Is the BRC craze the "last carnival" for retail investors?

The annual "meme season" is here again.

This is a season full of anxiety. Stories of financial freedom seem to keep happening, and the fear of not being able to "get on the train" can overcome all fears of the unknown.

This is a "season" of self-doubt. Players who like to buy tokens based on fundamentals are prone to self-doubt, and project owners who work hard and support their projects are prone to self-doubt. Batch-made stories, success in quantity, everything is so "easy as a whim". How confusing it is to work hard to operate a project to build success in many aspects.

In fact, there is nothing new under the sun. It’s just that this time there is a new “casino” – BRC-20 on the Bitcoin mainnet.

Suddenly, it became popular

All communities are flooded with content related to BRC-20 Token. "What is BRC-20?", "What is the difference between BRC-20 and Bitcoin NFT?", "How to buy?", "How to open trading permissions in UniSat's trading market?"... These questions are constantly being asked and answered. On Twitter, it seems that overnight all KOLs have turned their attention to BRC-20, and various BRC-20-related threads have appeared at an alarming rate.

I casually flipped through the chat records of various WeChat groups, and the heated emotions seemed to burn out my computer's CPU:

BRC-20 even appeared on Xianyu:

(Image credit: @coolish)

From April 24 to May 3, a total of 1,815,157 inscriptions were added. Among them, 1,787,862 new text-type inscriptions were added, and only 3,122 new image-type inscriptions were added. The Bitcoin NFT market can be said to have completely turned into a BRC-20 market. However, just a month ago, everyone's attention was still on "pictures".

(Recently, the growth of inscriptions is almost entirely supported by text types. BRC-20 Token Mint and Transfer both rely on creating new text type inscriptions)

On April 30 and May 1, the number of BRC-20 transactions even accounted for half of all Bitcoin transactions, and the transaction fees accounted for more than 30%. Currently, the total transaction fees generated by BRC-20 transactions have exceeded 135 BTC.

(Changes in the proportion of BRC-20 transactions in all Bitcoin transactions)

The price of the first deployed BRC-20 Token $ordi has soared like a rocket. In a disbanded BRC-20 OTC group, $ordi was sold at $0.088 (1 = $88) on April 19. On April 25, in Ordswap's Discord OTC, the selling price of $ordi was almost above $0.65 (1 = $650). As of today, the price of $ordi on the UniSat market has exceeded $8 (1 = $8,000). Since the amount of each pending order on UniSat is limited to 0.0005 BTC - 0.05 BTC, it is difficult for players to buy more than 300 $ordi in one transaction on UniSat.

$ordi price trend from April 26 to April 30 (Image credit: @Ca1aba93)

As the only BRC-20 trading market on the market, with BRC-20 Mint and Deploy functions, UniSat is extremely busy. Starting from April 29, UniSat was occasionally stuck by players who were "charging". Since the number of BRC-20 tokens that each inscription can represent is usually set to 1,000, Minting 10,000 tokens means minting 10 text-type Bitcoin NFTs. Players are afraid of missing out on the "Golden Dog" in the primary market, so they frantically raise the Gas and continuously submit Mint transactions to UniSat.

The transaction fee rate data on the chain also reflects how enthusiastic the players are. Before April 20, the daily fee rate of 1-2 sat/vB accounted for more than 50%, and the fee rate of 20-30 sat/vB was already very "stuck". But in recent days, we have even seen a certain proportion of 100-125 sat/vB.

It is hard to imagine that before BRC-20 became as popular as Zibo barbecue, the popularity of the entire Ordinals protocol had actually slowed down. This time, the "out of the circle" is as magical as "ice and fire".

At midnight on April 9th, Beijing time, the number of inscriptions exceeded 1 million. In the following week, the number of new inscriptions per day was not large, and even less than 10,000 appeared. At that time, the Spaces of the Chinese circle and even the entire Ordinals circle were almost all familiar faces. The daily Space of the Chinese circle was about 30-60 people in size. The friends who chatted every night were almost familiar with each other, and there were few new faces.

During the period from April 9 to April 20, the daily increment of inscriptions reached a periodic low. (As shown in the red frame of the blue bar chart in the figure below) Before April 23, there was only one case where the proportion of BRC-20 daily transaction fees exceeded the proportion of non-BRC-20 inscription transaction fees. Most of the time, the proportion of non-BRC-20 inscription transaction fees was much higher than that of BRC-20 transaction fees. (As shown in the red frame of the black and gray bar chart in the figure below)

On April 23, UniSat's BRC-20 market was launched, but it was urgently closed in the early morning of April 24 due to a business loophole. It was then reopened on April 27.

On April 24, OKX announced that its wallet plug-in supports displaying/transferring Bitcoin NFTs. On the same day, Binance’s official Twitter account also posted a tweet titled “Ordinals, made simple”. On April 27, the Chinese official Twitter account of OKX launched a poll titled “Do you want OKX to support BRC-20?” and briefly introduced the Ordinals protocol and BRC-20 Token in the same tweet. The idea of ​​CEX entering the Bitcoin NFT market began to take shape, and the rise of $ordi began to be noticed and gradually “went out of the circle”.

In fact, until now, I still can't figure out what point directly triggered the BRC-20 craze. It was too fast, really too fast.

“In fact, we almost gave up a month ago.”

While various KOLs began to lead the majority of players to reflect deeply on "Why didn't you catch BRC-20?", xiyu, Huan.sats, Ivan and other old players who have been active in the circle since the official launch of the Ordinals protocol and are well-known for their opinions/tutorials or development have remained very calm during this wave of popularity.

In February, xiyu discovered the relevant content of Ordinals on Twitter and began to study it in depth. At that time, Bitcoin was entering a rebound market, and he felt that Ethereum had no new stories to tell, so he began to study Bitcoin again. Xiyu also designed a cash system based on the defects of BRC-20, which can be used as an inscription stable token in the future and added to the system. Huan.sats learned about Ordinals from an article in Decrypt on the second day after the Ordinals protocol was launched on the mainnet and began to study it.

Ivan is the developer of BRC-1155, and he may be the most ceremonial of the three. After being deeply fascinated by the Ordinals protocol, in order to express his love, he specially selected a MAYC with an orange background to commemorate his encounter with Ordinals.

As I mentioned in past articles, they never expected BRC-20 to grow so fast.

Ivan was not optimistic about BRC-20 at first, but he still held the mentality of "it's okay to give it a try" and supported the "innovative experiments" in the Ordinals ecosystem, so he minted some $ordi. That night, UniSat was busy because $ordi Mint produced a bunch of inscriptions that had not been confirmed by the network. Seeing such a bustle, Ivan raised the miner's fee again. When talking about the development speed of BRC-20, Ivan recalled the minting of $meme at that time. $meme was the second BRC-20 Token to be deployed, with a total of 99,999 pieces, and each inscription can only represent 1 $meme. Ivan said that everyone was still wondering at the time, 99,999 inscriptions, can they really be minted?

Is it a good thing or a bad thing that so many new players have suddenly flooded into the Ordinals ecosystem? All three of them believe that there are both advantages and disadvantages, but the overall advantages outweigh the disadvantages. On the positive side, the Ordinals ecosystem has been very successfully "out of the circle" because of BRC-20, and more people have learned about Bitcoin NFT. As for the disadvantages, the three have different perspectives.

Xiyu believes that the popularity of BRC-20 has squeezed the space of picture (art) Bitcoin NFT. (As we mentioned in the previous article, from April 24 to May 3, a total of 1,815,157 inscriptions were added. Among them, 1,787,862 new text-type inscriptions were added, and only 3,122 new picture-type inscriptions were added, accounting for only 0.172% of the number of new inscriptions.) But at the same time, Xiyu also said that this is not actually a "disadvantage". Although he believes that this is an unhealthy situation, he believes that the market will repair itself.

This view of xiyu happened to be discussed by me and Blueberry during our chat. I made Bitcoin Pizzas, and Blueberry made PixelBirds Sparrow. We used to think that the emergence of the Ordinals protocol gave small and medium-sized creators a stage with higher visibility, and because there were no smart contracts, project launches were more friendly to creators. This may become a small but exquisite independent workshop, where small and medium-sized creators will grow together like independent game developers in the game circle. But now, the "Art Salon" is deserted. At the same time, the skyrocketing gas fees and the sluggish cultural atmosphere have temporarily made more creators wait and see about entering Bitcoin NFT.

On April 24, the night before $ordi was about to “go viral”, the first BRC-20 fraud case involving over one million dollars broke out.

A BRC-20 OTC group owner named Bzz.eth was exposed on April 24 for swallowing large orders (opening a small account to claim high-priced purchases, finding excuses to cancel the transaction after the seller transferred $ordi, and then using invalid Transfer inscriptions to push the responsibility to the seller and refusing to return it), going back on his word to increase the guarantee fee, and passing different prices between buyers and sellers to swallow the difference. On March 20, BlockBeats interviewed the owner of the guarantee group. At that time, he revealed that the average transaction amount was 300U, and the average number of transactions per day was 20.

(The coin-swallowing process and the subsequent discovery that the two were the same person)

With the launch of UniSat’s BRC-20 trading market and Ordswap’s guarantee service on the official Discord, the security of BRC-20 transactions has been greatly improved.

$nals’ story: I am just a local dog, do you want to buy me?

This year's May Day holiday was a busy one for Null. He spent 25 hours a day in front of the computer screen, waiting for the new BRC-20 "Golden Dog" to appear like a patient hunter, and then minted frantically.

Even through the screen, I could feel the pride he felt when he shared his achievements with me by counting on his fingers like reading out the names of dishes.

"$piza, $moon, $8888, $lowb, $#gua, $ngmi, $noot, $gmgn, $noce... I can't remember if some of them were played during the Labor Day holiday, but they were played recently. Some of them haven't been sold out yet, so I won't be interviewed. Just tell me, is this a BRC-20 legend?"

In addition to lurking in a bunch of BRC-20 related discussion groups, he also stared at the BRC-20 dashboard on UniSat, mainly observing the two indicators of Holder quantity and Mint speed. Once he found a desired target, such as a Toekn with a bunch of unconfirmed Mint transactions, he would immediately consider whether to raise the Gas and charge forward. There will also be some cases where the Gas is pulled very low to create a false FOMO, so in terms of decision-making, he pursues speed while also taking into account caution.

Adhering to the principle of "selling for profit" and the accumulated experience in token screening, Null gained a lot during the May Day holiday. He was initially attracted to the Ordinals ecosystem because of the picture-type inscriptions, and now he still insists on leaving his true love only to pictures.

"BRC-20 suddenly became popular... We are all old players, are you nervous? Anyway, as long as I don't have a big picture, I won't be nervous. I will hold on to $ordi, and sell the others when necessary, even if I make little profit. Can the wind of the capital market blow to the Bitcoin mainnet and make it permanent? It doesn't exist." In normal chats, Null gave me the impression of a carefree person, but this time he was a little sad. "At first, I just wanted to collect some pictures. After all, on Bitcoin, we have talked about this many times. It's cool and not expensive. With so many people coming at once and with the benefits, things started to become complicated... I am a leek, and I will rush to the local dog wherever I go. I just hope that everyone here can stick to the original idealism."

BRC-20 is very popular, and the player base is not too large. It is not new but relatively easy to build consensus. Everyone has a clear goal. It is not important whether the story is good or not, but whether it can make money is important. Traffic, or influence, is a greater lever than ETH in the process of takeoff.

Since the name of the BRC-20 Token is limited to 4 characters, a BRC-20 Token named $nals has been popular with the story of “Ordi + nals gives Ordinals a complete home”. $nals was actually deployed as early as March 10, but it was not fully minted until May 1.

($ordi + $nals = ordinals)

After the Mint was completed, the price of $nals took off at an astonishing speed. According to transaction data on UniSat, $nals increased 20 times in about 12 hours after the Mint was completed.

There seem to be a lot of "golden dogs" like $nals. If you randomly pick a few popular BRC-20 tokens on UniSat, you will find that they are all flying, but their take-off postures are slightly different.

($pepe, nearly 10 times)

($moon, 5 times more)

($utxo, up more than 5 times from the lowest point)

These tokens that have taken off are just like $nals, telling stories that sound nonsensical. It doesn’t matter, emotions are the most important. Take a look at the following moves, do the “dog hunters” of ETH feel familiar?

(Toads on ERC-20 and BRC-20 join forces)

(All BRC-20 Tokens must be to the $moon)

(Ordinals cannot do without $utxo)

Why is there a "meme season"?

Huan.sats believes that if someone makes money, someone else will lose money, and overheated speculation may cause many new players to face losses. At the same time, BRC-20 as a ledger system is not efficient enough and is at risk of being replaced by better technologies (for example, the author of the protocol pointed out in the official document: Would also like to mention that the taproot enabled concept of issuing assets on the bitcoin blockchain is not novel, and Taro is unequivocally a better solution). The higher the popularity, the more attention and discussion the technology itself should receive, so that BRC-20 and even the entire Ordinals ecosystem will become better and better.

Ivan believes that "going out of the circle" is just the beginning. What is more important is how to keep new players in the Ordinals ecosystem, rather than slowly losing "people" as the popularity may decrease in the future. What needs to be considered is whether BRC-20 has brought more and better project parties into the ecosystem for construction? If not yet, how to do this? After all, only high-quality projects can continuously inject incremental value into the Ordinals ecosystem in the future.

In addition to sharing their own views, xiyu and Ivan also shared with me their observations on the attitudes of other Ordinals veterans and even Bitcoin veterans.

According to xiyu's observation, veteran players have the following attitudes towards Ordinals:

1. Exploring ways to transfer some of the things on Ethereum to the Bitcoin chain is also a contribution;

2. I have no objection. You can do whatever you want, as long as it is not a fork.

3. Take good care of your Bitcoins. If you do well, Bitcoin holders will also benefit.

4. Don’t try to cheat me out of my Bitcoins using pictures or data.

As for BRC-20, xiyu said that most old players have not expressed their opinions on BRC-20, which itself may also represent an attitude.

Ivan's observation is that the attitudes of Ordinals veterans towards BRC-20 are "polarized". Some believe that BRC-20, as a token protocol system, is still relatively backward in terms of support for transactions and bookkeeping, but they firmly believe that there will be more complete supporting infrastructure in the future to solve the problem, and they are optimistic about the future development of BRC-20. On the contrary, some believe that BRC-20 has deviated from the center of gravity, and building BRC-20 on Bitcoin, which is extremely secure and decentralized, is putting the cart before the horse and is purely unnecessary.

Regarding the technical shortcomings of BRC-20 itself , both xiyu and Ivan emphasized the problem of "centralized dependence" .

Ivan: From a technical perspective, it is difficult for BRC-20 to achieve a smooth transaction process and a decentralized accounting system through inscriptions. After all, when transaction activities on the chain become more frequent, the complexity of transfers will increase the amount of data to an extremely large amount and make it difficult to track. At present, it is still necessary to rely on a single centralized project party to implement the relevant accounting system, which is a systemic risk. However, the general community opinion tends not to accept the transfer of BRC-20 protocol tokens to different chains for more convenient transactions and applications through mapping or side chains, but only accepts the implementation of related operations on Bitcoin's native network to highlight its uniqueness. However, with the current technical support, to achieve the above more user-friendly operation process, this means that the BRC-20 protocol will need to sacrifice the decentralized nature of Bitcoin and instead welcome extremely dependent centralized support.

From the perspective of the Ponzi scheme, there is nothing special about BRC-20 when it comes to each token, but BRC-20 as a whole has two narratives that can attract incremental growth:

1. Copycat Tokens on the Bitcoin Mainnet;

2. Natural "ownerlessness". Judging from the reactions of various communities, this point is very appealing to new players. Since the deployers of BRC-20 Tokens cannot reserve any tokens for themselves, if they want to control the market, they either have to spend gas to mint like ordinary players, or spend money to buy chips from ordinary players. Players think that speculating on "dogs" on ETH is speculation, and speculating on BRC-20 is also speculation. Instead of being cut by the "dogs" on ETH through reserved chips, instead of playing the so-called "value investment" project and watching CEX, institutions and market makers eat meat, it is better to "turn over and become the master" on BRC-20.

It coincides with the "meme season", and ETH has another myth of getting rich quickly like $PEPE. The potential of BRC-20 also makes players FOMO. Will Binance, OKX and other large CEXs list BRC-20 Token? It is still so difficult to get started now, and there will be many players joining in later, right?

As for why there is a "meme season"? Every time a "meme season" appears, it is "the right time, the right place, and the right people". For example, two years ago, $Squid "Squid Token" was revived from Rug Pull because it was on TV and was named "community autonomy". It soared again, ignited market sentiment, and then there was $People, who failed to auction the constitution. This is the "right time". Often, the market that is relatively boring and lacks hot spots will be the time for meme Token to perform. "The right place" is simple. This is the world of Crypto. There have been many precedents of thousands of times of increase. The story of "you can be free to speculate on memes" has been deeply rooted in people's hearts. As for "the right people", the trend has appeared and the emotions have been ignited. Is it really important to find logic on top of this?

However, the "infection" of memes always carries a bit of "emotion". Just like the following cases:

"Meme season" comes and goes like the wind, year after year. However, every time a "meme season" comes, players are always prone to a "sense of doomsday anxiety" - how many opportunities to get rich by a hundred or a thousand times can there be? In the eager desire, BRC-20 seems to have become a "land of hope". But who is making money and who is losing money? Is this game on Bitcoin really a "victory for retail investors" and a "last chance"?