BRC-Based Ordinals Tokens: An Unstoppable Rise?

The new BRC-20 Token niche has already showcased some amazing numbers and every piece of data available points out to the beginning of a new chapter for many projects looking at BTC-based coins.

But there are serious concerns around this new wave of tokens, and with those concerns, there are also serious underlying issues in all BRC-20 projects.

Bitcoin-Powered BRC-20 Tokens Surpasses 1 Billion in Combined Market Value: serious tokens or serious bait?

In a remarkable turn of events, tokens created on the Bitcoin blockchain have achieved an extraordinary milestone by surpassing a combined market value of over 1 Billion USD.

This is a significant accomplishment that not only highlights the rapid growth of a nascent asset niche within the cryptocurrency ecosystem but also underscores the potential of Bitcoin as a platform for tokenization and decentralized finance.

Leading the charge in the BRC-20 token category is Ordi, a meme coin that has captured the attention of investors and enthusiasts alike with its fully diluted value surpassing half a billion dollars, Ordi has emerged as the dominant player in this burgeoning market. 

Just a few months ago, its value stood at a mere $0.11 but fueled by the ongoing meme coin mania, it has skyrocketed to an astonishing $25 per token, marking an impressive surge of 22,500%, though this peak was later followed by a 30% correction that brought it down to a price of 18$ USD per token.

The meteoric rise of Ordi keeps reminding us of the cash-flow-generating power and speculative nature of meme-based digital assets, which, while not able to present a set of use cases for traditional B2B investors, are still comparable to exciting collectables for many of the retail investors interested in the sector.

At the heart of this remarkable achievement lies the BRC-20 token standard, a recently developed protocol that allows for the creation of tokens on the Bitcoin blockchain. 

While being a fundamentally different protocol, in the same vein as the  ERC-20  with their NFT project craze that happened a couple of years ago, BRC-20 tokens offer a new range of possibilities for developers and users, enabling them to build fungible and non-fungible assets with ease. 

Spearheaded by Casey Rodarmor, the visionary developer behind the Ordinals protocol, the BRC-20 standard introduces an innovative approach to tokenization on the Bitcoin network.

The Ordinals protocol in fact revolutionizes how developers interact with the Bitcoin blockchain on the most basic level, allowing for the assignment of a distinct identity or file to each satoshi, the smallest unit of Bitcoin, across the network. 

This mechanism, known as inscription, has opened up a world of possibilities for token creation and digital asset management.

In addition to fungible tokens, the Ordinals protocol has laid the foundation for the emergence of non-fungible tokens (NFTs), which while having gained significant attention for their role in digital art, collectables, and other unique assets, have yet to reach their previous peak. 

And while we are still far from those heights, the BRC-20 standard is sure to bring a lot to the table for the NFT ecosphere, unlocking an entirely new network to utilize to the fullest.

While the Ordinals core team successfully implemented the mechanism for generating NFTs on the Bitcoin blockchain, another developer, known as Domo, took the concept even further. 

In March, Domo introduced an experimental token standard built upon the Ordinals protocol called BRC-20. This groundbreaking standard enables users to issue fungible tokens, such as Ordi, by associating specific files with satoshis. 

The introduction of BRC-20 unleashed a wave of creativity and innovation, as developers quickly embraced the protocol to bring a wide array of tokens to life on the Bitcoin network.

Since this new player entered the field, the number of tokens created on the Bitcoin blockchain using the Ordinals protocol has experienced an explosive surge. Over 11,000 tokens have been generated in just a few months, each contributing to the growing ecosystem of digital assets.

This surge in token creation has had a profound impact on the Bitcoin network, driving a substantial uptick in daily transactions. 

Recent data indicates that the number of daily transactions on the Bitcoin network reached a record high of 534,000. However, this surge in activity has also led to an increase in network fees, highlighting the need for scalability solutions and optimizations as the ecosystem continues to evolve.

Among the myriad of BRC-20 tokens, Ordi reigns supreme in terms of market capitalization with a fully diluted market cap of $525 million, based on a token supply of 21 million.

Ordi has established itself as the leading player in this exciting new market segment. As a testament to its popularity and demand, Ordi has recently been listed on Gate.io, becoming the first BRC-20 token to be available for trading on a centralized cryptocurrency exchange. 

This listing not only provides greater accessibility to investors but also serves as a significant milestone for the BRC-20 token ecosystem, signaling the recognition and adoption of Bitcoin-based tokens within the broader crypto community.

While Ordi leads the pack, other meme assets on the Bitcoin blockchain, such as Meme, Domo, and Nals, have also gained traction and carved out their own market niches. With individual market caps ranging from $8 million to $20 million, these tokens demonstrate the diversity and potential for growth within the BRC-20 token landscape.

The exponential rise of Bitcoin-based tokens and their growing market value underscores the expanding possibilities within the Bitcoin ecosystem. 

As developers and enthusiasts alike continue to explore the potential of tokenisation on the Bitcoin chain, we can anticipate further innovations and exciting developments in the ever-evolving world of digital finance.

However, the success of BRC-20 tokens also brings forth important considerations. As the ecosystem expands and more tokens are created, ensuring proper due diligence, transparency, and regulatory compliance becomes paramount. 

Investors must conduct thorough research and exercise caution when engaging with BRC-20 tokens, as the market is still maturing and subject to risks.

In conclusion, the achievement of BRC-20 tokens breaching the 1 Billion USD market value on the Bitcoin blockchain marks a significant milestone in the world of tokenisation, but it doesn’t come without troubles. 

As the ecosystem continues to evolve, and many new use cases are found, BRC can become an interesting proposal for investors and users alike, but at the moment we must temper our excitement, since with this new wave of tokens also comes a new wave of problems.

What are the opportunities presented here for the Api-verse and its users?

We believe in the ability to adapt, improve and tailor our technology to any existing architecture on the market, and the birth of what can be called an entirely new niche thanks to the Ordinals protocol will bring a lot to the table for us and our community.

Starting from the top, the Api-Verse's main goal is to provide all the tools needed for a project to reach its full potential, be they accelerators, Dapps, Data gathering protocols or even Smart Contracts deployment protocols. 

With the newly introduced BRC-20 standard, we will be able to bring many of those tools to the projects based on the Ordinals protocol, opening up a niche that was previously totally barren, while also entering a market that will let us develop in a fully unexplored direction. 

This is simply due to the underlying nature of our project, and the ability to specifically tailor our AI-backed APIs to multiple different archetypes at the same time. 

Many other companies in the same field will need time to adapt and create their solutions for their clients, while the Api-Verse may very well find a lot of new interesting uses for the BRC-20 standard with multiple different projects able to utilize our tools to reach all of their goals in a reasonable time. 

We also believe that by integrating some of the principles that are being brought to the light by the birth of a new niche the Api-Verse will be able to reach new standards of quality for all of our tools, to keep our project ahead of the competition for the many opportunities coming our way this year.

But, in a similar vein to the many retail users interested in the BRC-20 tokens we must also be aware of their issues, and as such, our approach to the matter will be to wait and see how the situation develops for the BTC chain, and how the BTC core developers will solve the problems that the BRC-20 standard has brought to their network. 

ERC 20 or BRC 20? Why the Ethereum network success can’t be easily replicated. 

Before opening up ourselves to a discussion about the newly introduced tokens, we must first address another question: will the BRC-20 niche establish itself as a new competitor in the DeFi market or is it just a fad that’s going to be drowned by the already established players? 

For now, we can’t really rush with our decisions, since we need to take stock of what those tokens' use cases are while preparing for the eventuality of some major corrections since many of the basic utilities present on the similarly named ERC-20 network are simply not on BRC-20 projects. 

But the second, maybe more heated question, is directly related to the existence of the BRC-20 tokens themselves.

Despite the recent hype, their ease of minting, coupled with the little underlying utility are giving a highly questionable outlook to the long-term potential of the asset. Users and investors are entering this highly speculative bubble that at the moment doesn’t truly present a real tangible upside. 

There has been a shakeup in the market due to their huge capitalization and ease of access, but BRC-20 tokens currently don’t have a lot going on for them in terms of their use cases, since they cannot interact with other protocols or applications due to their inability to utilize smart contracts.

While there may be a future in which BRC-20 tokens become refined enough to present valuable tools and utilities to their users, at the moment they represent an opportunity only if you are willing to enter into a very highly speculative market that also presents a too-high risk ceiling for the worth of the products.

Another point we can’t forget is that even if the individual tokens reach some level of usability, the probability of the BRC-20 standard as a whole climbing to the heights of the ETH network is almost nihil, mainly due to its many underlying issues.

The Concerns Raised by this new wave of Tokens in the BTC Network.

The proliferation of BRC-20 tokens has also led to many problems for the major chain developers, with the huge amount of meme coins causing record levels of congestion and soaring transaction fees on the entire blockchain. Bitcoin core developers are now taking action to address these concerns and ensure the smooth functioning of the network.

The Bitcoin network recently experienced an unprecedented surge in transaction volume, reaching a seven-day moving average of 539,000 transactions. Industry experts attribute this spike to the emergence of BRC-20 tokens and their utilization for the creation and trading of meme coins on the Ordinals Protocol. 

The market capitalization of BRC-20 tokens surpassed $1 billion, with over $200 million in trading volume recorded in a 24-hour period. However, this increased activity has contributed to various issues, like a staggering of the network itself, as evidenced by the 394,000 pending transactions in the mempool.

Transaction fees on the Bitcoin network have also skyrocketed, surpassing the block rewards earned by miners. The average transaction fee now stands at $20.34, marking a remarkable 788% increase in just one year.

This fee surge has prompted on-chain analysts to label Bitcoin as "under siege" from BRC-20 "junk" coin with the situation even catching the attention of Bitcoin core developers, who recognize the urgent need for action to address the rising fees and congestion.

The multiple solutions put forward are quite drastic, as showcased by Bitcoin core developer Ali Sherief.

One approach involves modifying the Bitcoin codebase to close the loophole enabling the creation of BRC-20 transactions, another suggests implementing a runtime option that would delete all non-standard Taproot transactions, including BRC-20 tokens.

Sherief acknowledges the criticisms and emphasizes the shared responsibility to find a solution that prevents future congestion while ensuring the network's stability.

Luke Dashjr, a prominent Bitcoin core developer, has been at the forefront of this battle against network spam. Dashjr's proposal to extend existing spam filters to Taproot transactions has also gained support in the community.

He argues that this bugfix does not necessitate a major release and should have been implemented sooner. Dashjr's efforts align with his previous contributions to the Bitcoin ecosystem, such as his instrumental role in the implementation of the Segregated Witness upgrade in 2017.

Not everyone is on the same page 

Within the Bitcoin community, opinions vary regarding the nature of the issue. Some view it as a "civil war" between Bitcoin core developers, miners, and holders of BRC-20 tokens. 

Others consider it as an ideological stance that was taken by Dashjr, emphasizing the necessity of spam filtration to maintain the integrity of the network. The situation has sparked intense debates, with stakeholders expressing their concerns and advocating for measures that strike a balance between network security and transaction efficiency.

The congestion and rising fees on the Bitcoin network not only affect its functionality as a digital currency but also raise concerns about scalability and long-term viability. 

Bitcoin's ongoing challenge bears resemblance to Ethereum's earlier experiences, with fees on the Bitcoin network currently exceeding those on Ethereum. 

The situation emphasizes the need for sustainable solutions that address network congestion while maintaining the decentralized principles that underpin the Bitcoin ecosystem.

But while those factions war, a third grows more and more concerned with the current state of the BTC chain. In fact, I would argue that this group of people is the one truly fighting to see the same status quo as before the BRC-20 craze restored and they have all the right to clamour for measures to be taken. 

And in this category, we have every single person that ever treated BTC as a value storage unit, or, as many in the field call it, as digital gold. 

The clear disruption of the network can and will bring down the total value of BTC, thus degrading the network's ability to fulfil its role for the many people relying on it for long-term investments, and the more the network is unresponsive, the more its weaknesses are exposed.

At the same time, Bitcoin core developers are actively engaged in addressing the congestion and rising fees resulting from the proliferation of BRC-20 tokens, and a full solution may also bring back the faith of the investors that was lost during this period of uncertainty.

By proposing bug fixes, extending spam filters, and seeking ways to enhance transaction efficiency, they are working to safeguard the network's integrity and ensure a seamless user experience. 

The Bitcoin community eagerly awaits the implementation of these solutions, which will shape the future of the world's first cryptocurrency and is eager to see what can be done to solve more fundamental issues like scalability and interconnectivity. 

Conclusions. 

The introduction and explosive growth of more BRC-20-based projects will be a boon for the market at large, simply due to the number of interesting directions that it gives to the many projects in the field, but retail investors may get too caught up in the new shiny and forget the more basic rules of investing. 

This situation has also caused quite a few problems within the BTC community itself, and as such this entire market may even be banned entirely, though we feel that this would be a shame, as the crypto community at large would lose out on the many opportunities that the Ordinals protocol brings. 

We understand the panic and the fear caused by rising transaction fees, but with a clear road to success already paved by the Eth blockchain, some growing pains would be acceptable in the long run. 

But, with everything considered, the lack of utilities presented by BRC-20 tokens presents a real roadblock to their adoption and the environment on this side of the DeFi market won’t start to get better until a real solution is found. 

This is why we suggest acting with caution in all of the movements involving the BRC network since we can’t accurately predict what the future may hold for them. They can either reach a level of usability that puts them in the tier of a solid investment, or they may need to go away for the betterment of all BTC users. 

We will be willing to look for ways to utilize this new technology in the future if the opportunity presents itself, but our focus is and will still be on the core development of our tools and our ecosystem, to always improve on the pillars of the Api Verse and deliver the best possible product to our community.