Original Author: August Cao Yihan, Song Hao, Dusko, Deng Xiaojuan, Nora, Tim Hu
Mentorship: Jademont, Elaine, Bill @Waterdrip Capital
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What is BRC-20?
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Mint and Transfer functions of BRC-20, source:https://domo-2.gitbook.io/brc-20-experiment/
BRC-20 issued tokens achieved the original idea of the encryption industry - everyone can simply issue tokens, the greatest value is that it is on Bitcoin, which occupies a part of Satoshi, these BRC-20 tokens are like Bitcoin The clone of the currency, Bitcoin gives it value. Of course, it can also be compared to issuing currency on RMB, which is similar to the RMB limited edition, and each BRC-20 is a bitcoin limited edition and has a basic bitcoin value.
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The first BRC-20 token Ordi deployed by @domodata, source:https://domo-2.gitbook.io/brc-20-experiment/
BRC-20 mainly provides three implementation standards for the issuance of tokens on the Bitcoin network, including deployment of BRC-20 tokens, mint mint, and transfer. Developers can complete the creation and issuance of BRC-20 tokens by following this standard.
The user can change the field after op to represent the operation performed. deploy indicates the deployment of tokens, mint indicates the casting of tokens, and transfer indicates the transfer of tokens; tick indicates the name of the token being executed. Users can Enter the name of the token being executed.
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BRC-20 Generation Background
Since the release of the Ordinals protocol, domo has minted his Twitter avatar into an NFT on BTC.
Domo then made statistics on the trading volume of the Ordinals market, and found that as of March 6 this year, its nft has reached a market trading volume of 6 million US dollars and 10,000 unique users, while the same product Opensea took 14 months to achieve With this goal, domo concluded that the Ordinals protocol will definitely be preserved, and it also made him discover the great potential of the Ordinals Market.
Twitter user @satsnames introduced the .sats namespace built on Bitcoin at the end of February this year. Its goal is to build a name ecosystem for Bitcoin, and it is built by Bitcoin users and completely developed based on Bitcoin. All names The state all lives on Bitcoin, and no one person is privileged. The general default is that the writer of the first name on Bitcoin owns that name, but anyone else may have a duplicate name (i.e. naming collisions), so the first is first rule is used to resolve this. Since the naming system was introduced, minted .sats accounted for 45% of minted Ordinals.
Twitter user @redphonecrypto explained the NFT on Bitcoin, and believes that it cannot be called NFT, but can be called digital artifacts. And gave negative reasons for the misunderstanding of Bitcoin inscriptions are just JPGs on Bitcoin, no innovation, no programmability, and will definitely die soon: ①Inscriptions can contain almost any content that modern web browsers can display. Media, such as: movies, games, web pages, etc., and JPG; ②The biggest use case is to simply publish text on Bitcoin, which can be copied and pasted, which makes this function a service similar to IPFS in the encrypted world③ Bitcoin inscriptions are similarly a database of immutable timestamps tx, they are numbered sequentially, the first inscription is always the first inscription, and it is associated with an immutable timestamp. Previously Bitcoin only stored timestamped tx, now it can store anything its users collectively imagine.
At the same time, it is believed that the NFT on Bitcoin is better than that on Ethereum in at least two aspects: (1) It is truly scarce (it cannot be minted infinitely like Ethereum) (2) it is guaranteed by the Bitcoin security mechanism POW. (3) Engraving on the chain (instead of linking to IPFS/Arweave/centralized servers). @redphonecrypto drew an inspiration from the sats file system, and looked forward to who would create a standard similar to BRC-20 to allow token issuance on Ordinals, and gave his own assumptions, as shown below:
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BRC-20 vs. ERC-20
BRC-20 is more like a special NFT, which states how many homogeneous tokens this NFT represents.
Advantages of BRC-20 over ERC-20:
1. A fairer distribution method. This is mainly due to the low programmability of the Bitcoin chain. The low programmability itself is the disadvantage of the Bitcoin chain, which cannot compare with Ethereum, which is Turing complete and capable of carrying smart contracts. However, this disadvantage makes it possible for BRC-20 to issue tokens without reservation, while erc-20 can be issued with tokens reserved.
2. Has fundamental value. BRC-20 is attached to Satoshi, so the minimum value of BRC-20 tokens can be considered as the value of a Satoshi, but erc-20 does not have the support of minimum value.
Disadvantages of BRC 20 compared to ERC 20:
1. The programmability is not high, and the original lack of smart contract support on the Bitcoin chain makes the defi scalability of BRC-20 not high.
2. BTC cannot reject invalid inscriptions. Inscriptions are data in json format, and Bitcoin nodes will not parse the data.
3. UniSat has a dominant position in determining the legitimacy of inscriptions and is not decentralized enough. UniSat already occupies a dominant position in the BRC-20 market. Since the content of BRC-20 is json data, tools are needed to interpret the data. UniSat plays the role of this interpreter, which is a manifestation of BRC-20s lack of decentralization.
In fact, two technical upgrades to the Bitcoin protocol in 2017 and 2021: Segregated Witness (SegWit) and Taproot increased the amount of stored data in a block, which provided the possibility for the emergence of Ordinals NFT, but they did not Not an upgrade to create Bitcoin NFTs.
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Schematic diagram of serialization of old and new transactions posted by David A. Harding, data source: https://medium.com/@dexx/debunking-three-misconceptions-about-segregated-witness-3bbf55c6f4de
The soft fork Taproot upgrade implemented in 2021 includes three BIPs: Schnorr Signatures, Taproot, and Tapscript. Their goal is to enhance the privacy and efficiency of transactions on the Bitcoin network, and to address security concerns. Schnorr Signature is a digital signature algorithm proposed by Claus Schnorr. They can aggregate multiple signatures into one, increasing efficiency and privacy. Taproot is a scheme that uses Merkle abstract syntax trees to hide complex transactions under common public keys, also improving efficiency and privacy. And Tapscript is a new scripting language for writing conditional branching logic in Taproot. It optimizes Schnorr signatures and adds some new opcodes. At the heart of this upgrade are Schnorr signatures. Signature algorithms can bring higher performance and better use cases to Bitcoin. The size of a Bitcoin block is limited to 1 MB, but since each transaction included in a block on the Bitcoin network can add additional data, each block can store up to 4 MB of data [5].
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Bitcoin Punks(Inscription 34400)
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Situation Analysis
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https://BRC-20.io/
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https://dune.com/cryptokoryo/brc 20
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https://dune.com/cryptokoryo/brc20
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Data source: https://unisat.io/
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https://dune.com/cryptokoryo/brc20
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https://dune.com/cryptokoryo/brc20
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https://unisat.io/brc20
Most of the people who take over are from an investment perspective and mentality, with expectations of rising currency prices and fantasies of getting rich overnight. The increase in currency prices is often based on the consensus of the community and the fantasy of a group of people who want to get rich. Therefore, when BRC-20 is listed on the exchange, vested interests expect that more people will be able to participate in the sale and take over the BRC-20 tokens in their hands. But actually:
1. It is impossible for the number of people entering the BRC-20 market to maintain a long-term substantial increase
2. Most of the people involved in the BRC-20 market transactions also have a lot of chips waiting to be sold, and they are more inclined to buy new coins in the market rather than take over worthless old coins.
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(Figure 8: VMPX market trend chart) Data source: https://www.gate.io/zh/trade/VMPX_USDT
Take the above picture——VMPX market trend chart as an example. Before VMPX was listed on the gate.io exchange, the price of VMPX reached 0.8 US dollars due to the consistent and steady increase of the community consensus price. When the news of the listing came out but before it was officially listed, the transaction price on the chain reached $2, and then some people sold it in large quantities. One hour before the listing, the price had dropped to about 0.3. After being listed on the exchange, the highest point was only 0.3, and then continued to fluctuate and fall. The price can be regarded as retreating step by step, and there is not much left.
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BRC-20 Ecosystem
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What did UniSat do right?
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UniSat service
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Why did UniSat add fire to the BRC-20 market?
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What did UniSat gain in the BRC-20 frenzy?
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secondary titlehttps://twitter.com/punk2898/status/1655220723504541698?s=20）
What does the UniSat team want to do in the future?
According to Lorenzos interview with the UniSat team, the UniSat team has financing plans in the near future. In terms of products, Lorenzo only revealed that UniSat will improve the user experience across the platform, securely save the users inscriptions in the wallet, improve the access experience of mobile phone users, and optimize the casting process.
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Ordswap
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Ordswap market interface
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Incribe orc-20
Ordmint
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Ordmint Minting Features
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Ordinals wallet
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BRC-20 Kanban in Ordinals wallet
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Dex for BRC-20
Bitcoin’s script is not Turing-complete, and BRC-20’s inscription needs to be parsed by tools. The former makes Bitcoin’s DeFi scalability not high, and the latter makes BRC-20 assets too dependent on centralized interpretation tools. These two reasons make it not easy to build a DEX that trades BRC-20. Most of the BRC-20 trading markets such as UniSat are in the form of pending orders, which require human market makers to match transactions.
BisoSwap announced on May 9 the deployment of the first AMM DEX in the BRC 20 ecosystem. BisoSwap describes the workflow of adding liquidity, swapping tokens, and removing liquidity in the official documentation.
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Increase fluidity workflow (source:https://bisoswap.gitbook.io/bisoswap/workflow-and-architect-a-seamless-3-step-liquidity-solution-for-the-brc-20-ecosystem）
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Swap Token Workflow (Source:https://bisoswap.gitbook.io/bisoswap/workflow-and-architect-a-seamless-3-step-liquidity-solution-for-the-brc-20-ecosystem）
Workflow for removing liquidity
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Remove liquidity workflow (source:https://bisoswap.gitbook.io/bisoswap/workflow-and-architect-a-seamless-3-step-liquidity-solution-for-the-brc-20-ecosystem）
future outlook
future outlook
BRC-20 is a major innovation of domo on the Bitcoin network, which has re-ignited the ecology and narrative of the Bitcoin network, and brought back the long-lost Lightning Network to peoples vision. As the potential of BRC-20 is gradually tapped by people, more and more people start to FOMO BRC-20. BRC-20 has also gradually formed an ecosystem. However, the various tokens of BRC-20 are still mainly local dogs at present, and most of them have entertainment value. dramatically drop.
1. BRC-20 trading market UniSat Marketplace has removed the points access threshold
2. BRC 20 Buying Step-by-Step Tutorial Using Huge Beng as an Example
4.Advantages of BRC 20 over ERC 20
5.Why is BRC-20 not going to be another ERC-20?
8. What is Ordinal? BTC NFTs explained
9. Three minutes to let you know what is Segwit Segregated Witness
10.Bitcoin NFT? A Deep Dive into Ordinals Protocol and BRC-20
