The Bitcoin ecosystem stands out as one of the few narratives in the current cycle that brings genuine technological innovation. It has also demonstrated remarkable resilience, experiencing three distinct bullish phases even during the broader bear market.
As we mark the second anniversary of this ecosystem, this article reflects on these three mini-booms over the past two years and pays tribute to the builders and believers who have remained committed to Bitcoin's expansion.
The Birth of a New Era
On December 14, 2022, the Ordinals protocol was officially launched on Bitcoin by its creator, Casey Rodarmor. He inscribed the very first inscription, now known as inscription #0. This event marked the beginning of a new, on-chain ecosystem for Bitcoin.
The Ordinals protocol can be understood as a method for attaching data to individual satoshis (the smallest unit of Bitcoin). This data can be an image, text, JSON, GIF, HTML, and more. Ordinals emerged during the absolute depths of the crypto bear market. The environment was silent, and with little promotion, very few in the industry were aware of its existence.
By early February 2023, the Ordinals inscription count had only just surpassed 10,000 (it now exceeds 80 million). These initial inscriptions were mostly images, along with some GIFs and HTML files, largely scattered pictures uploaded by individual users. There were also a few small collections, typically comprising 50-200 items, but nothing on a massive scale.
It was around this time that holders from the CryptoPunks community initiated an effort to inscribe "Bitcoin Punks" on Ordinals, downloading the iconic pixel art to inscribe themselves.
Bitcoin Punks became the first 10K NFT collection on Ordinals. Its arrival sent shockwaves through a small but growing community. The idea was revolutionary: you could inscribe an NFT directly on the Bitcoin blockchain? Immutable, permanent, and each with a verified inscription number and timestamp. This was a completely new and disruptive narrative.
Before this, Bitcoin was largely seen only as a tool for peer-to-peer value transfer. Now, it had the potential for a rich on-chain ecosystem. The following months were a period of intense exploration and building for early adopters.
Bitcoin Punks, while not an original art collection, established two foundational rules for the nascent Bitcoin ecosystem:
- First is First: Since anyone can inscribe an image on Bitcoin without a smart contract, a system was needed to determine authenticity if two identical images were inscribed. Bitcoin Punks established the "First is First" principle, meaning only the earliest inscription—the one with the lower number—is recognized as the legitimate item.
- Fair Launch (Fair Mint): Bitcoin Punks were not pre-minted and distributed by a project team. Instead, users had to inscribe them themselves. This pioneered the concept of a fair launch in the Bitcoin ecosystem, setting a precedent for future protocols like BRC-20 and Runes, and even influencing fair launch models on other blockchains.
The First Mini-Boom: NFTs (Feb - Mar 2023)
The popularity of Bitcoin Punks ignited the ecosystem's first mini-bull run, focused on NFTs. This period lasted from early February to March 2023.
The floor price of Bitcoin Punks soared. Infrastructure was almost non-existent; there were no dedicated marketplaces. Buying a Bitcoin Punk required finding a seller on Discord and arranging an over-the-counter (OTC) trade, often with high escrow fees. Despite these hurdles, demand was immense, and prices rose rapidly.
This frenzy wasn't limited to Punks. Collections with inscriptions in the first 10,000, known as "Sub 10K," saw their values skyrocket in OTC deals. The first few marketplaces, like ordinals.market, began to appear, further fueling the excitement.
The focus was squarely on Bitcoin Punks and other early, low-numbered collections. These were seen as digital artifacts, akin to rare antiques, with collectors diligently hunting for specific pieces across various Discord communities.
A Brief Bear Market and Quiet Building (Mar - May 2023)
By March, the market began to cool. An increasing number of NFT projects launched on Ordinals led to an oversupply, and a two-month bear market ensued. This period, however, was a time of strong community building and unwavering belief in the ecosystem's long-term potential.
Two critical developments during this time would reshape the ecosystem's future:
- The SATS Name Protocol: Emerging around inscription #160,000, the SATS protocol became the first domain name system supported by wallets like UniSat and Xverse. Its significance lies in its adherence to the "First is First" and "Fair Launch" principles while also pioneering the use of JSON-formatted inscriptions. Unlike Ethereum name services, it had no central company behind it and was permanently free to use. It directly inspired the next major innovation.
- The BRC-20 Experiment: An engineer named Domo, inspired by the SATS protocol, proposed a JSON-based token standard called BRC-20. The first token, $ORDI, was deployed by Domo himself. The protocol was rudimentary and widely criticized for being inefficient and creating blockchain "junk" data. Domo himself considered it an experiment and advised against FOMO. However, a group of speculators, unwilling to miss a potential opportunity, minted all 21,000 $ORDI tokens within two days at a minimal cost. This early, cautious skepticism would soon turn into a frenzy.
The Second Boom: The BRC-20 Eruption (May - Jun 2023)
The rise of BRC-20 is largely thanks to the relentless building of UniSat Wallet. Their development of a dedicated marketplace and indexer for BRC-20 tokens in May caused prices to surge. $ORDI, for instance, rose 100x from its mint price.
A subsequent bug that led to a double-spending incident on UniSat's marketplace ironically served as a major marketing event. UniSat's swift decision to fully reimburse affected users made headlines across crypto media, drawing massive attention to Bitcoin and BRC-20s.
A wave of new participants flooded in. Major exchanges like Gate.io and OKX listed $ORDI, propelling it to achieve a mythical 10,000x gain from its initial mint price. Bitcoin transaction fees soared as the network became congested with minting and trading activity.
The euphoria spilled over back into the NFT market. Collections like Bitcoin Frogs, which positioned itself as the first original 10K collection, saw its price rise 60x in BTC terms. This shifted market focus from small, low-numbered "artifact" collections to larger 10K collections that could build stronger communities and cultural consensus—factors better suited for speculation.
This period also saw the emergence of numerous alternative token protocols (ORC-20, SRC-20, etc.) and inspired inscription-mania on other chains like Dogecoin and Ethereum. The market cooled again by June as the flood of new assets outpaced available capital.
Innovation in the Quiet Period (Jun - Oct 2023)
The summer of 2023 was a bear market for Bitcoin ecosystem assets, but a hotbed of technical innovation. Key developments included:
- Ordinals Technical Upgrades: The introduction of parent-child inscriptions, recursive inscriptions, and the formalization of "cursed inscriptions" (which were given negative numbers and then made obsolete).
- New Projects: The birth of projects like Bitmap, a metaverse land project based on Bitcoin blocks.
- Rival Protocols: The growth of the Atomics Protocol (ARC-20), which uses a "colored coin" model.
- The Announcement of Runes: Casey Rodarmor announced he was developing the Runes protocol. His vision for Ordinals had always been a museum or library for digital art, but the explosion of "junk" BRC-20 inscriptions led him to design a more efficient, UTXO-friendly fungible token protocol.
The Third Wave: Mainstream Attention (Nov 2023 - Apr 2024)
The third bull run was ignited on November 6, 2023, when Binance, the world's largest crypto exchange, listed $ORDI and $SATS. This brought unprecedented mainstream attention.
A new wave of "inscription season" began, far larger than the one in May. New BRC-20 tokens like $RATS saw incredible gains. Assets across all Bitcoin protocols—ARC-20, SRC-20, ORC-20—surged in value. NFT collections also rode the wave.
A pivotal moment for NFTs was the Dutch auction of NodeMonkes. The market recognized it as the true first original 10K collection, and its floor price skyrocketed, setting a new record for a Bitcoin NFT sale. This resurgence was further fueled by the launch of Merlin Chain, a Bitcoin Layer 2 that allowed staking of various Bitcoin-native assets like BRC-20s and NFTs, offering users attractive yields and pioneering the concept of Bitcoin DeFi (BTCfi).
All eyes were on the upcoming launch of the Runes protocol, scheduled for Bitcoin's halving block in April 2024. Innovative pre-launch projects like RSIC and DOG generated immense hype and were valued in the hundreds of millions of dollars before the protocol even went live.
However, the launch of Runes was met with a classic case of "buy the rumor, sell the news." The hype had peaked too early. Several factors contributed to a quick cool-down: most early Runes had pre-allocations rather than fair launches, the naming convention was seen as cumbersome, and the genesis Rune had a four-year mint period, discouraging short-term speculators. The revolutionary protocol saw only a brief period of excitement.
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The Present: Consolidation and Future Potential (May 2024 - Present)
Since the halving, the market has cooled significantly. Prices for major assets like $ORDI, $SATS, NodeMonkes, and Bitcoin Frogs have fallen substantially from their peaks. The Runes protocol has yet to see its breakout moment.
The Bitcoin ecosystem has experienced three accelerated boom-bust cycles in just two years. While the broader crypto market entered a bullish phase in late 2024, the Bitcoin ecosystem has, so far, lagged behind, remaining in a period of consolidation.
However, this period of quiet accumulation is often a foundation for the next major move. The total market capitalization of all Bitcoin ecosystem assets is still less than 0.5% of Bitcoin's own market cap. In contrast, the Ethereum ecosystem's valuation is over 66% of ETH's market cap. This highlights the massive, untapped growth potential.
The story is far from over. A wave of technological innovation continues, with developments in BTCfi, Bitcoin Layer 2 solutions, and potential DeFi applications for Runes. The ecosystem is ripe with narratives waiting to be unlocked.
Frequently Asked Questions
What is the Ordinals protocol?
Ordinals is a protocol that allows data like images, text, and JSON to be inscribed directly onto individual satoshis on the Bitcoin blockchain. Each inscription is given a unique number, creating a permanent and immutable record, similar to an NFT but native to Bitcoin.
What was the first major NFT collection on Bitcoin?
Bitcoin Punks is widely credited as the first major NFT (non-fungible token) collection on the Bitcoin blockchain. It established critical rules for the ecosystem, such as the "First is First" principle for determining authenticity.
How does a BRC-20 token work?
BRC-20 is a token standard that uses JSON-based inscription data to deploy, mint, and transfer fungible tokens on Bitcoin. It is a simple but inefficient experiment that requires multiple transactions for transfers and creates a lot of residual data on the chain.
What is the difference between BRC-20 and Runes?
BRC-20 is an experimental standard that is inefficient and creates "junk" UTXOs. Runes is a more streamlined protocol designed by Casey Rodarmor to enable efficient fungible token transactions on Bitcoin without clogging the chain, using a UTXO-based model that is more aligned with Bitcoin's core design.
What does "Fair Launch" mean in the Bitcoin ecosystem?
A fair launch means a token or NFT collection has no pre-mine or allocation for the founders. It is made available for anyone to mint at the same time and for the same cost, embodying a permissionless and democratic ethos. This was pioneered by collections like Bitcoin Punks.
What is the future of the Bitcoin ecosystem?
The future is focused on scaling and expanding utility through Bitcoin Layer 2 solutions (like Merlin), decentralized finance on Bitcoin (BTCfi), and further development of more efficient token protocols like Runes. The goal is to build a vibrant, multi-faceted economy on top of Bitcoin's secure base layer.