Bitcoin inscriptions from concept to practice: The complete guide you need to understand

The Essence of Inscriptions: An Innovation that Grants Bitcoin Uniqueness

To understand the significance of Bitcoin inscriptions, one must first grasp the basic structure of Bitcoin and the operational mechanism of the Ordinals protocol.

Bitcoin’s total supply is fixed at 21 million coins, and each Bitcoin was originally interchangeable and of equal value. However, unlike Ethereum, Bitcoin lacks smart contract functionality, making it technically challenging to directly issue tokens and NFTs on its blockchain.

To overcome this limitation, Bitcoin core developer Cassie Rudomer launched the Ordinals protocol in December 2022. The core innovation of this protocol is: assigning a unique serial number to Bitcoin’s smallest unit, the “satoshi” — with 21 million Bitcoins containing 210 trillion satoshis, each given a distinct serial number.

When users write images, text, or code (a single file not exceeding 4MB) onto a specific satoshi, that satoshi becomes a unique asset carrying particular information. The process of writing this information is called inscription minting. In simple terms, inscriptions give the originally homogeneous Bitcoins differentiation and uniqueness, thus enabling the issuance of NFTs on the Bitcoin blockchain.

Why Have Bitcoin Inscriptions Sparked Market Attention?

Latest Bitcoin Price: $87.38K, 24-hour Change: -0.44%

Looking at Bitcoin’s price history, despite significant gains in 2021, the price began a continuous correction after reaching a high of $64,400 in November. By the end of 2022, Bitcoin had fallen over 70% from its peak. The emergence of the Ordinals protocol brought a turning point to this situation.

Before the launch of the Ordinals protocol, industry developers mainly focused on the Ethereum ecosystem. Ethereum’s smart contract capabilities led to explosive growth in tokens, NFTs, DeFi, and other applications. In contrast, Bitcoin’s application layer exploration was relatively limited.

Key events driving the development of Bitcoin inscriptions:

In March 2023, Twitter user domodata launched the BRC-20 standard based on the Ordinals protocol. If we compare Ordinals to a machine that produces parts, BRC-20 provides the capability for direct assembly and delivery. Since then, Bitcoin inscriptions development has entered a rapid expansion phase.

Additionally, Bitcoin’s recognition in the market far exceeds that of other blockchains, and this “brand effect” provides a natural advantage for the promotion of inscription applications.

Current Ecosystem of the Inscriptions Market

Bitcoin inscriptions experienced their first wave of popularity in early 2023. In May, a major exchange announced the listing of Bitcoin tokens, becoming the first large platform to support such assets. Subsequently, many exchanges followed suit, marking a crucial shift for the inscription ecosystem.

In the past, creators and investors could only trade tokens via decentralized exchanges, facing high network fees and long confirmation times. The involvement of mainstream exchanges significantly reduced transaction costs and improved efficiency.

By the end of 2023, according to cryptoslam data, Bitcoin NFT trading volume reached $1.84 billion, ranking fourth among blockchains:

How Can Retail Investors Participate in Inscription Minting?

To participate in inscription minting, follow these steps:

Step 1: Prepare a cryptocurrency wallet (such as a Web3 wallet or other wallets supporting inscriptions)

Step 2: Buy or transfer BTC into the wallet

Step 3: Enter the inscription feature, select the type of inscription to mint

• Choose “BRC-20” to mint tradable fungible assets
• Enter a four-character token code
• Set the minting amount and recipient address

Step 4: Confirm the transaction and pay the network fee

Before minting, clarify the nature of the target asset. If creating a tradable general asset, mint a Token; if representing a unique digital asset, create an NFT:

Future of the Inscription Track and Risk Tips

Although Bitcoin inscriptions have ushered in development opportunities, investors need to stay alert. With mainstream exchanges supporting inscriptions, the number of inscription projects has grown rapidly, making low-cost opportunities harder to find compared to early 2023.

More concerning is that large inscriptions such as images and audio occupy more block space, leading to significantly higher minting and transaction costs. Whether market enthusiasm can be sustained amid high fees remains uncertain.

The current Bitcoin inscription market is at a critical development node, seeking a balance between innovation, decentralization, and security. Based on this judgment, it is recommended that investors adopt a cautious attitude:

• Avoid large investments in inscription tokens or NFT products
• If participating, limit the investment amount and set stop-loss points in advance
• Closely monitor transaction fee trends and market sentiment changes
• Regularly assess personal risk tolerance

Summary

Bitcoin inscriptions represent an important innovation in the application layer of the Bitcoin blockchain. The launch of the Ordinals protocol and BRC-20 standard has equipped Bitcoin with the technical capability to issue NFTs and tokens. The participation of mainstream exchanges further promotes market development.

However, the inscription market is still in its early exploration stage, and rising transaction costs and market sentiment fluctuations require high attention from investors. Before engaging in inscription investments, it is essential to understand the technical logic and risk factors thoroughly, avoiding blind followings. Maintaining rational judgment is key to steadily advancing amid emerging opportunities.