“Bitcoin NFTs?” Diving into Ordinals & BRC-20 and Why They Matter

Eric
Eric

“Bitcoin NFTs?” Diving into Ordinals & BRC-20 and Why They Matter

1) Quick Recap: Why Bitcoin Was Created

In 2008, an anonymous developer or group known as Satoshi Nakamoto published the Bitcoin whitepaper, and in 2009 the first block (“genesis block”) was mined. He/she/they built Bitcoin to enable peer-to-peer transactions without reliance on banks or governments—which made extra sense after the 2008 global financial crisis shook faith in traditional finance.

Bitcoin was designed with key features: a fixed supply (21 million BTC), mining rewards, a “halving” every ~4 years, and decentralized consensus.


2) Why Did the Bitcoin Community Resist NFTs?

Although early NFT-like efforts (e.g., Counterparty in 2014) used Bitcoin, many in the Bitcoin community objected. Their reasons:

  • The network was designed for money and value transfer, not always for images/videos.

  • Embedding large data (images, text) into Bitcoin blocks raised concerns about network bloat and higher fees.

  • Some purists argued it diluted Bitcoin’s “digital gold” narrative with what they saw as speculative collectibles.

However, protocol upgrades—such as SegWit and Taproot—expanded what could be done on Bitcoin. This set the stage for newer innovations like Ordinals and BRC-20 tokens.

3) What Are Ordinals?

The term Ordinals comes from the idea of assigning a serial or “ordering” to satoshis (the smallest unit of BTC: 1 BTC = 100 million satoshis). By numbering/inscribing data onto individual satoshis, you create unique digital artefacts.

  • When you inscribe an image or text onto a satoshi, it becomes non-fungible in practice.

  • An “inscription” means you embed some data in the Bitcoin block (via the witness field etc.).

  • Because Bitcoin has ~21 million coins × 100 million sats = ~2.1 trillion satoshis, every satoshi has a “history” and can be uniquely identified.

In effect, Ordinals allow “NFTs on Bitcoin” (though the community debate about whether they are “true NFTs” continues).

4) What Is BRC-20 (and How Did It Emerge)?

While Ordinals deal more with uniqueness/inscription, BRC-20 is a token standard (on Bitcoin) for fungible tokens—akin to Ethereum’s ERC-20.

Key points:

  • Created by pseudonymous developer “Domo” and community, BRC-20 leverages the Ordinals ecosystem and inscribes token-data onto sats instead of writing full smart contracts.

  • Initially quite “hacky”—no full EVM smart contracts—but in 2025 upgrades arrived: e.g., BRC2.0 promises EVM-style features on Bitcoin. 

  • BRC-20 exploded in use: for example, data from BitMEX shows from December 2022 to September 2025 the Unspent Transaction Output (UTXO) set roughly doubled (84 million → 169 million) due to BRC-20 inscriptions.

In short: BRC-20 turned Bitcoin into a token issuing platform (in a limited way), opening new use-cases.

5) What’s New & What’s the Issue in 2025?

Trending Innovations

  • The BRC2.0 upgrade: adds “EVM-style smart contracts” layer for BRC-20 tokens on Bitcoin.

  • Improved tooling/wallets for Ordinals + BRC-20 (wallets like UniSat, etc.), making it easier for users to mint/transfer. (For example: enhancements in July 2025 for BRC-20 flows)

  • Exchanges listing BRC-20 tokens (e.g., SATS, ORDI) increasing availability and liquidity.

Key Issues / Risk Factors

  • Node & network load: BRC-20 inscriptions are increasing strain on full nodes. Research by BitMEX shows that BRC-20 inscriptions used ~13.9 billion weight units vs ~8.9 billion for image-type Ordinals, despite far fewer images.

  • Liquidity & utility limitations: Many BRC-20 tokens remain speculative, lacking mature DeFi ecosystems (e.g., lending, staking, governance) compared to Ethereum.

  • Security/design flaws: Academic work shows attack vectors like “BRC-20 Sniping Attack” and “Pinning Attack” on inscription models. 

  • Regulatory & market risk: Because tokens are newer and infrastructure is evolving, investor caution is warranted.

  • Network purpose tension: Some Bitcoin purists argue embedding tokens/data can push out financial transactions and increase fees. (See network-load studies) 

6) What Does This Mean for Investors & the Bitcoin Ecosystem?

Potential Opportunities

  • First-mover advantage: BRC-20 tokens like ORDI (leading token in the space) already built brand value.

  • Bridging “BitcoinFi”: The possibility that Bitcoin becomes more than “digital gold” and supports tokenisation, collectibles, and maybe light DeFi.

  • Ecosystem growth: With infrastructure (wallets, marketplaces, indexers) improving, niches like “inscribed art”, “bitcoin-native tokens”, “tokenised sats” may gain traction.

  • Network revenue: Miners/validators may benefit from increased transaction fees stemming from inscriptions & token activity.

Risks you should monitor

  • Utility must mature: a token without use-case is largely speculation.

  • Technical and security risk: new protocols = possible bugs.

  • Network cost: rising inscription activity could raise fees for ordinary Bitcoin users, degrading network experience.

  • Liquidity risk: many tokens may have thin markets and limited exit options.

  • Regulatory uncertainty: token-standards on Bitcoin are less regulated, ambiguous jurisdictionally.

7) Summary: What’s Changed & Keys to Follow

  • Your older article correctly identified Ordinals & BRC-20 as interesting, but now:

    • The scale is much larger (millions of inscriptions, tens of millions of token transactions)

    • The tech is advancing: BRC2.0 adds EVM-style smart contract capabilities. 

    • There is network-level impact, not just novelty. Node operators, UTXO size, fees—all affected.

    • Listing & liquidity are improving; this is no longer purely fringe.

    • But structural weaknesses remain (security, utility, scalability) which we must keep in mind.

8) Final Take for Blog Readers

If you are a reader of your blog and want to understand what to watch:

  • Keep an eye on wallet/market tools (are transfers easier for BRC-20?).

  • Monitor token-standards upgrades (e.g., BRC2.0).

  • Check network metrics (UTXO growth, fees, inscription counts) to gauge ecosystem health.

  • Watch for real-world use-cases (tokenised assets on Bitcoin, gearing toward DeFi-style functions).

  • Be realistic: some projects will thrive, others will fade—treat this space as high risk / high optionality.

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