Can the Bitcoin ecosystem replace the Ethereum ecosystem?

Author: Origins Research; Compiler: Huohuo, vernacular blockchain

In the ever-evolving landscape of blockchain technology and NFTs, a new concept has emerged: Bitcoin Ordinals.

Ordinal seeks to bring the creativity and expressiveness of NFTs to the Bitcoin network. This innovative approach utilizes "ordinal number theory" to inscribe data on Bitcoin's smallest unit, called a satoshi.

By doing so, Bitcoin Ordinals can extend the capabilities of Bitcoin and create and own unique digital assets on its secure and decentralized blockchain.

**This article delves into the fascinating world of pre-Ethereum NFTs and explores the emergence of Bitcoin ordinals as a unique form of NFT. Additionally, the fundamental purpose of Bitcoin and the ongoing debate surrounding the integration of NFTs in the Bitcoin ecosystem are revealed. **

1 A brief history of NFT in ancient times

The history of NFT is relatively short, dating back to 2014, nine years ago. It all started with the creation of the first-ever NFT called Quantum, minted by Kevin McCoy on Bitcoin fork Namecoin.

** Over the next few years, several other NFTs were launched on the pre-Ethereum blockchain, laying the groundwork for the thriving NFT market we witness today, primarily powered by the Ethereum blockchain . **

Early History of NFTs

(1) Colored Coins (March 27, 2012)

Colored Coins (2012)

Colored Coins is an open source protocol based on Bitcoin 2.0 that enables users to represent and manipulate immutable digital resources in Bitcoin transactions. These Colored Coins act as a means of representing and maintaining real-world assets on the Bitcoin blockchain, creating ownership of those assets. By tokenizing bitcoins with specific characteristics that correspond to physical assets such as vehicles or stocks, owners can prove ownership through these distinguishable coins.

Colored Coins, commonly known as metacoins, introduce imaginative coloring as metadata to differentiate them from other bitcoins. While some experts debate their classification as the first NFTs on the blockchain, Colored Coins laid a solid foundation for the development of NFTs and can be considered an early precursor to Bitcoin’s ordinals.

(2) Quantum (May 2, 2014)

Quantum， by Kevin McCoy （2014）

In 2014, Kevin McCoy created the world's first NFT called "Quantum" on Namecoin. This groundbreaking NFT garnered a lot of attention when it sold for $1.47 million at a Sotheby's auction in 2021.

However, legal disputes arose due to ownership issues. McCoy initially minted "Quantum" on Namecoin, a blockchain software based on the bitcoin code that requires regular renewals of ownership every 250 days.

Unfortunately, McCoy was not able to renew his contract in 2015. Prior to McCoy's 2021 sale, an individual @EarlyNFT with a Twitter handle was registered as owner, causing ownership issues.

**Nonetheless, the sale stands and marks Kevin's successful effort to bring this important piece of NFT history into mainstream consciousness. **

(3) Eggs (July 27, 2014)

Eggs (2014)

**Namecoin is a fork of Bitcoin, created by the creator of Bitcoin, Satoshi Nakamoto. It launched in 2011 as a decentralized name registry service, similar to what we know today as ENS (Ethereum Name Service). **

In 2014, users discovered that they could add metadata to their registered names, including attaching a profile image. This marks the origin of the first personal profile pictures (PFPs).

Of the registered PFPs, 277 are default Twitter avatars, known as "Twitter Eggs." These eggs come in 14 different colors, and collectors are already seeing them as the first on-chain collectible NFTs and PFPs.

(4) Spells of Genesis (March 11, 2015)

Spells of Genesis (2015)

Spells of Genesis is a blockchain trading card game utilizing the Bitcoin blockchain. Each card in the game represents an important moment in blockchain history through unique artwork.

FDCARD released by EverdreamSoft, the creator of Spells of Genesis, marks the first tokenized game asset.

** This milestone marks a transfer of power, allowing gamers to take back ownership of their digital assets from a central authority. **

The importance of this moment cannot be overemphasized, as it paved the way for a new era of true player ownership in gaming. Spells of Genesis is a foundational milestone when exploring the roots of blockchain gaming.

(5) SaruTobi (May 6, 2016)

SaruTobi (2016)

In 2014, iOS developer Christian Moss released the game SaruTobi on the App Store. While his original goal was to allow in-game purchases using bitcoin, Apple's restrictions led him to choose to reward players with small amounts of bitcoin for playing. This marks one of the earliest examples of play-to-earn games.

A few years later, Moss discovered EverdreamSoft's research on tokenized game assets in Spells of Genesis, which inspired him to introduce NFT skins and ability enhancements in SaruTobi, and released NinjaSuit. **This marks the first time NFTs have been used in play-to-earn games. **

As the story continues, Moss realized he could lure Spells of Genesis users by letting them use their in-game items in SaruTobi. By linking their Counterparty mobile wallet, SaruTobi can read their token inventory and grant access to various functions based on their holdings. When Spells of Genesis cards became playable in SaruTobi, this led to a breakthrough interoperability between the two games.

**This breakthrough highlights the potential of NFTs to connect independent games, suggesting that the walled gardens of the gaming and social media industries will eventually be eroded. **

(6) Rare Pepes (September 9, 2016)

Rare Pepes (2016)

**Rare Pepes are iconic collectible cards deeply rooted in internet culture and played a major role in the emergence of crypto art on the blockchain. **

The Satoshi Nakamoto Card, Series 1, Card 1, holds a special place among the 1800 cards issued in 36 series. This card pays homage to Satoshi Nakamoto, the mysterious creator of Bitcoin. There are only 300 people, and you can enter the exclusive 300 club with the Satoshi Nakamoto card.

(7) Linagee Name Registrar (August 8, 2015)

Linagee Name Registrar (2015)

The Linagee name registrar was launched a week after ethereum’s public launch and is currently believed to be the oldest smart contract on ethereum.

**Although it predates the NFT movement by a few years, the Linagee name registrar is similar to the modern Ethereum Name Service (ENS). **

While not a traditional NFT, it embodies the underlying technology that has enabled the ubiquity of NFTs we see today.

(8) CryptoPunks (June 23, 2017)

CryptoPunks (2017)

CryptoPunks, founded by Matt Hall and John Watkinson, has become a top NFT project and a symbol of the NFT community.

These 8-bit avatars, considered works of art and collectibles, have gained immense popularity. The rarest Alien CryptoPunks, of which there were only nine in total, sold at auction for more than $11 million.

**Owning CryptoPunks is seen as a vote of confidence in NFTs and the Ethereum blockchain because of their historical significance. **

(9) CryptoKitties (November 23, 2017)

CryptoKitties (2017)

CryptoKitties, a blockchain game that allows users to raise virtual cats, gained huge popularity during the 2017 cryptocurrency bull market, causing Ethereum Gas prices to soar. This viral sensation marked the first time a blockchain game went mainstream and led to the coining of the term "NFT."

Notably, CryptoKitties was also the first to use the ERC-721 Token standard, which describes how to create NFTs on an Ethereum-compatible blockchain. Despite the misconception of an infinite supply, there are only 100 and 50,000 of the Progenitor and Generation 0 cats, making them valuable and highly sought after by collectors.

**Many of the biggest names in the NFT space, such as Pranksy, Chris Dixon, Nate Alex, and founder of Axie Infinity, started out with CryptoKitties. **

Early NFT projects struggled to gain widespread popularity and remained largely unknown to the public, accessible only to cryptocurrency and blockchain enthusiasts.

NFTs started to gain mainstream attention in 2017 with the launch of the first series of NFTs on the Ethereum blockchain.

Unlike previous blockchains, Ethereum's smart contracts make token creation, programming, storage, and transactions easier and user-friendly.

02 The Rise of Bitcoin Ordinals

Bitcoin ordinals are becoming a mature form of NFT. They use "ordinal number theory" to store data on small bitcoin units called satoshis (for more information, read "Bitcoin Ordinal Numbers: Everything You Need to Know").

One of the early standout projects in the ordinal space was Taproot Wizards, a collection of 2105 unique and fascinating Taproot Wizards aimed at restoring the magic of Bitcoin. The project's first inscription #652 on the blockchain marks its early entry into this emerging era.

Taproot Wizard, Inion #652

**BRC-20, also known as Bitcoin Consultation 20, is the latest trend in the NFT ecosystem. **

In this emerging trend comes a user named @BitGod21 whose mission is to "define the meta on Bitcoin". They played a vital role in educating people about this emerging technology, while also launching the BRC-20 Token OXBT, which garnered a lot of attention on Twitter, drawing the attention of famous influencers like Elena and Wale interest.

BitGod21’s Twitter Profile Picture

The ordinal appears in December 2022, but gets a lot of attention in January 2023. Several well-known NFT projects such as OnChainMonkey, DeGods, and Yuga Labs have joined the Bitcoin network.

**In just six months since its inception, the number of inscriptions of Bitcoin ordinals has surpassed 10 million. This demonstrates the rapid adoption and growing popularity of this form of NFT. **

Bitcoin Ordinals Trading Volume by Market

Ordinal Movement has seen a rapid influx of more than 130,000 unique users, a sharp rise from May.

Bitcoin Ordinals cumulative unique users by market

When examining the top 15 NFT series by sales volume in the last month, it is worth noting that 5 of them are ordinal items, including two BRC-20 ordinals.

Top 15 Collectible NFTs by Sales, CryptoSlam

An important question that naturally arises is whether ordinal numbers are a lasting phenomenon, or just a passing fad that will eventually fade away?

03 ** Can the Bitcoin ecology replace Ethereum? **

Despite its rapid development, the innovation has faced huge criticism due to network congestion as it became congested, with some questioning the durability of the technology and whether it was just a passing fad.

Historical chart of Bitcoin average transaction fees

(1) The basic purpose of Bitcoin

Bitcoin was created by Satoshi Nakamoto to create a decentralized and secure financial system that operates independently of any central authority. In Satoshi Nakamoto's vision, Bitcoin will enable peer-to-peer electronic cash transactions without the need for intermediaries such as financial institutions.

**While Bitcoin's primary purpose is to serve as a digital currency, some believe it goes beyond that role. They see the potential for Bitcoin to evolve into a currency or store of value, similar to how Ethereum works as an infrastructure blockchain on which applications can be built. **

Transforming bitcoin into an ethereum-like infrastructure blockchain and enabling application development through ordinals and BRC-20 has sparked divisions within the bitcoin community.

**(2) Are there any benefits to storing NFTs on Bitcoin? **

The quality of a blockchain is usually assessed against three key criteria:

• Scalability;

-Safety;

• Decentralization.

Blockchain Trilemma Solutions Compared

Transitioning to an infrastructure blockchain like Ethereum can present scalability issues, as seen with the proliferation of NFT creations leading to exorbitant transaction fees. This problem has also been observed in ordinals, where congestion in the blockchain causes transaction fees to spike.

**Originally, Ethereum emerged as a potential solution to the previously mentioned historical scalability issues with NFTs. Subsequently, Solana became an alternative solution to high gas costs. However, this solution comes at the expense of security. **

To address Bitcoin's scalability challenges, layer 2 scaling solutions such as stacks have emerged. These solutions aim to make Bitcoin programmable and overcome its limitations. However, it is critical to consider potential security issues that may arise with these proposed solutions. This demonstrates the importance of taking proactive steps to effectively address these issues.

(3) Bitcoin solves security issues

The main advantage of Bitcoin is its strong security. The verification of Bitcoin blocks relies on the computing power of multiple computers, a process known as "proof-of-work." Although energy-intensive, this approach ensures a high level of security, as manipulating the blockchain would require significant computational and electrical resources.

**However, security issues associated with Ethereum are relatively minor, with most losses occurring due to scams perpetrated by malicious users. Given this, why is there interest in owning NFTs on Bitcoin? **

According to Ordinals creator Casey Rodarmor, the effort is primarily a fun art project aimed at promoting a deeper understanding of bitcoin among individuals. It is a means of encouraging people to delve into the intricacies of Bitcoin and its potential.

04 Summary

NFTs are a relatively new concept, having emerged nine years ago in 2014. This journey began with the creation of the first-ever NFT, called "Quantum," minted by Kevin McCoy on Bitcoin fork Namecoin. Over the years, various other NFTs were introduced on the pre-Ethereum blockchain, laying the groundwork for today's thriving NFT market primarily powered by Ethereum.

**Bitcoin ordinals have become a popular form of NFT, utilizing "ordinal number theory" to store data on small bitcoin units called "satoshis." The launch of BRC-20 (also known as Bitcoin Request for Review 20) has further contributed to the rise of Ordinals in the NFT ecosystem. **

As bitcoin has grown rapidly, criticism of high transaction fees and concerns over the technology's durability have emerged, leading some to question its long-term viability. While bitcoin was originally created as a decentralized digital currency, some proponents believe it has the potential to move beyond that role, similar to the infrastructure ethereum uses to build applications. However, the idea sparked divisions within the Bitcoin community.