Chapter Content

In the previous section, we discussed that the concept of inscriptions originated in the Bitcoin ecosystem, primarily through the process of inscribing data on the blockchain. One of the simplest methods of inscription involves directly inscribing text data, leading to the development of BRC-20, an easy-to-understand token. By correctly filling in the relevant information according to the specifications, one can complete the deployment, minting, and transfer of inscriptions. Consequently, developers have replicated and innovated BRC-20 on other public chains, thereby further promoting the popularity of inscriptions.

Expansion to Other Public Chains

Ethereum Inscriptions

Ethscriptions and iERC20 are among the well-known inscriptions on Ethereum. Ethscriptions is an alternative to smart contracts and L2 that allows users to share information and perform computations on Ethereum L1 at low cost. It achieves decentralized computing by applying rules to Ethereum calldata to bypass smart contract storage and execution.

The protocol plans to launch a token issuance protocol based on POW mining, where the token issuance amount depends on the CPU computing power of the participants. In other words, the higher the computing power of the participants, the more tokens will be issued. This proof-of-work method allows users to fairly participate in any token sale.

Solana Inscriptions

The well-known inscription protocol on Solana is an SPL-20 protocol similar to BRC-20. The protocol is also a set of JSON text-based inscriptions with fixed rules and formats. Different from BRC-20, it changes the protocol name “P” in the “P” field to “P:”spl-20”. As shown below, the format of the well-known Solana inscription ‘sols’ is different only in the protocol and name fields.

Source: https://magiceden.io/marketplace/sols_spl20?activeTab=items

Avalanche Inscriptions

Similar to the Solana chain, the Avalanche chain also has an inscription protocol similar to BRC-20, called ASC-20. The protocol also has three basic operations: deployment, minting, and transfer, but only on the Avalanche public chain.

The transfer operation of the Avalanche inscription ‘dino’. Source: https://avascriptions.com/inscriptions/0x50cc0c7fcd6710c47c399cac9a85ca6dba6b4d91d5a51c19bcb873578a4a8be0

In addition to these public chains, inscription assets have emerged on several Layer 1 and Layer 2 solutions, including Polygon, Doge Chain, Near, and Sui. You can find inscription assets on up to 20 public chains just on Gate.io’s official inscription navigation page.

Source: https://www.gate.io/inscription/bitcoin/brc-20

Inscription Protocol Innovation in the Bitcoin Ecosystem

The public chains mentioned above, such as Ethereum and Solana, are Turing-complete chains. They can utilize smart contracts to design corresponding token protocols, like the well-known ERC-20 token protocol and ERC-721 NFT protocol on Ethereum. Solana also has its own token standard, SPL. Developers can directly use these protocols to issue fungible and non-fungible tokens. Therefore, most inscription asset and underlying inscription research and development occur on non-Turing-complete public chains like Bitcoin. Inscriptions can be considered an excellent asset issuance solution on such chains. Consequently, besides Ordinals Protocol and BRC-20, there are also numerous innovative inscription protocols on Bitcoin.

Atomicals Protocol (ARC-20)

The Atomicals protocol is a simple and flexible protocol specifically designed for minting, transferring, and updating digital objects on UTXO-based blockchains like Bitcoin. Atomic Digital Objects are the core asset of the Atomicals protocol. The protocol can mint, transfer, and update digital objects.

In addition to Atomical, the Atomicals protocol also supports token minting. For this purpose, the team introduced the new ARC-20 standard. It uses Satoshis to represent each token. In other words, each ARC-20 token is backed by 1 Satoshi (abbreviated as Sat, the smallest unit of the Bitcoin network; 1 BTC can be subdivided into 100 million Satoshis). Its value will never fall below 1 sat.
ARC-20 tokens can be split and combined like regular BTC. Anyone can create them through decentralized minting or direct minting, and they can be transferred to any BTC address type. The minter can use the init-dft command for decentralized initialization, setting parameters like the block height at which minting starts, the allowed total number of mints, and minting conditions. Alternatively, they can directly create a single output containing the total supply, making each sat directly represent a token unit. For example, a minter can create a single output containing 1 full BTC to mint a total supply of 100 million tokens. (Reference)

Runes Protocol

On September 26, 2023, Casey Rodarmor, the founder of Ordinals Protocol, introduced the new Runes protocol. This protocol aims to address the various shortcomings of BRC-20. In his blog, Rodarmor outlined the inadequacies of current asset issuance protocols:

• BRC-20: Not UTXO-based and rather complex, as it requires use of ordinal theory for some operations.
• RGB: Very complicated, relies on off-chain data, and has been developed for a long time with no adoption.
• Counterparty: Has native tokens required for certain operations, and is not UTXO-based.
• Omni Layer: Has native tokens required for certain operations, and is not UTXO-based.
• Taproot Assets: Somewhat complicated, relies on off-chain data.

Casey Rodarmor named his solution Runes, with the token name being “Runes”. In the initial blog post, the two standard operations of the Runes protocol, transfer and issuance, were defined with a basic format. Overall, the Runes protocol does not link balance records to wallet addresses but instead stores the records within the UTXO itself. New Runes tokens start from the issuance transaction, specifying the supply, symbol, and number of decimal places, and allocate that supply to a specific UTXO. A UTXO can contain any number of Rune tokens, regardless of their size. UTXOs are only used for tracking balances. Then, the transfer function uses this UTXO, splits it into multiple new UTXOs of any size containing different numbers of Runes, and sends the records to others. Compared to BRC-20, Runes reduce a layer of server consensus, becoming simpler, while not relying on off-chain data and not having native tokens. This makes it highly suitable for Bitcoin’s native UTXO model. (Reference)

Runes protocol is not yet live and is expected to launch in April 2024.

BTNS Protocol

The Broadcast Token Naming System (BTNS) is an asset issuance protocol created by J-Dog, one of the early Bitcoin holders and development team members. The basic concept is to make it possible for BTC to issue its own on-chain native asset tokens and NFTs by attaching broadcast signals to each BTC chain transaction and recording them on the blockchain as data based on ledger indexing. The biggest advantage of the BTNS protocol is that, in addition to the three common operations of deployment, minting, and transfer found in most inscriptions, it also offers a series of common basic instructions for protocol assets, including burning, listing, and airdrops.

Source: https://btns.wtf/

Tap Protocol

Tap Protocol is another token asset standard built on the Ordinal protocol, and it can be considered an improved version of BRC-20. By leveraging Tap Protocol, more complex financial operations can be directly implemented on the Bitcoin blockchain. Its design prioritizes flexibility and user-friendliness compared to other token meta-protocols. It can achieve functions like token staking, swapping, and liquidity pools without requiring an auxiliary layer or complex mechanisms. Here are some examples:

1. Swapping and Staking: In the TAP ecosystem, users can easily swap tokens and stake them to support the network and earn rewards, combining liquidity with incentives.
2. Liquidity Pools: TAP allows for the creation of token pools that users can contribute to, enabling decentralized trading and earning fees in return.
3. Token Authentication: It provides a framework for verifying tokens within the platform, potentially used as in-game currency or items.
4. TAP Art: This allows Ordinals to be connected with tokens on the TAP protocol, enabling fractional ownership of valuable artwork. By extending the TAP protocol, both token deployment and the source of ordinal ownership are preserved.
5. Multiple Sends: Users can send multiple transactions at once, simplifying the process of distributing tokens to various recipients. Airdropping tokens in Ordinals has never been easier or more cost-effective than with TAP.
6. Multi-Asset Protocol: Finally, TAP functions as a multi-asset protocol, meaning it can handle various asset types beyond a single standard, expanding the scope of transactions and interactions within the Bitcoin blockchain.
7. TAP’s external functionalities are divided into external and internal parts. It functions similarly to BRC-20, allowing for easy integration with current markets and wallets. Internally, it offers additional features to users that can be expanded through community governance using the $TRAC token.

Based on these functionalities, we can see that Tap Protocol prioritizes embedding its own token standard into various DeFi function modules. These modules make it a more likely candidate to become the cornerstone of Bitcoin DeFi. As the number of related DeFi applications increases, it will attract users to Tap Protocol to issue Tap Protocol assets, ultimately solidifying the protocol’s market position.

Pipe Protocol

Pipe Protocol, proposed by BennyTheDev, is a Bitcoin-native token protocol inspired by Casey Rodarmor’s RUNES and the BRC-20 concept of Ordinals. It also has three primary functions: deploying, minting, and transferring tokens. Unlike BRC-20, its technical specifications are more complex, as shown below. Pipe Protocol’s transfer function has more extensive fields.

Source: https://github.com/BennyTheDev

This complex architecture also allows Pipe Protocol to be compatible with Bitcoin’s UTXO model, ensuring complete compatibility with Bitcoin’s native architecture.

Summary

Overall, although the popularity of inscriptions has spread to other public chains, most are simply imitations. Inscriptions on non-Turing complete blockchains like Bitcoin, especially Bitcoin itself, have received a lot of research and innovation. Though different inscription protocols have different mechanisms and solutions, the overall result is to promote the liquidity and asset diversity within the ecosystem, which has a significant push effect on the overall prosperity of Bitcoin’s ecosystem.

In the next chapter, we will delve into inscription tools to see which ones can help us master inscriptions!

Chapter Summary

• Most inscriptions on Turing-complete blockchains are imitations of BRC-20, usually with a changed “p” field in the protocol.
• In the Bitcoin ecosystem, inscriptions have greatly evolved with the emergence of inscription protocols such as Atomicals, Runes, BTNS, Tap protocol, and Pipe Protocol.