In a little over a month, the Ordinals protocol will celebrate its 2nd anniversary on the Bitcoin mainnet. In 2023, the Bitcoin ecosystem went from obscurity to an inscription frenzy. This year, following the historic 4th Bitcoin halving, the ecosystem has seen many changes such as Runes, the development of new meme communities, and discussions around OP_CAT.

In May of this year, Bitcoin Asia, Ordinals Asia, and various Bitcoin-related Side Events were held in full swing in Hong Kong. At that time, expectations for the second half of the year in the Bitcoin ecosystem, especially around Bitcoin Layer2 and Runes, were high. Fast forward, we find ourselves at the end of 2024, with Trump's election, Bitcoin has been on a tear, and we finally saw Bitcoin reach a six-figure price.

However, compared to Bitcoin's fierce price rally, the performance of the Bitcoin ecosystem seems lackluster.

Runes, the most influential token protocol in the Bitcoin ecosystem, still has a total market value of less than $2 billion. Since Trump's election, the total market value of Runes briefly exceeded the $2 billion mark. However, even with just a brief breakthrough of the $2 billion mark and approximately a 2x total market value increase, the Rune ecosystem could not hold its ground. Currently, Rune is undergoing its second challenge to the $2 billion mark, with a total market value of approximately $1.92 billion.

Indeed, purely looking at the data, pulling a top-tier meme coin from Solana could easily surpass Rune in market value...

Another familiar old friend, BRC-20, still has a higher total market value than Rune, at nearly $3.6 billion. While it still maintains the lead in terms of data, BRC-20 also faces some issues, such as the majority of its market value composition being dominated by the spot-traded $ORDI and $SATS on Binance, which collectively make up almost half, leaving a long tail of assets. Some active Western communities, primarily focused on $PUPS and $WZRD, have already or are about to shift to the Rune ecosystem.

BlockBeats has invited 3 deep-rooted Bitcoin ecosystem players to collectively review the performance of the Bitcoin ecosystem over the past year. Are they more optimistic or pessimistic about the future? Have they witnessed a subtle change in the development logic of the Bitcoin ecosystem? How do they interpret some of the unique phenomena within the Bitcoin ecosystem?

Guests:

Dr. Goldendog (@ordjingle): Ordinals Protocol Contributor

Ivan (@ivantkf): Former Magic Eden Bitcoin Ecosystem APAC Community Lead, BRC-1155 Protocol Author

An anonymous senior dev, a significant contributor to the BRC-20 protocol

Bitcoin has surpassed the $100,000 mark, why is the Bitcoin ecosystem still lukewarm?

Looking back at this past year, Bitcoin has undoubtedly stood out in the Crypto market and, with Trump's election, has surged ahead, breaking the $100,000 mark, once again making cryptocurrency history.

However, despite Bitcoin's continuous rise, it seems that it has not provided much of a boost to the Bitcoin ecosystem. CEXs show little interest in listing runic tokens, especially Binance, which has not yet listed any runic token contracts or spot markets. The Bitcoin Layer2 projects that garnered attention earlier this year, apart from Fractal and Merlin, have not left a profound impression like other projects.

Currently, the total market cap of runics is not even as high as a top-tier Solana meme coin. In the NFT space, the top 10 Bitcoin NFT projects include Bitcoin Puppets at 10th place, with Node Monkes at 11th place, while ETH NFTs still hold a higher position and influence in the NFT market.

Why hasn't the Bitcoin ecosystem been driven along with Bitcoin's price surge?

Dr. Goldendog: The narrative of the Bitcoin ecosystem is still valid, such as the significance of Bitcoin itself as a medium of value, the meaning of fully on-chain data, and so on. However, perhaps the narrative of merely tokenizing Bitcoin, the stimulation brought by novelty, has been largely exhausted. Both runics and BRC-20 have entered a stage of community building that requires relatively long-term accumulation.

From the perspective of VC investment, top Crypto VCs have not completely abstained from investing in the Bitcoin ecosystem, but their involvement has not been particularly deep. It is more like "alternative" investment. If they do not show a strong interest in taking a "gamble" on the Bitcoin ecosystem, then the short-term opportunities in the Bitcoin ecosystem may still be relatively limited.

For Tier 1 CEXs, the possible reason for not listing RUNE tokens is quite simple: the trading of RUNE tokens is not yet widespread and active enough to meet the listing standards of CEXs. If listing RUNE tokens does not bring about an increase in traffic or significant fee revenue, CEXs lack the motivation to list RUNE tokens.

However, the Bitcoin ecosystem has not been entirely unaffected by Bitcoin's rise. Whether it is RUNE, BEP-20, or Bitcoin NFTs, they have actually experienced a relatively noticeable correlated increase along with Bitcoin's rise. This increase is not significant but it exists, indicating that the Bitcoin ecosystem is still recognized by the market, but it remains a niche track and has not yet been favored by widespread or substantial funds.

Ivan: For assets that are not listed and need to be purchased using Bitcoin on-chain, in this environment of significant Bitcoin price appreciation, if Bitcoin is exchanged for RUNE or other Bitcoin ecosystem assets, it may not outperform Bitcoin's price appreciation, and once Bitcoin falls, it may face a double loss.

If it were a story like the BEP-20 craze last year that drove the entire market crazy, such concerns would not exist, as the Bitcoin price was also lower at that time. However, now such stories are on Solana instead of Bitcoin, and Bitcoin has even reached a price of $100,000 per coin. People are willing to use their precious Bitcoin to buy any "shitcoin" based on the expectation of better returns than Bitcoin, but it is not cost-effective to use Bitcoin on the Bitcoin mainnet to exchange for other assets.

This bull market is mainly driven by ETFs, allowing traditional institutional funds to find a stable channel to connect with Bitcoin. Everyone knows that a lot of funds are in Bitcoin, and through fund overflow, market funds can be diversified to drive the on-chain ecosystem development of Bitcoin. In contrast, Solana's meme ecosystem thrives on-chain, generating multiple stories of sudden wealth to attract new and old retail investors to reallocate funds to purchase SOL, thereby driving the coin price increase and continuous on-chain development. Therefore, for the Bitcoin ecosystem to break out, there is still a lack of a narrative that can truly materialize and create the next $ORDI wealth myth, which can then re-attract capital in the crypto market to flow back to the Bitcoin ecosystem.

dev: Solana is currently very hot, not only among Bitcoin ecosystem players. Apart from those making money on Solana, any player in any other ecosystem would feel a sense of loss.

However, during last year's bear market, the Bitcoin ecosystem had already experienced a thorough explosion. After such a big explosion, it takes time to cool down and settle, waiting for new events to attract more incremental players.

But such an event has not yet arrived. Although we had Rune this year, it is basically targeting the same audience that the Ordinals have already covered, without any new attraction points for players from other ecosystems to enter. Without a breakthrough in the narrative, the immaturity of the ecosystem's infrastructure further limits the entry of liquidity. Whether it's BRC-20 or Rune, the trading experience is no different from NFTs when the asset is not listed, which makes institutional investors who want to enter worry about potential exit issues.

Against the backdrop of the United States embracing Bitcoin, has the fundamental landscape of the Bitcoin ecosystem changed?

This year, as Bitcoin repeatedly hit new highs and with the expectation of the U.S. fully embracing Bitcoin following Trump's election, the "Miner Income Theory" has always been one of the optimistic views on the long-term development of the Bitcoin ecosystem. However, the boost that the "U.S. Embrace" narrative has given to the entire crypto market seems to have dealt a blow to the "intra-community narrative innovation". The voices that used to focus on the lack of useful innovation in the coin circle have almost disappeared amidst the lively surge.

For the Bitcoin ecosystem, which has many of its values built on the "Bitcoin mainnet," and the "strong narrative track", has the recent transformation of the market's biggest narrative also had some impact?

Dr. Jin Dog: If Bitcoin truly becomes a strategic reserve asset of the United States, and even all countries start to reserve assets strategically, then I might tend to believe that doing nothing is the best option; the security of Bitcoin must absolutely come first. Looking at this possibility, any potential impact on Bitcoin security is a hidden thunderbolt against Bitcoin's greatest interest. The fact that sovereign states can hold Bitcoin as a strategic reserve is the biggest driver for Bitcoin.

Previous views, such as increasing miner income, are now in the background of this "formal embrace" and the priority will naturally be placed behind network security. If Bitcoin can be given higher legal status by more sovereign states' officials, there is nothing more groundbreaking than this.

From this perspective, scenarios like OP_CAT resurrecting on the mainnet are unlikely to occur in this bull cycle. When Bitcoin's price was not rising, everyone might have felt an urgent need to innovate to make the network active again, but now that things are better, the necessity of taking risks to open up this uncertainty in the short term has significantly diminished. However, the attempt of OP_CAT on Fractal, such as CAT20, is very good and meaningful.

Ivan: For miners, the surge in Bitcoin's price due to the United States embracing crypto has certainly made the transaction fees in the Bitcoin ecosystem seem less lucrative in comparison. While some words are good, even if not, the Bitcoin price has already increased more than 5 times from its low point.

Furthermore, the portion of ETF funds is also not flowing into the Bitcoin ecosystem. When these two factors are combined, it makes the current Bitcoin ecosystem actually not much different from other chains, where experienced insiders are engaging in PvP. This is also why everyone is very eager for Binance to list Rune, believing that if this were to happen, it would be like a catalyst igniting the entire ecosystem.

dev: I have always felt that miners are not very concerned about Ordinals, the Bitcoin ecosystem, and such matters. Most of the miners I have encountered are quite realistic. They simply calculate the mining costs, how much various costs are, at what Bitcoin price they need to sell their mined coins to break even, and so on.

They also do not consider fundamental questions such as whether Bitcoin prioritizes security or innovation. They truly just mine faithfully, which is a very normal thing to do. Miners in Web2 who mine for gold, silver, copper, or iron also do not consider the sustainable development of the mining area; this is real life.

Bitcoin Core developers, as well as ecosystem developers and players, are more interested in this issue than miners.

If we step out of the Bitcoin ecosystem and look at the entire market, it is currently a bull market. Sooner or later, the Bitcoin ecosystem will rise with the bull market, and liquidity will inevitably overflow into this track. In past bull markets, not a single track with a relatively low position and a reliable narrative has been overlooked by later speculators. So, from my perspective, the fundamentals of the Bitcoin ecosystem have not changed much; there will be opportunities. It's just that this opportunity will come at what stage of the bull market, I don't know.

Is BRC-20 on the Decline?

Although BRC-20 currently still has a total market value of more than double that of Rune, for players deeply involved in the Bitcoin ecosystem, they can directly feel that the ecosystem activity of BRC-20 is gradually being surpassed by the Rune ecosystem. Some active Western communities, mainly centered around $PUPS and $WZRD, have already or are about to transition to the Rune ecosystem.

Nevertheless, BRC-20 is still the only Bitcoin asset protocol with 2 Binance spot listings. In comparison, Rune still has 0 listings, which remains a significant advantage of BRC-20 over Rune at this stage.

Over the past half month, the concept of "grassroots" led by "π" on BRC-20 has brought some renewed attention to BRC-20. Is this a good thing or a bad thing? Has BRC-20 declined?

Dr. Golden Dog: Indeed, BRC-20 is not as hot as last year, but I do not believe it has "declined." After all, BRC-20 is the first Bitcoin FT protocol born after the Ordinals protocol, and its historical position remains.

As a Bitcoin FT protocol, the BRC-20 protocol itself has been continuously updated, and advancements in related infrastructure have been ongoing. However, these actions, compared to when BRC-20 first emerged, when the entire market was focused on the issuance of tokens on Bitcoin, appear to be incremental innovations.

The concept of "grassroots" is actually quite interesting. If we do not immediately label coins such as "π" and "fifa" as having a "grassroots" nature, and instead view them from the perspective of asset issuance and development, they may simply be memes targeting audiences unfamiliar to us.

For example, we have often joked that Runes and BRC-20 are in a state of "no cross-trading." If we look at the popular meme communities in the Rune ecosystem, such as $PUPS and $BDC, to some extent, it can also be seen as a grassroots movement initiated by a younger foreign community. For every coin, the question of how to gain acceptance from more and more people is a challenge. If there can be a breakthrough in this regard, then from the perspective of the crypto market, the so-called "grassroots" is not as bad.

Ivan: Although BRC-20 is not currently very popular, it cannot be said to have "fallen." The overall market cap and trading volume of the entire BRC-20 ecosystem are not weak, and Chinese funds are quite familiar with assets like $ORDI, $SATS, $PIZZA. It's just that the current market's focus is on Solana, as funds always flow to where the action is. Therefore, both BRC-20 and Runes may be waiting for the next breakout opportunity.

Assets like $PUPS and $WZRD migrating to Runes may be mainly because their audience is primarily Western. Therefore, by moving to the more influential Rune ecosystem in the West, they might be able to better expand the coin's community size. Furthermore, another reason could be that Binance has not yet listed any Rune tokens. Therefore, if, as a Rune token, they strive to be listed in the future, the breakthrough they may achieve could be even greater.

dev: Now, "Ordianls are dead" is basically just a meme. But last year, it still carried a bit of self-deprecation and lack of confidence. Back then, the situation was seen as even worse, and jokes tended to lean towards the extreme "death" narrative. The current state of BRC-20 is far from as bad as it was back then; I don't think BRC-20 is heading towards "decline."

In fact, I see Runes and BRC-20 as a single entity. If liquidity spills over into the Bitcoin ecosystem, it will be like last year during the runeword craze, where everything related to BRC-XXX surged in value. People weren't even concerned whether something was truly innovative or not; the fear was missing out on the opportunity. It was no longer about the fundamentals of a project but rather about which undervalued project had the potential to pump, which new project could be airdropped free tokens, or which project was primed for a rug pull.

From a user's perspective, BRC-20's ecosystem infrastructure has been continuously evolving. The timing and catalyst for the next surge of BRC-20 cannot be predicted. More importantly, when the winds of change blow, the ecosystem infrastructure at that time must be able to absorb more significant liquidity inflows.

Why is the "lack of interaction between Chinese and non-Chinese communities" so evident in the Bitcoin ecosystem, while there is no such barrier on Solana or other chains?

On Solana, although there are also many meme coins where the "angle" may not be immediately apparent to Chinese speakers, such projects are quickly covered by relevant "educational information," and there isn't a clear distinction between audiences solely from the Chinese or English-speaking communities. However, in the Bitcoin ecosystem, it is very noticeable that Chinese players generally have less interest in Runes, while English-speaking players were also relatively uninvolved during last year's BRC-20 hype.

Why does this phenomenon occur?

Dr. JinDog: First of all, there is indeed a difference in cultural understanding. This interesting phenomenon reminds me of an interview between Jack Ma and Elon Musk. Jack Ma's English is already quite good, and in the interview, he had a statement that roughly meant "99.9% of tools are not smarter than humans," which was an exaggerated and somewhat joking remark. However, Musk thought Ma was stating a literal data point and made a joke based on that data, but Ma failed to grasp Musk's point.

In the Bitcoin ecosystem, Casey often creates some English compound words. They find it amusing and fun, but for those of us who didn't grow up in an English-speaking environment, we may not see where the humor lies. This situation is also very common with various memes within Runes.

From a technical perspective, Ordinals did bring innovation compared to BRC-20, which some foreigners do appreciate. However, a token protocol is still heavily tied to profitability, and foreigners did indeed miss the BRC-20 wave. Ordinals happened to resonate more with them culturally, which is a result of various factors.

Ivan: Early foreigners actually participated in Ordinals, but they were more involved in over-the-counter trading of small images on Discord, whereas we conducted BRC-20 OTC trades on WeChat. From the outset, there were differences in the directions or focuses of participation between Chinese and foreigners.

Last year, when OKX's BRC-20 trading experience on mobile was already very smooth, many foreigners were still unaware. The Chinese-speaking community, as a direct driving force behind the BRC-20 ecosystem, not only saw enthusiastic involvement from players but also a considerable amount of infrastructure was handled by the Chinese-speaking community. Naturally, everyone would think, since our system is running smoothly, its stability has been tested, and there have been no major security issues like double-spending, we should just enjoy playing with this.

dev: The die-hard foreign players in the Ordinals community were mainly focused on playing NFTs at the time and actually didn't have much faith in BRC-20 when it first came out. They thought it was just a matter of writing some JSON text on an inscription and then having to carve another inscription for transfers, which they found cumbersome.

These people were already supporters of Casey, who initially didn't like this concept either, feeling that Ordinals should be used for art. Unexpectedly, the Chinese-speaking community wielded great influence and directly fueled the popularity of BRC-20. I once had direct communication with domo. He mentioned that the builders who actively sought him out were mostly from the Chinese-speaking community.

The explosion of BRC-20 definitely had an impact on foreigners, so after Ordinals went live, the Western community also actively joined in. They may not have any biases against issuing coins on Bitcoin, but they certainly aren't interested in taking over old assets. This distinction between focusing on new projects rather than old ones transcends borders.

Chinese people are a cornerstone force in the BRC-20 ecosystem, and $ORDI is what we have been promoting. Builders of the BRC-20 ecosystem such as UniSat, OKX, all have Chinese backgrounds. For Chinese people, after Ordinals was launched, many of us who originally held positions in BRC-20 may feel that Ordinals is here to divert attention—considering how much we have built in BRC-20 and how stable the entire protocol runs, why would foreigners say it's not working?

How Would You Rate This Year's Bitcoin Ecosystem Development?

In 2023 and 2024, Bitcoin activities in Hong Kong transformed from a niche grassroots gathering into a week-long "Bitcoin Week." Those who understand and support the Bitcoin ecosystem have certainly increased significantly. However, what players expect from the Bitcoin ecosystem is an ecosystem that can compete with Solana and Ethereum on an equal footing, which does not seem to have much hope of catching up in the short term. As 2024 is coming to an end, how would you rate the development of the Bitcoin ecosystem?

Dr. Jingu: 70 points. There is no significant deviation from expectations, neither exceptionally good nor bad. The value propositions that make people optimistic about the Bitcoin ecosystem have not changed, and more people are becoming familiar with the Bitcoin ecosystem. Although 2024 did not have a wealth myth as mind-blowing as last year's $ORDI, the roots of this ecosystem are now firmly established, and small seedlings have sprouted.

I think this is quite good. Rapid development may also lead to premature death. As a newly emerging narrative in this cycle, the Bitcoin ecosystem has a long way to go and needs to steadily move forward.

Ivan: 60 points. The main reason is that the expectations from the previous year were quite high, such as the famous dream pie chart comparing BRC-20 and ERC-20 from last year.

Initially, everyone thought that the Bitcoin ecosystem would accelerate to retrace the path that the Ethereum ecosystem had gone through. For example, breakthroughs were expected in various projects like stablecoins, Layer 2 solutions, etc. However, the development outcomes so far fell short of expectations.

But this year is only the second year of the Bitcoin ecosystem. Perhaps next year, the scale of events in Hong Kong and worldwide will be even larger. The Bitcoin ecosystem will continue to evolve, more and more people will join, and it is still too early to draw conclusions. NFTs are a good example—born in 2017 but only skyrocketed in 2021. The Bitcoin ecosystem is still in its early stages.

dev: I won't give a score; I am more pessimistic.

I hope to see something like the revival of OP_CAT happen, enabling Bitcoin to truly execute Turing-complete smart contracts. Only then can a myriad of developments be built on top, and the Bitcoin ecosystem can truly take off. In reality, this is still a matter of consensus. With an incomplete consensus, the concept of the Bitcoin ecosystem may be a pseudo-demand, and everyone can only use "unconventional methods" to do things on Bitcoin.

Nevertheless, I believe that in this bull market cycle, liquidity will definitely spill over into the Bitcoin ecosystem, and we will have a good time in this bull market. However, in the long run, I am not optimistic about the Bitcoin mainnet's ability to truly develop without any changes taking place.

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