From Nakamoto to Satoshi’s Exploration: Can the Bitcoin Ecosystem Replace the Ethereum Ecosystem?
Can Bitcoin replace Ethereum?
Author: Origins Research; Compiled by: Huohuo, Plain-language Blockchain
In the context of the continuous development of blockchain technology and NFTs, a new concept has emerged: Bitcoin Ordinals.
Ordinals seek to bring the creativity and expressiveness of NFTs to the Bitcoin network. This innovative approach uses “ordinal theory” to engrave data on the smallest unit of Bitcoin, known as a satoshi.
By doing so, Bitcoin Ordinals can extend the functionality of Bitcoin and create and own unique digital assets on its secure and decentralized blockchain.
This article delves into the fascinating world of NFTs before Ethereum and explores the emergence of Bitcoin Ordinals as a unique form of NFT. It also reveals the fundamental purpose of Bitcoin and the ongoing debate around NFT integration in the Bitcoin ecosystem.
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1 NFT Early History
NFTs have a relatively short history dating back to 2014, nine years ago. It all began with the creation of the first-ever NFT called Quantum, minted by Kevin McCoy on the Bitcoin fork, Namecoin.
In the following years, several other NFTs were launched on blockchain platforms before Ethereum, laying the groundwork for the thriving NFT market we witness today, primarily supported 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 serve as a means of representing and maintaining ownership of real-world assets on the Bitcoin blockchain. By tagging bitcoins with specific attributes that correspond to physical assets such as vehicles or stocks, owners can prove ownership through these distinguishable coins.
Colored Coins, commonly referred to as meta-coins, introduce imaginative coloring as metadata to distinguish them from other bitcoins. While some experts argue they are classified as the first NFT on the blockchain, Colored Coins laid a solid foundation for the development of NFTs and can be viewed as an early precursor to Bitcoin 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 sold for $1.47 million at a Sotheby’s auction in 2021, attracting a lot of attention.
However, due to ownership issues, legal disputes arose. McCoy originally minted “Quantum” on Namecoin, a blockchain software based on Bitcoin code that requires ownership to be updated every 250 days.
Unfortunately, McCoy failed to renew it in 2015. Before McCoy’s sale in 2021, an individual with a Twitter handle @EarlyNFT registered as the owner, causing ownership issues.
Nevertheless, the sale was still valid and marked Kevin’s successful effort to bring this important NFT history to mainstream consciousness.
(3) Eggs (July 27, 2014)
Namecoin is a fork of Bitcoin created by Bitcoin’s creator, Satoshi Nakamoto. It was launched in 2011 as a decentralized name registration service, similar to the ENS (Ethereum Name Service) we know today.
In 2014, users discovered they could add metadata to their registered names, including attaching a profile image. This marked the origin of the first batch of profile pictures (PFP).
Among the registered PFPs were 277 default Twitter avatars, called “Twitter Eggs.” These eggs came in 14 different colors and have been regarded by collectors as the earliest on-chain collectible NFT and PFP.
(4) Spells of Genesis (March 11, 2015)
Spells of Genesis (2015)
Spells of Genesis is a blockchain-based trading card game that utilizes the Bitcoin blockchain. Each card in the game represents an important moment in blockchain history through unique artwork.
The FDCARD released by EverdreamSoft, the creator of Spells of Genesis, marked the first tokenized game asset.
This milestone marked a shift in power, allowing game players to reclaim ownership of their digital assets from central authorities.
It can’t be overstated how important this moment is, as it paved the way for a new era of games where players truly own their assets. When exploring the roots of blockchain gaming, Spells of Genesis is a foundational milestone.
(5) SaruTobi (May 6, 2016)
In 2014, iOS developer Christian Moss released the game SaruTobi on the App Store. While his initial goal was to allow in-game purchases with bitcoin, Apple’s restrictions led him to reward players with small amounts of bitcoin while they played the game. This marked one of the earliest examples of a play-to-earn game.
Years later, Moss discovered EverdreamSoft’s research into tokenizing game assets in Spells of Genesis, which inspired him to introduce NFT skins and power-ups in SaruTobi, releasing the NinjaSuit. This marked the first use of NFTs in a play-to-earn game.
The story doesn’t end there, as Moss realized he could attract Spells of Genesis users to SaruTobi by allowing them to use their game items. By linking their Counterparty mobile wallets, SaruTobi could read their token inventory and grant access to various features based on their holdings. When Spells of Genesis cards could be played in SaruTobi, it led to a groundbreaking level of interoperability between the two games.
This breakthrough highlights the potential of NFTs to connect independent games, hinting at the eventual erosion of the walled gardens of the gaming and social media industries.
(6) Rare Pepes (September 9, 2016)
Rare Pepes (2016)
Rare Pepes played a significant role in the emergence of encrypted art on the blockchain as an iconic collectible deeply rooted in internet culture.
Bitcoin card, Series 1, Card 1, holds a special place among the 1,800 cards issued across 36 series. This card pays homage to bitcoin’s mysterious creator, Satoshi Nakamoto. Only 300 people, who own the Bitcoin card, can enter the exclusive 300 club.
(7) Linagee Name Registrar (August 8, 2015)
Linagee Name Registrar (2015)
The Linagee Name Registrar was established shortly after its public release on Ethereum and is currently considered the oldest smart contract on Ethereum.
Although it predates the NFT movement by a few years, the Linagee Name Registrar is similar to modern Ethereum Name Service (ENS).
While not a traditional NFT, it embodies the underlying technology that facilitated the popularization of NFTs that we see today.
(8) CryptoPunks (June 23, 2017)
CryptoPunks, created by Matt Hall and John Watkinson, have become a symbol of the top NFT projects and NFT communities.
The 8-bit avatars, considered works of art and collectibles, have gained tremendous popularity. The rarest of the CryptoPunks, Alien CryptoPunks, have only a total of nine and were sold at auction for over $11 million.
Owning a CryptoPunk is seen as a vote of confidence in NFTs and the Ethereum blockchain as they have historical significance.
(9) CryptoKitties (November 23, 2017)
CryptoKitties is a blockchain game that allows users to breed virtual cats and gained massive popularity during the 2017 cryptocurrency bull market, causing Ethereum gas prices to skyrocket. This viral phenomenon marked the first time blockchain games went mainstream and led to the birth of the term “NFT.”
It is worth noting that CryptoKitties was also the first company to use the ERC-721 token standard, which describes how to create NFTs on Ethereum-compatible blockchains. Despite misconceptions about unlimited supply, the number of Founder Cats and Gen 0 Cats is only 100 and 50,000, respectively, making them valuable and sought after by collectors.
Many notable figures in the NFT space, such as Pranksy, Chris Dixon, Nate Alex, and the founder of Axie Infinity, started with CryptoKitties.
Early NFT projects were difficult to gain widespread popularity and largely remained unknown to the general public, only accessible to cryptocurrency and blockchain enthusiasts. In 2017, NFTs began to receive mainstream attention with the launch of the first NFT series on the Ethereum blockchain. Unlike previous blockchains, Ethereum’s smart contracts made token creation, programming, storage, and trading easier and more user-friendly.
02 The Rise of Bitcoin Ordinals
Bitcoin ordinals are becoming a mature form of NFT. They use “ordinal theory” to store data on small Bitcoin units called satoshis (for more information, read “Bitcoin Ordinals: Everything You Need to Know”). One of the early standout projects in ordinal space was Taproot Wizards, which collected 2105 unique and intriguing Taproot Wizards aimed at restoring the magic of Bitcoin. The project’s first inscription #652 marked its early entry into this emerging era on the blockchain.
Taproot Wizard, Inscription #652
BRC-20, also known as Bitcoin Request For Comments 20, is the latest trend in the NFT ecosystem.
In this emerging trend, a user named @BitGod21 emerged to “define the meta on Bitcoin.” They played a crucial role in educating people about this emerging technology while also launching the BRC-20 Token OXBT, which gained significant attention on Twitter and caught the interest of notable influencers such as Elena and Wale.
BitGod21’s Twitter Profile Picture
Ordinals surfaced in December 2022 but gained significant attention in January 2023. Several notable NFT projects, such as OnChainMonkey, DeGods, and Yuga Labs have joined the Bitcoin network.
In just six short months since its inception, the number of inscriptions for Bitcoin ordinals has exceeded 10 million. This indicates the rapid adoption and increasing popularity of this form of NFT.
Bitcoin Ordinals trading volume by market
The ordinal movement has witnessed a rapid influx of over 130,000 independent users, skyrocketing since May.
Bitcoin Ordinals unique user count by market
When examining the top 15 NFT collections ranked by sales volume last month, it is worth noting that 5 of them belong to ordinal projects, including two BRC-20 ordinals.
Top 15 NFT collections ranked by sales volume, CryptoSlam
A natural and important question that arises is whether ordinals are a persistent phenomenon or just a fleeting fashion that will eventually disappear?
03 Can the Bitcoin ecosystem replace Ethereum?
Despite its rapid development, this innovation faces significant criticism due to network congestion, and as the network becomes crowded, some have questioned the durability of the technology, whether it is just a fleeting fashion.
Historical chart of average Bitcoin transaction fees
(1) The basic purpose of Bitcoin
Bitcoin was created by Satoshi Nakamoto with the aim of creating a decentralized and secure financial system that operates independently of any central agency. In Satoshi’s vision, Bitcoin would enable peer-to-peer electronic cash transactions without the need for intermediary institutions such as financial institutions.
Although Bitcoin’s main purpose is as a digital currency, some see it as going beyond this role. They see the potential for Bitcoin to evolve into a currency or value store, similar to how Ethereum operates as an infrastructure blockchain on which application processes can be built.
Transforming Bitcoin into an infrastructure blockchain similar to Ethereum and enabling application process development through ordinals and BRC-20s has caused divisions within the Bitcoin community.
(2) What are the benefits of storing NFTs on Bitcoin?
The quality of a blockchain is usually evaluated based on three key criteria:
Comparison of blockchain’s three problems and solutions
Transitioning to infrastructure blockchains like Ethereum may bring scalability issues, as seen with the surge in transaction fees caused by the increase in NFT creation. This issue has also been observed in Ordenes, where blockchain congestion has caused transaction fees to skyrocket.
Initially, Ethereum emerged as a potential solution to the scalability problems mentioned earlier in NFT history. Subsequently, Solana became an alternative solution to solve high gas prices. However, this solution comes at the cost of sacrificing security.
In order to solve the scalability challenges of Bitcoin, second-layer expansion solutions such as Stacks have emerged. These solutions aim to make Bitcoin programmable and overcome its limitations. However, it is crucial to consider the potential security issues that may arise with these proposed solutions. This highlights the importance of taking proactive measures to effectively address these issues.
(3) Bitcoin solves security problems
The main advantage of Bitcoin is its strong security. The validation 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 computing and power resources.
However, security issues related to Ethereum are relatively minor, with most losses occurring due to fraud committed by malicious users. Given this, why the interest in having NFTs on Bitcoin?
According to Casey Rodarmor, the creator of Ordinals, this effort is primarily a fun art project aimed at promoting personal understanding of Bitcoin. It is a means of encouraging people to delve deeper into the complexity and potential of Bitcoin.
NFTs are a relatively new concept that emerged nine years ago in 2014. This journey began with the creation of the first-ever NFT, called “Quantum,” minted by Kevin McCoy on the Bitcoin fork Namecoin. Over the years, various other NFTs were introduced on blockchains before Ethereum, laying the foundation for today’s booming NFT market, largely driven by Ethereum.
Bitcoin ordinals have become a popular form of NFT, using “ordinal theory” to store data on small bitcoin units called “satoshis”. The launch of BRC-20, also known as Bitcoin Request Comment 20, further facilitated the rise of ordinals in the NFT ecosystem.
As Bitcoin grows rapidly, criticism of high transaction fees and concerns about its durability have led some to question its long-term viability. Although Bitcoin was initially created as a decentralized digital currency, some supporters believe it has the potential to go beyond this role, serving as infrastructure for building application processes similar to Ethereum. However, this idea has sparked controversy within the Bitcoin community.