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Are BRC-20 and Ordinals Dead?

by BSC News

August 29, 2023

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During its peak time in May, BRC-20 tokens had a market cap exceeding $1 billion, with over 14,000 tokens active. But, this meteoric ascent soon gave way to volatility, with the value fluctuating dramatically.

The BRC-20 Enigma

Trends and innovations can rise quickly in the fast-paced world of cryptocurrency, only to fade away just as quickly. The BRC-20 token standard was one such phenomenon that caught the attention of the crypto community. 

At its peak, the BRC-20 tokens garnered immense interest, drawing comparisons to the widely adopted ERC-20 standard on Ethereum. 

Back in May, the Bitcoin network was abuzz with the emergence of the BRC-20 token standard. The numbers were staggering - over 14,000 BRC-20 tokens with a combined market capitalization surpassing $1 billion. 

The excitement surrounding the Ordinals protocol, on which BRC-20 tokens are built, added fuel to the fire. As a result of the attention lavished on the Ordinals protocol, transaction fees on the Bitcoin network spiked. 

The average transaction fee soared to over $29 at one point, and daily transaction volumes reached unprecedented levels, touching 600,000 transactions per day. 

This surge was nothing short of astounding. But as we know, the crypto landscape is as volatile as it is exciting. As the dust settled a few months later, the excitement substantially diminished.

Modeling After Ethereum: The BRC-20 Standard

The BRC-20 standard, like its Ethereum counterpart, governs the creation, transfer, and management of fungible tokens on the Bitcoin blockchain. However, it's essential to differentiate: while the ERC-20 standard is widely adopted and well-established, the BRC-20 standard is still under development and lacks widespread approval.

Nevertheless, Bitcoin's narrative has evolved significantly since its inception as a peer-to-peer digital currency. The Taproot upgrade in 2021 expanded its capabilities, allowing more data to be embedded in Bitcoin's block space through the Ordinals protocol. This led to the emergence of Bitcoin NFTs and subsequently paved the way for the development of BRC-20 tokens.

The Ebb and Flow of Enthusiasm

The tale of the BRC-20 standard took a turn as sales volumes of Bitcoin Ordinals dropped a staggering 97% from May to August, according to Dappradar. This decline was particularly pronounced compared to the broader NFT space, where Ethereum and Polygon witnessed a 22% and 60% decrease in trading volume for unique active wallets.

Bitcoin Ordinals, the Bitcoin equivalent of NFTs, saw an even sharper decline, with active wallets plummeting from 85,316 in June to a mere 6,708 by August 14 - a staggering 92% reduction.

The Unwavering Resilience of Ordinals

Despite the cooling off of the NFT hype, Ordinals' inscription activity on the Bitcoin network remains remarkably active. Even as Bitcoin's price experienced fluctuations, a significant portion of the network's activity still revolved around Ordinals. The developer "Leonidas" noted on Aug.21 that out of 530,788 transactions over 24 hours, 450,785 were Ordinals transactions.

According to data from Dune Analytics, there were 226,771 ordinal inscriptions on August 27, coinciding with a daily Bitcoin transaction count of around 413,478, according to Bitinfocharts. This implies that more than 54% of the network's activity on that day was linked to Ordinals.

Ordinals Daily Inscriptions. Source: dataalways (Dune Analytics)

BRC-20 Tokens: The Current Landscape

The BRC-20 token landscape appears far from stagnant, with over 1.5 million tokens minted over the last week. These figures contrast with earlier reports that suggested a decline in NFT usage and sales volume, sparking discussions about the fading hype. 

However, it's important to distinguish between the overall NFT market and the specific activity related to Ordinals, which still demonstrates considerable engagement.

The journey of BRC-20 tokens and the Ordinals protocol highlights the dynamic nature of the cryptocurrency space. While the BRC-20 hype might have dulled, the Ordinals protocol's activity indicates that there's still much to explore and uncover in the ever-evolving world of blockchain and crypto.

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