Ordinal NFTs and BRC-20 tokens aim to enable new Bitcoin functionality but rely more on surrounding services than standards alone. For investors, value means understanding access enabled, not just protocols used.
What are Ordinal NFTs?
Ordinal NFTs represent unique ownership of assets both on and off-chain. They derive core value from the assets/access they prove ownership over, not just speculation. Ordinal NFTs enable new use cases on Bitcoin like collectibles, gaming assets, event tickets, badges, etc.
What is BRC-20?
BRC-20 is a standard for issuing fungible tokens on Bitcoin. It aims to enable interoperability between tokens and new functionality. However, BRC-20 has some key limitations around flexibility, security, and decentralization.
Limitations of BRC-20
BRC-20 powers many protocol tokens on Bitcoin but has significant limitations:
•It can only use 4-letter token names, limiting options.
•It cannot be upgraded once deployed, lacking flexibility.
•It is prone to double-spend and copying risks.
•It cannot cancel transactions once published to the network.
Why Standards Alone Do Not Determine Success
The value of ordinal NFTs and BRC-20 tokens depends on the services and access they provide, not standards alone. Only on-chain functionality and authentication can minimize dependence on centralized entities. BRC-20 powers popular protocol tokens but relies on surrounding services, not the standard itself.
Takeaways for Investors
For investors, the value comes from understanding the functionality, assets, and access enabled—not just the standards used. The ability to offer useful services and on-chain authentication is key. On-chain credentialing avoids over-reliance on centralization, regardless of standards.
In summary, ordinal NFTs and BRC-20 tokens aim to enable new functionality on Bitcoin but have meaningful limitations. Their success depends on the services built around the standards, not the standards alone. For investors, value comes from understanding functionality/access enabled, not just standards. On-chain functionality and authentication are key to minimizing centralization risks.