A new narrative for the Bitcoin ecosystem, invigorating the vision and confidence in decentralization

The U.S. Securities and Exchange Commission (SEC) suddenly filed lawsuits against Binance and Coinbase, stirring up a storm in the crypto industry. Some market commentators have remarked that "fortune and misfortune are intertwined," this event is an inevitable path for crypto regulation, and the market situation has shown significant fluctuations due to this event.

Both Binance and Coinbase are facing allegations related to the listing of unregistered securities, with the SEC classifying 19 high-value tokens as securities. Before this event, Bitcoin had already been declared a non-security. Therefore, some news commentary suggested that "the only cryptocurrency guaranteed to be safe is Bitcoin." This also somewhat explains the declining trend in attention towards Ordinals and BRC-20 tokens amidst market volatility, even subtly hinting at the upcoming "prosperity" of the Bitcoin ecosystem.

In our previous article "Hundreds of Millions of NFTs Minted, How to Ensure Secure Storage?", we mentioned the hot forms of Ordinals NFT and BRC20. Today, we will use this as a starting point to explore the resurgence of the Bitcoin ecosystem. As one of the most decentralized digital currencies, in the face of regulatory challenges, how does Bitcoin reinforce our vision and confidence in decentralization?

What are Ordinals and BRC20?

The Ordinals protocol is a system for numbering and tracking the smallest unit of Bitcoin --- --- Satoshi (satoshi). It is based on a methodology called Ordinal Theory, which assigns a serial number to each satoshi based on the order of mining and transfers, tracking their flow throughout the Bitcoin supply.

BRC20 is a standard created specifically for the Bitcoin blockchain, with the aim of allowing users to write JSON (JavaScript Object Notation) on the Bitcoin blockchain using the Ordinals protocol. Through the Ordinals protocol, token contracts can be deployed, enabling the minting and transfer of tokens.

The "Rebirth" of the Bitcoin Ecosystem in 2023

As a blockchain with a profound impact on the industry, the Bitcoin network has experienced several bull and bear markets alongside crypto enthusiasts, gathering and establishing early communities for crypto enthusiasts and decentralization supporters. However, with the expansion of Ethereum and its EVM ecosystem, many blockchains have emerged and rapidly developed, attracting most users.

Until 2023, the Bitcoin ecosystem began to generate new trends and development possibilities. Developers are once again building applications around the Bitcoin network, and various positive events have attracted more new users:

In early January 2023, the Damus social network kicked off the revival of the Bitcoin ecosystem. This is a social networking application similar to Twitter; for more details on Damus, refer to the article "Damus Sparks a Trend, Why Do We Need Decentralized Cloud Storage?" published by CESS. After Damus went live, the download volume of related Lightning Network applications also surged.

On January 21, 2023: Ordinals --- --- a Bitcoin-based NFT protocol was launched, creating a stir in the market. Subsequently, on February 2, Udi Wertheimer created the largest Bitcoin NFT in the history of the Bitcoin network, with a block size and transaction volume close to 4 MB. The Ordinals protocol entered users' sights, and Bitcoin NFTs gained market attention;

In March 2023, a developer named Domodata first proposed the theoretical BRC20 standard, and the MEME Coin sparked an investment frenzy.

In 2023, the birth of Bitcoin NFTs not only attracted the attention of Bitcoin users and communities, but also revitalized other Bitcoin fork chains like Bitcoin SV (BSV)…

The "Pros" and "Cons" of Bitcoin Ecosystem Development

The aforementioned trends have brought a series of benefits to the Bitcoin ecosystem. Firstly, the rise of Ordinals NFTs and BRC20 has provided Bitcoin holders with new investment and trading options. Through Ordinals and BRC-20, users holding Bitcoin can associate their digital assets with NFTs and other tokens and participate in the emerging digital asset market. This brings more opportunities and flexibility to users and will spark interest among new users to enter the Bitcoin ecosystem.

Secondly, the Bitcoin ecosystem will become more diverse. Previously, Bitcoin was mainly used as a digital currency for value storage and transactions. However, with the development of Bitcoin NFTs, the use of Bitcoin has expanded, making it a more comprehensive and multifunctional ecosystem.

Although the introduction of NFTs and BRC-20 tokens through the Ordinals protocol has sparked negative comments regarding transaction fees and chain bloat on the Bitcoin network, an undeniable fact is that the increase in transaction volume has improved miners' earnings.

While we recognize the innovative breakthroughs achieved by the Bitcoin ecosystem this year, we cannot help but ponder: why did the Bitcoin ecosystem not form a prosperous, innovative, and sustainably vibrant system before? Infrastructure is one of the factors contributing to the "adversity" in the development of the Bitcoin ecosystem.

Looking back at various "Summers," why did many applications explode on Ethereum? This is because Bitcoin lacked the appropriate infrastructure to develop dApps. Although many projects have long aimed to develop on the Bitcoin network, the inadequacy of infrastructure has led to projects failing to make significant waves. However, with the resurgence of Bitcoin NFTs and the ecosystem in 2023, the obstacles posed by infrastructure, methodologies, and practical applications still need to be addressed urgently. Overview of the Bitcoin Ecosystem (Source: COIN360 https://coin360.com/)

Storage of Bitcoin NFTs

The innovation brought by Ordinals has led to the popularity of Bitcoin NFTs. From a storage perspective, Bitcoin NFTs are fully stored on the Bitcoin network, without the need for off-chain storage. This is because each NFT is inscribed on a satoshi (1 BTC = 100,000,000 satoshis), allowing 1 Bitcoin to generate up to 100,000,000 Bitcoin NFTs. These NFTs are traceable and transferable, working directly on Bitcoin without requiring a second-layer solution. NFTs fully stored on the Bitcoin network are more secure compared to most NFTs stored on other servers in the market --- --- all data of the NFTs will be verified.

Of course, the security of NFTs or data storage cannot rely solely on complete on-chain storage for assurance.

The Cumulus Encrypted Storage System (CESS) has demonstrated a practical paradigm for NFT storage in the industry. As the first blockchain network supporting large-scale commercial storage, CESS focuses on the storage and retrieval of high-frequency dynamic data in Web3, providing more advanced and secure storage services and solutions for traditional static NFTs and dynamic NFTs (dNFTs).

Facing Regulation, Bitcoin Brings Confidence in Decentralization

Bitcoin will transform from a single cryptocurrency into a more diverse and feature-rich ecosystem. By introducing NFTs and other tokens into the Bitcoin network, developers and users can participate in the emerging digital asset market. This transformation and innovation for what is considered the most decentralized Bitcoin will bring the next direction and new vitality to the crypto industry. Despite facing regulatory challenges, the revitalization of the Bitcoin ecosystem also shows us the inevitability of decentralization.

We are witnessing a significant transformation in the Bitcoin ecosystem and the decentralization and regulatory challenges facing the industry. At this juncture in industry development, CESS is rooted in the infrastructure construction of decentralized cloud storage, achieving data sovereignty and privacy protection, realizing the value-sharing and circulation of data, and providing more reliable infrastructure for enterprise-level and phenomenon-level dApps through large-scale commercial storage, laying the foundation for the development of Web3.