The technical logic behind the booming Bitcoin inscription coins: Understanding the new trend of blockchain from scratch

What Exactly Are Inscriptions? An Easy Analogy to Help You Understand Instantly

If you still don’t know what Bitcoin inscriptions are, imagine this scenario: there are two banknotes of the exact same denomination. They are originally indistinguishable, but when one is signed by a celebrity or marked with a special symbol, its value skyrockets.

The concept of inscriptions is exactly like this—turning originally homogeneous bitcoins into unique assets. This involves three key technologies:

Basic Structure of Bitcoin: Each bitcoin is made up of 100 million satoshis, with a total of 21 million bitcoins amounting to 2,100 trillion satoshis. In the past, these satoshis were interchangeable, but everything changed with the emergence of the Ordinals protocol.

Breakthrough of the Ordinals Protocol: On December 14, 2022, Bitcoin core developer Cassie Rudomer launched the Ordinals protocol, assigning a unique number to each satoshi. This grants each satoshi its own identity, transforming it from a fungible asset into a non-fungible one.

The Essence of Inscription Minting: When users write images, text, or code onto a specific satoshi (with each inscription not exceeding 4MB), that satoshi becomes one of a kind. These written data are called inscriptions, and the process of writing them is inscription minting. Simply put, an inscription is a technical method used to issue NFTs on Bitcoin.

Why Did Bitcoin Inscriptions Suddenly Become Popular? Three Major Events Changed the Game

Bitcoin peaked at $64,400 in November 2021 and then continued to decline, losing over 70% of its market value by the end of 2022. But the appearance of inscriptions brought a turning point.

Timeline and Key Events:

November 2022 — Taproot Upgrade: Bitcoin completed a historic large-scale upgrade, attracting many developers to contribute to Bitcoin ecosystem development.

December 2022 — Launch of the Ordinals Protocol: This technical achievement made it possible to issue NFTs on Bitcoin, laying the foundation for the inscription ecosystem.

March 2023 — Birth of the BRC-20 Protocol: Twitter user domodata launched the BRC-20 standard based on the Ordinals protocol. If Ordinals is a machine tool for processing parts, BRC-20 is a production line that can directly deliver assembled parts to users. Since then, inscription development has truly entered the fast lane.

Compared to Ethereum’s years of smart contract accumulation and more mature tech stack, why can Bitcoin still stand out? The answer lies in brand effect. Bitcoin’s recognition in the market far exceeds that of other cryptocurrencies, and this super-strong credibility has brought unprecedented popularity to the inscription ecosystem.

How Hot Is the Inscription Market Now? Data Speaks

In early 2023, inscriptions experienced their first wave of enthusiasm. In May, a leading exchange announced the listing of Bitcoin tokens, becoming the first mainstream exchange to support inscription trading. Subsequently, more platforms followed, marking a watershed moment for the ecosystem.

Why is platform listing so important? Because before that, creators and investors could only trade via decentralized exchanges (DEX), facing high network fees and long processing times. Support from mainstream exchanges significantly lowered transaction costs and greatly improved speed.

Data says it all. According to cryptoslam, as of December 29, 2023, NFT trading volume based on Bitcoin development reached $1.84 billion, ranking fourth globally, behind Ethereum, Solana, and Ronin.

Global Blockchain NFT Trading Volume (USD):

After November 2023, inscription creation saw explosive growth. This ranking continues to rise.

How Can Retail Investors Participate in Inscription Minting? Three Steps to Get Started

Participating in inscription minting isn’t complicated. First, you need a crypto wallet that supports inscriptions. Here’s the standard process:

Step 1: Purchase BTC in your wallet or transfer BTC funds into it.

Step 2: Go to the “Market” → “Ordinals” → “Inscription” page, select the “BRC-20” type, and click “Mint”.

Step 3: Enter a four-character token code (the name of your inscription token), specify the amount, and input the recipient address to complete the minting.

Note that inscription tokens (Tokens) and NFTs serve completely different purposes:

Want to mint assets that can be traded in large quantities on exchanges? Choose Tokens. Want to create blockchain units representing unique digital assets? Choose NFTs.

Is There Still an Opportunity in the Inscription Track? Investors Should Know the Risks

As of today, BTC price is $87.04K, down 0.30% in the last 24 hours.

People entering the inscription market are asking the same question: Is now still a good time to buy?

Honestly, the situation has changed. Since the beginning of the year, the number of inscription projects has surged, and cheap inscription tokens are hard to find. Plus, inscriptions involving large data like images and audio occupy more block space, causing transaction fees to rise sharply. With high transaction costs, how long the market enthusiasm can last remains uncertain.

Our advice is to stay cautious. Bitcoin is indeed at a critical development stage, balancing innovation, decentralization, and security delicately. But because this balance is still fragile, the future of the inscription track remains uncertain.

If you are a high-risk-tolerance investor wanting to participate in inscription creation and trading, it’s recommended to invest limited funds and set stop-loss and take-profit levels in advance. If you prefer short-term trading, consider tracking Bitcoin price fluctuations through contracts for difference (CFDs) rather than directly holding inscription assets.

Summary: Are Inscriptions an Opportunity or a Bubble?

The emergence of inscriptions has undoubtedly brought new vitality to the Bitcoin ecosystem. The Taproot upgrade, Ordinals protocol, BRC-20 standard, and support from mainstream exchanges have collectively driven inscription development. With NFT trading volume based on Bitcoin already ranking in the top four globally, this demonstrates the growth potential of the inscription market.

But we must also see reality: high transaction fees, uneven project quality, and whether market enthusiasm can be sustained are all concerns. Bitcoin inscriptions are at a critical juncture, and their future direction remains to be observed.

For retail investors, caution is always the first priority. Before participating in any emerging track, fully understand its technical logic and decide whether to enter based on your own risk tolerance.