshis, but engraves it in UXTO.

In addition, the Atomicals protocol also introduces a PoW mechanism, which controls the difficulty of mining by adjusting the length of the prefix characters. The minter needs to use the CPU to calculate the matching hash value, thereby achieving a fairer distribution method.

Under the Atomicals protocol, three types of assets are generated: NFT, ARC-20 Tokens, and Realm Names. Among them, Realm is an innovative domain name system on the Atomicals protocol. Unlike traditional domain names that add suffixes, Realm uses the domain name as a prefix.

Next, we will focus on analyzing ARC-20. Unlike BRC-20, which is based on the Ordinals protocol, ARC-20 is the token standard officially supported by the Atomicals protocol. Unlike BRC-20, which writes tokens into the script data of the isolated witness, ARC-20 is a colored coin mechanism. The registration information of the token is recorded on UXTO, and the transaction is completely processed by the BTC network. Therefore, it is different from BRC-20 in many aspects. For details, see the table below:

In general, the transactions of the Atomicals protocol rely on the BTC network, and will not repeatedly create a large number of meaningless transactions, which has a small impact on the transaction cost of the network; and it does not rely on the off-chain ledger to record transaction information, which is more decentralized; in addition, the transfer process only requires one transaction (while BRC-20 requires two transactions), so the transfer performance of ARC-20 is significantly higher than that of BRC-20.

However, on the other hand, unlike retail investors participating in fair launch, the mechanism of ARC-20 mining will cause the market to pay for miners to some extent, so the advantage in inscription fair launch will be weakened. In addition, it is also a challenge that ARC-20 tokens are difficult to prevent users from spending by mistake.

1. Runes & Pipe

As mentioned above, the emergence of BRC-20 has led to the generation of many meaningless UTXOs. Casey, the developer of Ordinals, was very dissatisfied with this, so he proposed the token protocol Runes based on the UTXO model in September 2023.

Overall, the Runes protocol is similar to the ARC-20 standard. Token data is also engraved in the UTXO script, and the transaction of tokens also depends on the BTC network. The difference is that the number of Runes can be defined, unlike the minimum precision of 1 in ARC-20.

However, the Rune protocol is currently only in the conceptual stage. One month after the Runes protocol was proposed, Benny, the founder of Trac, launched the Pipe protocol, which is basically the same as Rune; in addition, according to the founder Benny’s remarks in the official Discord, it is also hoped to support more asset types (similar to ERC-721 and ERC1155 assets on Ethereum)

1. BTC Stamps & SRC-20

BTC Stamps is a completely different asset issuance protocol from Ordinals. Since Ordinals data is stored in the script data of the segregated witness, it may be "pruned" by the full node and erased once the network hard forks. To address this risk, Twitter user @mikeinspace created the BTC Stamps protocol, which embeds data in an indivisible way in the blockchain by storing it in BTC's UTXO.

This integration ensures that data remains on the chain permanently, free from deletion or modification, making it more secure and tamper-proof. Once data is embedded as a Bitcoin Stamp, it is kept on the blockchain forever. This feature is invaluable for ensuring the security and integrity of data. It provides a powerful solution for applications that require unchangeable records, such as legal documents, digital art authentication, and historical archives.

From the specific technical details, the Stamps protocol uses the method of embedding base64 format image data in transaction output, encoding the binary content of the image into a base64 string, placing the string as the suffix of STAMP: in the transaction description key, and then broadcasting it to the Bitcoin ledger using the Counterparty protocol. This type of transaction splits the data into multiple transaction outputs and cannot be deleted by the full node, thus achieving permanent storage.

Under the Stamps protocol, the SRC-20 token standard also appeared, which is comparable to the BRC-20 token standard.

· In the BRC-20 standard, the protocol stores all transaction data in the data of the isolated witness. Since the adoption rate of Segwit is not 100%, there is a risk of pruning.

· In the SRC-20 standard, data is stored in UTXO, making it a permanent part of the blockchain and cannot be deleted.

Among them, BTC Stamps supports multiple types of assets, including NFT, FT, etc. The SRC-20 Token is one of the FT standards. It has the characteristics of more secure data storage and difficult to tamper with. However, the disadvantage is that the cost of minting is very expensive. Initially, the mint fee of SRC-20 was around 80U, which is several times the mint cost of BRC-20. However, on May 17 last year, after the SRC-21 standard upgrade, the cost of a single mint dropped to 30U, which is similar to the mint fee of ARC-20. However, after the reduction, the fee is still expensive, about 6 times that of BRC-20 token (the recent mint fee of BRC-20 is 4-5U).

Although the mint fee of SRC-20 is expensive, like ARC-20, SRC-20 only needs one transaction during the mint process; in contrast, the mint and transfer of BRC-20 tokens require two transactions to complete. When the network is smooth, the number of transactions has little impact, but once the network is congested, the time cost of initiating two transactions will increase significantly, and users need to pay more gas to speed up transactions. In addition, it is worth mentioning that SRC-20 Token supports 4 types of BTC addresses, including Legacy, Taproot, Nested SegWit and Native Segwit, while BRC-20 only supports Taproot addresses.

In general, SRC-20 tokens have obvious advantages over BRC-20 in terms of security and transaction convenience. The non-cuttable feature is very consistent with the needs of the Bitcoin community that focuses on security. Its free split feature is more flexible than the ARC-20 limit of 1 token per satoshi. On the other hand, transfer costs, file size and type restrictions are the challenges currently faced by SRC-20, and we also look forward to the future exploration and further development of SRC-20.

1. ORC-20

The ORC-20 standard aims to improve the use scenarios of BRC-20 tokens and optimize the existing problems of BRC-20. On the one hand, the current BRC-20 tokens can only be sold in the secondary market, and the total amount of tokens cannot be changed. There is no way to activate the entire system like ERC-20 by staking and issuing additional tokens.

On the other hand, BRC-20 tokens rely heavily on external indexers for indexing and accounting. In addition, there may be double-spending attacks. For example, if a BRC-20 token has been minted, it is invalid to mint additional identical tokens using the mint function according to the BRC-20 token standard, but since the transaction pays fees to the Bitcoin network, this minting will still be recorded. Therefore, it is completely dependent on external indexers to determine which inscription is valid or invalid. For example, in April 2023, a hacker performed a double-spending attack in the early stages of Unisat's development. Fortunately, it was repaired in time and did not expand the impact.

In order to solve the dilemma of BRC-20, the ORC-20 standard came into being. ORC-20 is compatible with the BRC-20 standard and improves adaptability, scalability and security, as well as eliminating the possibility of double spending.

In terms of technical logic, ORC-20 is a JSON file added to the Bitcoin blockchain, just like BRC-20 tokens, with the following differences:

· ORC-20 has no restrictions on names and namespaces, and has flexible keys. In addition, ORC-20 supports a wider range of JSON-formatted data formats, and all ORC-20 data is case-insensitive.

· BRC-20 has a maximum minting value and an immutable supply after initial deployment, while the ORC-20 protocol allows the initial value and maximum minting value of the issuance to be changed.

· ORC-20 transactions use the UTXO model, where the sender specifies the amount the receiver receives and the remaining balance to be sent to himself. For example, if you have 3333 ORC-20 tokens and want to send 2222 tokens to someone, you will also send 1111 to yourself as a new "input". The process of this entire model is the same as the process of Bitcoin UTXO. If the two steps are not completed, the transaction can be canceled midway; since UTXO can only be used once in the UTXO model, double payment is fundamentally prevented.

· ORC-20 tokens add ID identification when deployed, and even tokens with the same name can be distinguished by ID.

Simply put, ORC-20 can be regarded as an upgraded version of BRC-20, which gives BRC-20 tokens higher flexibility and richer economic models. Due to ORC-20's compatibility with BRC-20, it is also easy to package BRC-20 tokens into ORC-20 tokens.

1. Taproot assets

Taproot assets is an asset issuance protocol launched by Lightning Labs, the second-layer network development team of Bitcoin, and is also a protocol directly integrated with the Lightning Network. Its core features and current status can be summarized in the following three aspects:

· Completely based on UTXO, it means that it can be well integrated with Bitcoin native technologies such as RGB and Lightning.

· Unlike Atomicals, Taproot assets, like the Runes protocol, allow users to customize the number of token transactions and create or transfer multiple tokens in a single transaction.

· Directly integrated with the Lightning Network, users can use Taproot transactions to start a Lightning channel and deposit Bitcoin and Taproot Assets into the Lightning channel in a single Bitcoin transaction, thereby reducing transaction costs.

However, it should be noted that there are also some disadvantages at present:

· There is a risk of malicious behavior: Taproot Assets metadata is not stored on the chain, but relies on the off-chain indexer to maintain the state, requiring additional trust assumptions. Data is stored locally or in the Universe (a collection of servers containing historical data and verification information for specific assets) to maintain token ownership.

· Not a fair launch: Users cannot mint tokens on the Bitcoin network themselves, but all tokens are issued by the project party and transferred to the Lightning Network. The issuance and distribution are controlled by the project party, which essentially loses the characteristics of fair launch.

Elizabeth Stark, co-founder of Lightning Labs, is committed to leading the Bitcoin revival through Taproot Assets while promoting the Lightning Network to become a multi-asset network. Due to the native integration of Taproot Assets and Lightning, users do not need to cross-chain assets to side chains or other Layer2s. They can directly deposit Taproot Assets into Lightning channels for trading, making transactions more convenient.

1. Summary of current situation analysis

In summary, the birth of the Oridinals protocol and the BRC-20 token standard has brought about a craze for inscriptions, and has also made people turn their attention to asset issuance protocols on Bitcoin. A variety of asset issuance protocols such as Atomicals, Runes, BTC Stamps, and Taproot Assets have emerged, and ARC-20, SRC-20, and ORC-20 have also been produced.

In addition to the mainstream asset issuance protocols introduced above, there are many asset protocols that are also being conceived and developed. For example, BRC-100 is a decentralized computing protocol based on the Ordinals theory, hoping to enrich the use scenarios of assets and support the development of applications such as DeFi and GameFi; the BRC-420 standard is similar to ERC-1155, which can combine multiple inscriptions into a complex asset, so that there are more application scenarios in games and metaverse (for example, the ERC-1155 protocol is suitable for game scenarios of the combination of NFT and FT.); even some memecoin communities have begun to launch new asset protocols on BTC (for example, the Dogecoin community launched DRC-20), presenting a situation of flourishing.

From the current status of the project, the current asset issuance protocols can be divided into BRC-20 and UTXO. The former includes BRC-20 and the upgraded and expanded version of BRC20, ORC-20, which engraves data in the script data of the isolated witness and relies on the off-chain indexer for indexing and accounting; the latter mainly includes ARC-20, SRC-20, Runes and Pipe’s desired asset types, as well as Taproot Assets.