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Xverse: Decoding Bitcoin's Evolution and Bitcoin NFTs

By Cove

Published on 2023-07-12

Explore the exciting world of Bitcoin NFTs, including Ordinals, BRC-20 tokens, and the future of Bitcoin with Elizabeth from Xverse wallet.

The notes below are AI generated and may not be 100% accurate. Watch the video to be sure!

Xverse: Decoding Bitcoin's Evolution and Bitcoin NFTs

In this enlightening podcast episode, we dive deep into the evolving world of Bitcoin, exploring the recent developments that have brought new life and excitement to the original cryptocurrency. Our guest, Elizabeth, the head of growth at Xverse, a user-friendly Bitcoin wallet, guides us through the landscape of Bitcoin NFTs, ordinals, BRC-20 tokens, and the controversies surrounding these innovations.

The Resurgence of Bitcoin

Bitcoin, the world's first and most well-known cryptocurrency, has experienced a significant resurgence in recent months. At the time of recording, Bitcoin's price had surged to over $30,000, marking its highest point in the past year. This price action has been accompanied by a wave of institutional interest, with major firms like BlackRock applying for Bitcoin ETFs.

Perhaps even more surprisingly, Bitcoin has surpassed Solana as the second most popular chain for NFTs in terms of trading volume over the past six months. This shift represents a significant expansion of Bitcoin's use cases beyond its traditional role as a store of value or medium of exchange.

What are Ordinals?

Ordinals, often referred to as Bitcoin NFTs, are at the heart of this recent innovation in the Bitcoin ecosystem. But what exactly are they? In simple terms, ordinals are a way of uploading data directly to the Bitcoin blockchain by inscribing Satoshis (the smallest unit of Bitcoin) with unique data.

Elizabeth explains, "Ordinals are basically we're uploading data to Bitcoin. And we do that by, it's a process that updating this called, it's a process called it inscribing. So we're inscribing Satoshi's, which is the smallest monetary unit of Bitcoin. So like a cent to a dollar with unique data."

This development has been made possible by several updates to the Bitcoin protocol over the past few years. The first significant update was the Segregated Witness (SegWit) upgrade in 2017, which enabled content to be stored in the witness data of a transaction. The second, and perhaps more crucial, was the Taproot update in November 2021, which allowed for more flexible contracts and removed data constraints for up to four megabytes on a Bitcoin block.

The History of Bitcoin NFTs

While ordinals have brought newfound attention to Bitcoin NFTs, it's important to note that the concept of NFTs on Bitcoin isn't entirely new. Elizabeth points out that the first Bitcoin NFT, known as Rare Pepe, was minted back in 2016. However, much of the subsequent NFT activity migrated to Ethereum due to its smart contract capabilities.

In the intervening years, projects like Stacks (formerly Blockstack) enabled Bitcoin NFTs secured by the Bitcoin blockchain without making changes to Bitcoin itself. However, these solutions lacked the direct on-chain accessibility that ordinals now provide.

The Unique Value Proposition of Ordinals

What sets ordinals apart from NFTs on other blockchains? The key differentiator is that ordinals are directly inscribed on the Bitcoin blockchain. Elizabeth emphasizes this point: "NFTs on Ethereum are actually images and data that's stored not directly on chain, but on IPFS. So if somebody essentially stops paying for that service, your, your data that NFT could go away, could vanish."

In contrast, ordinals leverage Bitcoin's durability and longevity, offering a level of permanence that's unmatched by other NFT platforms. This feature has attracted significant attention from major players in the NFT space, including Magic Eden, Yuga Labs, Beeple, and DeGods, all of whom have launched collections on Bitcoin.

The Luxury Sector and Bitcoin NFTs

Elizabeth's background in the luxury sector provides an interesting perspective on the potential of Bitcoin NFTs. She sees Bitcoin as the "luxury chain" with the capability to support humanity's most important artifacts. This view is starting to gain traction in the luxury industry, with brands like Louis Vuitton and Tiffany's beginning to explore the space.

One notable example is the Asprey Bugatti collection, which is in the process of minting and is positioned to become the first blue-chip NFT collection on Bitcoin. Elizabeth sees this as a "huge renaissance moment" for the intersection of art, luxury, and blockchain technology.

Beyond Static Images: The Utility of Bitcoin NFTs

While much of the initial focus has been on static image NFTs, the potential use cases for ordinals extend far beyond this. Elizabeth mentions that developers are already working on games leveraging ordinals technology. Music files, books, and even entire literary works like George Orwell's "1984" and the Bible have been inscribed on the Bitcoin blockchain.

The permanence offered by Bitcoin inscriptions provides an inherent value proposition, ensuring that these cultural artifacts will be preserved "forever and ever," as Elizabeth puts it. However, she also notes that individual projects can build additional utility on top of this base layer of permanence.

BRC-20 Tokens: Expanding Bitcoin's Capabilities

The innovation didn't stop with ordinals. Soon after, developers introduced BRC-20 tokens, which leverage JSON script to create fungible tokens on the Bitcoin blockchain. Elizabeth explains, "Depending on, uh, you know, the limitations you put around that, that contract, there's a protocol that is able to, um, take that inscription and index it and, and tell you, you know, how many tokens are allotted."

This development has led to an explosion of new tokens and projects on Bitcoin, with meme coins alone reaching a market cap of $1 billion in just a month. While Elizabeth cautions that these tokens are still experimental and users should do their own research, she acknowledges the excitement and adoption they've brought to the Bitcoin ecosystem.

Bitcoin Usernames and Rare Sats

Another interesting development in the Bitcoin space is the emergence of Bitcoin usernames, also known as .sats names. These are on-chain name schemes that use the same JSON formula as BRC-20 tokens. This innovation opens up possibilities for decentralized identities and more user-friendly ways of sending and receiving Bitcoin.

Alongside usernames, the concept of "rare sats" has emerged. Because each Satoshi now has a unique ordinal number assigned to it, some Satoshis are considered rarer or more valuable than others. This has led to speculation about future possibilities, such as minting your own name as a rare sat.

Recursive Inscriptions: Solving Scalability Challenges

As the popularity of ordinals and BRC-20 tokens grew, concerns arose about congestion on the Bitcoin blockchain. In response, developers introduced the concept of recursive inscriptions. Elizabeth explains, "Recursive inscriptions are really interesting because what they do is, it's an inscription that references another inscription. And this provides composability of the Bitcoin blockchain."

This innovation allows for higher resolution content with a lower file size, making it more cost-efficient and scalable. It opens up possibilities for more complex and dynamic content on Bitcoin, such as 3D assets and high-definition video.

The Xverse Wallet: Bridging Bitcoin and Web3

Elizabeth works for Xverse, a Bitcoin wallet designed to make interacting with these new Bitcoin technologies as user-friendly as possible. She describes Xverse as "the leading Bitcoin wallet for web three" with first-class support for ordinals and BRC-20 tokens.

The wallet aims to provide a seamless, intuitive experience similar to what users might be familiar with from wallets like Phantom on Solana or MetaMask on Ethereum. It supports not just payments, but also NFTs and connections to decentralized applications on Bitcoin, such as marketplaces and DeFi protocols.

Xverse is non-custodial and open-source, available on iOS, Android, and as a Chrome browser extension. The team behind Xverse prides itself on being at the forefront of Bitcoin innovation, rapidly incorporating new features as they emerge in the ecosystem.

The Controversy Surrounding Bitcoin's Evolution

Despite the excitement surrounding these new developments, they haven't been without controversy in the Bitcoin community. Elizabeth explains that there's a divide between what she calls "Bitcoin extreme fundamentalists" and "moderates."

The fundamentalists, according to Elizabeth, want Bitcoin to be used solely as a sound money layer and resist any additional use cases. On the other hand, the moderates, whom Elizabeth suggests form the majority, are interested in new ideas and ways to develop Bitcoin to increase its usability and drive mass adoption.

Elizabeth argues that this innovation is not only good for Bitcoin's price and economic security but also necessary for its long-term sustainability. She points out that arbitrary data has been inscribed on Bitcoin since its very first block, and that competing for block space is part of the free market nature of the system.

The Future of Bitcoin vs. Smart Contract Platforms

Looking to the future, Elizabeth sees Bitcoin and other smart contract platforms like Ethereum as complementary rather than strictly competitive. She values the diversity in the ecosystem, noting that "if Bitcoin fails for some reason, Ethereum fails, then, you know, the other survives and vice versa."

However, she does see potential for Bitcoin to compete more directly with traditional smart contract platforms, particularly through Layer 2 solutions and scalability improvements. She believes that if Bitcoin can become as scalable and accessible as Ethereum while maintaining its core properties, it could "unlock" the entire DeFi system.

Getting Started with Bitcoin NFTs and Ordinals

For those interested in exploring the world of Bitcoin NFTs and ordinals, Elizabeth recommends following influencers and thought leaders in the space. She specifically mentions Leonidas, an NFT historian and host of the Ordinals Show, and Munib, co-founder of the Stacks blockchain and CEO of Trust Machines.

Of course, she also encourages listeners to download the Xverse wallet as a starting point. The wallet includes a fiat on-ramp, making it easy for new users to purchase Bitcoin and start interacting with ordinals and BRC-20 tokens.

Concluding Thoughts

The recent developments in the Bitcoin ecosystem, from ordinals to BRC-20 tokens and beyond, represent a significant shift in how we think about and use the world's first cryptocurrency. While these changes have been met with some resistance, they've also brought new life, excitement, and adoption to Bitcoin.

As Elizabeth puts it, "Bitcoin is exciting again," and it's clear that there are smart, dedicated people working to push the boundaries of what's possible on the Bitcoin blockchain. Whether you're a long-time Bitcoin enthusiast or a curious newcomer, these developments offer plenty of reasons to pay attention to the evolving world of Bitcoin.

Facts + Figures

  • Bitcoin's price surged to over $30,000, its highest point in the past year.
  • Major firms like BlackRock are applying for Bitcoin ETFs, signaling increased institutional interest.
  • Bitcoin has surpassed Solana as the second most popular chain for NFTs in terms of trading volume over the past six months.
  • The first Bitcoin NFT, Rare Pepe, was minted in 2016.
  • The Segregated Witness (SegWit) upgrade in 2017 and the Taproot update in November 2021 were crucial for enabling ordinals.
  • Ordinals allow for uploading data directly to the Bitcoin blockchain by inscribing Satoshis with unique data.
  • Major NFT players like Magic Eden, Yuga Labs, Beeple, and DeGods have launched collections on Bitcoin.
  • The Asprey Bugatti collection is positioned to become the first blue-chip NFT collection on Bitcoin.
  • BRC-20 tokens use JSON script to create fungible tokens on the Bitcoin blockchain.
  • Meme coins on Bitcoin reached a market cap of $1 billion in just a month.
  • Recursive inscriptions allow for higher resolution content with a lower file size on Bitcoin.
  • Xverse, a Bitcoin wallet, has seen over 300,000 wallet downloads.
  • The Ordinals Show, hosted by Leonidas, attracts hundreds of viewers several times a week.
  • Trust Machines, led by Munib, is spearheading many projects and developments in the Bitcoin space.

Questions Answered

What are ordinals?

Ordinals are a way of creating NFTs directly on the Bitcoin blockchain. They work by inscribing Satoshis, the smallest unit of Bitcoin, with unique data. This process allows for the creation of non-fungible tokens that are permanently stored on the Bitcoin blockchain, leveraging Bitcoin's durability and longevity.

How do ordinals differ from NFTs on other blockchains?

Ordinals differ from NFTs on other blockchains primarily in their on-chain nature. While NFTs on platforms like Ethereum typically store their data off-chain (often on IPFS), ordinals inscribe the data directly onto the Bitcoin blockchain. This means that ordinal NFTs have a level of permanence and durability that's unmatched by NFTs on other platforms, as they don't rely on external storage systems that could potentially fail or be discontinued.

What are BRC-20 tokens?

BRC-20 tokens are a type of fungible token created on the Bitcoin blockchain using JSON script. They leverage the same inscription process as ordinals but allow for the creation of multiple, identical tokens. BRC-20 tokens have enabled the creation of various new projects on Bitcoin, including meme coins that have seen significant adoption and value growth.

How has the Bitcoin community reacted to ordinals and BRC-20 tokens?

The Bitcoin community's reaction to ordinals and BRC-20 tokens has been mixed. There's a divide between what Elizabeth calls "Bitcoin extreme fundamentalists" who want Bitcoin to be used solely as a store of value, and "moderates" who are open to new use cases and innovations. While some see these developments as unnecessary or even harmful to Bitcoin's core mission, others view them as exciting innovations that can drive adoption and expand Bitcoin's utility.

What is Xverse?

Xverse is a non-custodial Bitcoin wallet designed to make interacting with new Bitcoin technologies like ordinals and BRC-20 tokens as user-friendly as possible. It offers features similar to popular Web3 wallets on other blockchains, including support for NFTs and connections to decentralized applications. Xverse is available on iOS, Android, and as a Chrome browser extension, and aims to be at the forefront of supporting new developments in the Bitcoin ecosystem.

How might ordinals and BRC-20 tokens impact Bitcoin's future?

Ordinals and BRC-20 tokens could significantly impact Bitcoin's future by expanding its use cases beyond just a store of value or medium of exchange. These innovations have already attracted new developers, users, and institutional interest to Bitcoin. They could potentially position Bitcoin to compete more directly with smart contract platforms in areas like NFTs and DeFi. However, they also present challenges, such as increased blockchain congestion, that the ecosystem will need to address.

What are recursive inscriptions?

Recursive inscriptions are a solution to the scalability challenges posed by ordinals and BRC-20 tokens. They work by creating an inscription that references another inscription, allowing for higher resolution content with a lower file size. This innovation makes it more cost-efficient to store complex data on the Bitcoin blockchain and opens up possibilities for more dynamic content like 3D assets and high-definition video.

How can someone get started with Bitcoin NFTs and ordinals?

To get started with Bitcoin NFTs and ordinals, Elizabeth recommends downloading a wallet that supports these features, such as Xverse. From there, users can connect to marketplaces and applications that allow for minting or purchasing ordinals and BRC-20 tokens. She also suggests following thought leaders in the space, such as Leonidas (host of the Ordinals Show) and Munib (co-founder of Stacks blockchain), to stay informed about new developments.

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