Join the Bitcoin Ecosystem Frenzy: This Guide Is All You Need

2024.04.01

Join the Bitcoin Ecosystem Frenzy: This Guide Is All You Need

The Bitcoin ecosystem is entering its moment of glory.

2024.04.01 - 08:56:34

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Navigating Web3 tides with focused insights

The Bitcoin ecosystem is entering its moment of glory.

Author: Delphi Digital

Translated by: Followin

Crypto research firm Delphi Digital recently released a report on the Bitcoin ecosystem titled "A Frenzy Over Bitcoin Ordinals and Runes". The report argues that the Bitcoin ecosystem is entering a period of prosperity driven by the emergence of Ordinals. This is the most exciting time to explore Bitcoin, with increasing user participation across its ecosystem. Ordinals have kicked things off, stimulating development activity on what was largely a dormant chain. This feels reminiscent of Ethereum's explosive growth between 2020 and 2021. The report also highlights several projects worth watching.

The following is translated by Followin:

Introduction

The Bitcoin ecosystem is having its moment in the spotlight.

Once considered a boring asset within crypto, Bitcoin is now experiencing a revival. Its resurgence is being fueled by multiple factors, including recent Bitcoin ETF approvals, the anticipated halving in April, and the potential for new all-time highs—all drawing significant media attention.

Looking back, the launch of Ordinals in December 2022 significantly energized the Bitcoin developer community and triggered numerous downstream effects.

The popularity of Ordinals has led to growing demand for block space on the Bitcoin network, resulting in high transaction fees that are fueling the growth of Bitcoin Layer 2 solutions and DeFi projects. These areas have become central topics in cryptocurrency discussions this year.

Bitcoin, the Trillion-Dollar "Casino"

While institutions and crypto natives continue accumulating Bitcoin as a store of value and “digital gold,” more is brewing beneath the surface.

Bitcoin may be evolving into the world’s largest on-chain “casino.”

Starting with early applications like Satoshi Dice—the first gambling app on Bitcoin—Bitcoin has evolved over recent months into newer and more engaging forms of speculation. These include BRC-20 meme coins, Ordinals, upcoming Runes, and new token launches.

The argument for growing speculation on Bitcoin is straightforward:

Bitcoin is a multi-trillion dollar asset with the strongest monetary status in crypto. However, until recently, much of its capital remained passive due to limited use cases.
A segment of users will seek to deploy their capital for entertainment, speculation, and yield generation while remaining within the Bitcoin ecosystem. Unlike other cryptocurrencies, they view Bitcoin as hard money.
Even a small but growing portion of that capital represents a substantial amount. Although Bitcoin’s market cap is three times that of Ethereum, Bitcoin’s total value locked (TVL) in L2s and BRC-20s (around $6 billion combined) remains only a fraction of Ethereum’s TVL (approximately $93 billion across stablecoins, DeFi, and NFTs). This suggests massive growth potential.
Retail investors already familiar with Bitcoin are increasingly participating in speculative activities. Videos circulating on platforms like X show Chinese aunties getting involved in speculation.

The convergence of these factors will drive rising interest and capital inflows into Ordinals, Layer 2 solutions, and other Bitcoin-based applications.

Bitcoin Positioned as an Attractive Hub for Speculation

We’ve recently published several reports covering various aspects of Bitcoin:

State of Bitcoin
Bitcoin Gaming
The Cultural Opportunity of Bitcoin Ordinals

In this follow-up report, we dive deeper into the latest developments around Ordinals and Runes and highlight specific notable projects.

State of Bitcoin

In terms of NFT trading volume, Bitcoin Ordinals firmly holds second place in the NFT ecosystem with a 24% share. This slightly edges out Solana, which ranked third last month with a 22% volume share.

Inscriptions continue to gain traction. Since our last report, the total number of inscriptions has tripled to over 60 million, showing no signs of slowing down—driven primarily by the growing popularity of BRC-20 tokens and wallets supporting Ordinals like UniSat, which allow retail users to purchase and mint Ordinals and BRC-20 tokens. While Ordinals activity paused briefly from September to October 2023, it rebounded in November with the emergence of new token standards.

Interestingly, the inscription craze originating on Bitcoin has now spread to other chains such as Polygon, Avalanche, Fantom, and Solana, each of which now hosts its own inscription protocols.

While BRC-20 still dominates a large portion of Bitcoin transactions, non-BRC-20 Ordinals are performing well and now hold a larger market share than during most of last year. Note that this includes newer experimental token standards such as BRC-420, ARC-20, and bitRC-20. It’s too early to determine which token standard will endure over time.

Since launching in June 2023, recursive inscriptions have gradually gained momentum as builders learn and appreciate their benefits—primarily their ability to expand beyond the 4MB data limit per inscription ordinal and enable greater interoperability and design flexibility around Ordinals. As of February, there were over 375K recursive inscriptions on the Bitcoin network, with no signs of slowing.

The importance of Ordinals to Bitcoin is often underestimated—they introduce a new fee stream for miners. Due to the correlation between file size and cost, embedding data into Bitcoin blocks can be expensive. In just 15 months, over 6,175 BTC ($308.75 million) in fees have been paid to miners via recording Ordinals.

During the peak of inscription activity from November to December 2023, monthly fees paid to miners surged from 26.4 BTC in October 2023 to a staggering 2,095.8 BTC in December 2023—an increase of 79x in just two months. While the frenzy may have cooled, February saw steady growth in Ordinals fees, albeit at a milder pace. If this trend continues, it could help mitigate concerns about declining Bitcoin security budgets.

Source: Electric Capital’s 2023 Developer Report

While most Bitcoin developers focus on Bitcoin mainnet and L2s, Ordinals-related development remained consistently active throughout 2023. Looking ahead to 2024 and beyond, we expect this momentum to persist and gradually expand. The Ordinals developer scene is passionate.

Market

The Ordinals market exhibits clear oligopoly dynamics, with Magic Eden and OKX competing for dominance throughout 2023. Magic Eden initially held an early lead in Q3 last year but faced strong competition from OKX starting in August. OKX ultimately emerged as the leader during the second wave of inscription mania in November–December 2023, capturing 84% of Ordinals trading volume share during that period.

Currently, OKX maintains market leadership with 53.5% of trading volume, followed by Magic Eden at 31.1%. OKX also has the largest number of Ordinals users, with a cumulative total of 166.5K. Magic Eden follows closely behind at 146.7K. At the time of writing, total Ordinals user count reached a peak of 468.3K.

We anticipate even fiercer competition between these two markets in 2024.

Runes: Native Fungible Tokens on Bitcoin

Casey really likes his Viking outfit

Ordinals introduced a groundbreaking method for creating non-fungible tokens (NFTs) on Bitcoin. Now, a new protocol called Runes is emerging to facilitate the creation of fungible tokens on Bitcoin, offering an alternative to the BRC-20 standard. Unlike Originals, which weren't designed for fungible tokens, Runes utilize the OP_RETURN field instead of witness data, simplifying the process and potentially reducing clutter.

Runes operate using UTXOs (unspent transaction outputs), where Rune balances on input UTXOs are automatically transferred to new UTXOs when the original ones are destroyed during Bitcoin transactions. There are also "Runestones," which use data embedded in the OP_RETURN field to specify how Runes should be transmitted across outputs, designate specific transfer addresses, and create new Runes.

BRC-20 generates a large number of unused UTXOs. To spend Runes, you must destroy the UTXO, which benefits the overall system. It also benefits users by enabling simpler PSBT-based swaps. Because UTXOs can only be used once, you can create a set of transactions where only one can be mined—something BRC-20 transactions cannot do.

Like BRC-20, Runes can be open-minted and fairly distributed. They can also be created by sending the entire supply to a single address. Rune names will be carefully considered, with a maximum length of 28 characters. Only runes with 13+ characters will be available at launch, with shorter names gradually released (reducing by one character every four months) to prevent waste of valuable short-name slots.

Runes adopt a commit-reveal naming scheme to prevent frontrunning—a common issue with BRC-20. They are also designed to be compatible with SPV (Simple Payment Verification) wallets, allowing lightweight Bitcoin wallet users to interact with them.

Each Rune token will be uniquely identified, similar to Ordinals’ inscription numbers. The first ten runes (0–9) may be hardcoded into the protocol to ensure a fair launch without pre-mining. Runes are scheduled to go live at block 840,000 (the halving, expected around April 20). Hundreds of different runes have already been inscribed on testnet.

Notable Rune Projects

Runecoin (RSIC)

Runecoin emerged as an anonymous project aiming to be among the earliest runes created. Initially, 21,000 RSIC inscriptions were mysteriously airdropped for free to 9,211 wallets. Each RSIC connects to 10 distribution centers, which in turn link to early inscription 126.

Each RSIC held in a wallet earns 21 Runecoins per block on the Bitcoin network. To boost earnings to 42 Runecoins per block, users can inscribe a perfect copy of inscription 60750020 into the same wallet holding RSIC, at a cost of approximately $300. Holding this boosted inscription upgrades all RSICs within that address. Earned Runecoins can be tracked on Ordiscan. The total Runecoin supply is capped at 21 billion, planned for release upon Runes protocol launch.

Within its gamified mechanics, Runecoin introduces a 24-rune symbol rarity system ranging from 1 to 8192 symbols. Each symbol is assigned a hash; if it matches the latest block hash via JavaScript, the symbol turns orange. Additionally, there’s a lottery where each RSIC holder earns one ticket per block, with a large portion of the Runecoin supply allocated to five lucky winners.

As of February 27, 2024:

Approximately 7,700 blocks remain until halving. Each RSIC purchased today (floor price 0.09 BTC = $4,950) will earn 161,700 Runecoins by halving—if boosted, 323,400 Runecoins.
If Runecoin launches with a $1 billion FDV, that equates to $0.048/Runecoin. In this case, each RSIC bought today could yield ~$15,400.
Based on current RSIC floor price, implied market cap at Runecoin launch would be $160 million (21,000 * 323,400 / 4,950 * 21B = $160M).
We estimate 5.9B–10.1B Runecoins in circulation at halving, depending on how many RSICs get boosted. For estimation, we can take the midpoint = 8B.

Runestones

Runestones is a project initiated by prominent Ordinals influencer Leonidas to reward individuals who participated in the first year of the Ordinals protocol. This initiative aims to fairly distribute Runestones based on on-chain activity, commemorating the one-year anniversary of Ordinals' launch.

Initially, Runestones will be distributed as inscriptions, with the goal of each qualifying wallet receiving exactly one Runestone inscription regardless of level of participation. All feature identical artwork, with no inherent rarity or variation between them. This means Runestones will have a market price even before the Runes protocol launches.

When the Runes protocol launches at block height 840,000, holders of Runestone inscriptions will receive a corresponding Runestone Rune based on the number of inscriptions held. The Runestone Rune will serve as a collectible commemorative item for first-year Ordinals supporters, with no utility or roadmap. The Runestone Rune itself will function as a collectible meme coin and speculative asset.

Runestones claim the title of largest Bitcoin airdrop, requiring participants to hold at least three inscriptions by block height 826,600. With over 2,000 collectibles and 113,376 addresses eligible, Runestones promise a fair launch. No team allocation—fully funded by community donations. Users can check their eligibility here: https://runestone.lfg.cash/.

Distribution of Runestones to Ordinals holders

Our Take on Runes

Despite lacking obvious new use cases, Runes represent a new avenue for entertainment, speculation, and community building. We appreciate that it’s built atop Bitcoin—a solid foundational asset and store of value. When Runes launch, they could revitalize Bitcoin by attracting liquidity and attention, effectively transforming it into a bustling casino-like ecosystem capable of generating substantial transaction fees.

While many new token standards fail, we believe Runes may endure as a viable fungible token standard due to the reputation of its creator (Casey) and the already high expectations and acceptance within the Ordinals community.

The total market cap of BRC-20 tokens currently reaches up to $4.1 billion, with leading token ordi accounting for $1.5 billion of that. This gives us a sense of the potential scale of the Runes market.

Runes are likely to challenge existing BRC-20 tokens. We expect significant capital rotation from BRC-20 tokens like ordi and sats into Runes after launch, driven by the allure of shiny new assets—provided the technical rollout of Runes proceeds smoothly.

Warning: Like meme coins, most Runes will likely end up worthless, trending toward zero. Only those able to capture attention and build communities around them will survive.

Notable Ordinals Collections to Watch

Unlike Ethereum, linking multiple inscriptions/NFTs into a single collection isn’t straightforward. Parent-child provenance is the current industry standard for creating collections with clear lineage. Danny (Onchain Monkeys) shared insightful threads on this topic, showcasing the top ten series using this method:

While the highest-floor-price PFP collections are still dominated by Ethereum NFTs like Punks and Bored Apes, Bitcoin Ordinals are catching up, with three Ordinals PFP series (Quantum Cats, NodeMonkes, and OMB) making the top ranks.

If we consider the value of these top PFP collections relative to the total market cap of their native chains—Bitcoin’s market cap is three times that of Ethereum—but top Bitcoin Ordinal collections trade at roughly one-third the floor price of CryptoPunks. This suggests top-tier Ordinals series have significant upside potential.

Quantum Cats

Quantum Cats is a collection of 3,333 recursive ordinal inscriptions launched by the Taproot Wizards team. The series pays homage to Satoshi Nakamoto, as its origin traces back to the OP_CAT script function (included in the original Bitcoin codebase) later removed by Satoshi in 2010 due to perceived risks to the network.

One goal of Quantum Cats is to revive OP_CAT functionality, paving the way for secure cross-chain BTC transfers and strengthening the development and maturity of Bitcoin Layer 2 networks. By leveraging Quantum Cats, the project aims to draw attention to the proposed BIP upgrade while also serving as an educational platform for the broader public.

The Quantum Cat series will gradually evolve its artwork through a process known as “evolution inscriptions.” Individual versions of Quantum Cats were pre-inscribed, and the evolution process was encrypted by the team. Artworks will deterministically evolve according to the OP_CAT proposal timeline. It’s unclear whether newly evolved traits affect rarity, so the current “rarity” and appearance of Quantum Cats remain subjective.

The series is split evenly into two distinct groups—“dead cats” and “live cats.” It initially minted on February 7 at 0.1 BTC per NFT, raising 300 BTC (~$13.3 million) in primary sales for the Taproot Wizards team.

Given its origins and purpose, Quantum Cats may accumulate cultural and community-driven value over time, especially if people believe Ordinals and the Bitcoin ecosystem will grow larger in the coming years. It brings together those hoping to participate in the collective movement to upgrade Bitcoin.

Holding a cat may confer benefits for upcoming Taproot Wizards mints (date unconfirmed), given they come from the same team. Meanwhile, its market value before Taproot Wizards launches serves as a test.

2024 Catalyst:

If this BIP upgrade is implemented, a Bitcoin soft fork would reinstate OP_CAT functionality. Activation is still far off, but if this BIP passes, we could see increased attention and price appreciation for Quantum Cats.

NodeMonkes

NodeMonkes was the first 10,000-piece Ordinals PFP collection inscribed on Bitcoin, with inscription numbers ranging from 83k to 110k. Although inscribed in February last year, the anonymous team behind the project waited until December 2023—when Ordinals infrastructure matured—before officially launching. Primary sales occurred via Dutch auction, offering 8,000 NFTs to collectors on December 21, with Monkes settling at a final price of 0.03 BTC.

The series features a range of interesting traits, blending crypto-native inside jokes and memes with original artwork. For example, traits reference famous CT meme culture like Pepe, BTC maxis, laser eyes, and even Aliens from CryptoPunks. Collectors can use Monkedex to check each NodeMonke PFP’s official rarity.

The narrative building around NodeMonkes is simple: Monkes are Bitcoin’s CryptoPunks. No roadmap, no execution risk. Less than two months since launch, we believe it’s premature to crown Monkes as Bitcoin’s de facto CryptoPunks—true legitimacy requires community members to continue being influential builders and thought leaders within the Bitcoin space (much like Cryptopunks did for Ethereum). But if enough people believe in this narrative, it could become reality.

After launch, NodeMonkes traded actively, reaching a peak average price of 0.32 BTC on January 5, with weekly volume peaking at 594 BTC (~$26.8 million) in early January. After a brief cooling-off period, NodeMonkes experienced another surge on February 19, with floor prices climbing from 0.15 BTC to 0.4 BTC by February 26. This rally was fueled by announcements of additional Ordinals airdrops for NodeMonke holders and mentions by prominent KOLs on Twitter such as The Crypto Dog, Kevin Wu, and hentai avenger.

The team customized 400 honorary NodeMonkes to honor CT celebrities like Claire Silver, Grant Yun, and Batz. With consistent visual language, the series has become an iconic presence in the Bitcoin Ordinals ecosystem—immediately recognizable, much like Nouns glasses.

Bitcoin Frogs

Launched on March 8, 2023, Bitcoin Frogs is a collection of 10,000 PFP ordinals minted on Bitcoin via the Lightning Network. Created by Frogtoshi Nakamoto, each trait layer in the series has equal rarity, fostering subjective appreciation based on aesthetics and satoshi rarity.

Bitcoin Frogs stands out for its fair launch (distinguishing it from Nodemonkes), with the entire collection minted for free—excluding transaction fees. The project cultivated a vibrant community on X using expressions like “Ribbit!” and “Frogs follow Frogs.” These frog PFPs also serve as a social network, with holders regularly posting their frogs on Twitter to express loyalty and belonging.

Although activity declined after the inscription hype in May last year, interest and engagement resurged in November when major L1s/L2s began adopting inscriptions, pushing Bitcoin Frogs’ floor price back up.

What makes Bitcoin Frogs so popular? Frogs resonate deeply with crypto culture, drawing inspiration from the popularity of Pepe frogs. The collection is also significant as one of the earliest Ordinal PFP collections and the first minted via the Lightning Network. Bitcoin Frogs can be seen as one of the cultural faces of the early Ordinals ecosystem—a symbol participants use to signal their pioneer status.

OMB (Ordinal Maxi Biz)

OMB is an Ordinals PFP project initiated by pseudonymous founder Zkshark in collaboration with artists Tony Tafuro and Nullish. The series consists of 2,091 hand-drawn PFPs, each uniquely categorized by eye color—including green, red, blue, and a newly introduced orange-eyed variant.

Red-eyed PFPs were inscribed first, with 92 pieces below 100k inscription numbers. Next came blue-eyed PFPs, consisting of 99 pieces inscribed on satoshis from block 78 (“Hal Finney”). Green-eyed PFPs were inscribed last, with 1,900 pieces on satoshis from block 9.

Among all Ordinals inscription series, OMB ranks among the highest in both floor price (0.76 BTC / $38,000) and sales volume. After the Ordinals hype in November last year, while many other series saw declining floors, OMB’s floor has steadily climbed.

Notably, during Super Bowl 2024, over 3,000 new OMBs with orange eyes were inscribed on Bitcoin, some appearing on some of the oldest Bitcoin satoshis. These items are not yet listed—watch for related announcements.

The project describes itself as a movement, sharing similarities with Goblintown in cultivating a dedicated community. Serious OMB collectors view these PFPs not merely as punk derivatives but as thoughtful artworks supporting important political statements. For instance, OMB-themed graffiti appeared on London streets advocating “Buy Bitcoin, Free Ross,” symbolizing protest against the establishment. Owning an OMB can be a form of solidarity with this movement.

Additionally, OMB partnered with Luxor Technologies, allocating part of proceeds to mine Bitcoin. Earnings will fund a treasury and OBounties, rewarding developers, educators, and community members contributing to open-source projects aligned with Bitcoin’s core values. Educational bounties will be awarded specifically to OMB holders based on effort and engagement. Holders are encouraged to propose bounties for consideration.

Interestingly, OMB has no Discord server—all community coordination happens on Twitter.

Pizza Ninjas

Pizza Ninjas was launched by the team behind Ninjalerts, a blockchain data insights tool for web and mobile apps that sends real-time push notifications for NFT-related activity. Founder Trevor is a well-known investor and influencer in the Bitcoin space and runs a popular Twitter Space show.

The Pizza Ninjas series consists of 1,500 PFPs inscribed on rare pizza satoshis, launching on January 17 at a mint price of 0.03 BTC. Notably, it’s the first Ordinals PFP series with high-resolution 2000×2000 pixels, utilizing recursion, and featuring dynamic traits that change based on Bitcoin block height. We appreciate it as a thoughtfully designed PFP series, detailed thoroughly in their design whitepaper.

Each Ninja PFP acts as an interactive app, offering features like a built-in animation editor, one-click social media stickers, and an on-chain Super Nintendo emulator for in-PFP games.

Owning a Pizza Ninja PFP grants a lifetime license to Ninjalerts’ Ordinal Portfolio Tracker and wallet viewer software. Additionally, the PFP serves as a membership pass to their alpha group, providing access to collaboration and whitelist giveaways for top projects.

Despite rich functionality, Pizza Ninja’s floor price has declined from initial post-launch levels, currently hovering around 0.05 BTC (a 66% increase from mint price). Long-term, the project aims to become the world’s premier Bitcoin-native IP—an ambitious vision requiring significant time and effort to realize.

2024 Catalysts:

Ordinals enter a frenzied bull market. This drives demand for Ninjalerts’ product suite, which enables early mint sniping and tracking of new project launches. Pizza Ninjas serves as the gateway to this toolkit.
Launch of partnerships and collaborations

Bitcoin Art

In our conversations, many artists are observing the Ordinals space with keen interest. The appeal lies not just in the art itself, but in the innovative processes behind it—such as recursion and remixing of existing artworks. Ordinals art is also fully on-chain, distinguishing it from most NFTs. This environment echoes early digital art exploration on Ethereum, where boundaries were constantly tested and expanded.

A compelling example of creative use comes from artist SpZjulien, who inscribed personal piano audio files onto Bitcoin. This approach allows fully on-chain songs to be created through recursive inscriptions, showcasing immense possibilities for composability of art on Bitcoin.

However, Ordinals present unique challenges for artists, particularly regarding file size limits, which directly impact the feasibility of creating and trading high-quality, complex artworks. For instance, inscribing a 1MB AI-generated image on Ordinals can cost thousands of dollars, positioning such works as status symbols for the wealthy rather than accessible art forms.

These constraints have led to a surge in p5js-based collections while placing less emphasis on 3D art. Ordinals artists are increasingly drawn to artworks reflecting Bitcoin’s network characteristics or incorporating on-chain data, creating a unique fusion of technology and creativity. Despite these innovations, practical limitations force artists to work within narrow expressive ranges—particularly challenging for narrative art requiring heavy data bandwidth.

Due to these constraints, rasterized (pixel-based) or complex vector engravings become prohibitively expensive, prompting artists and collectors to seek lower-cost alternatives. Yet, a narrative is emerging suggesting early high-quality raster art may become highly valuable due to its rarity.

A creative workaround to these limitations is using recursion in generative art on Ordinals. Artists inscribe a core script, and subsequent artworks use it as a base, adding unique data to generate varied outputs. This method significantly reduces the size and cost per inscription.

Despite these innovations, discoverability remains a challenge in generative art, highlighting the need for improved platforms to showcase and promote Ordinals art.

Harto’s FloraForms

FloraForms is a collection of 10,000 fully on-chain generative art pieces created by artist Harto in collaboration with Vienna’s Liechtenstein Museum. Inspired by Gustav Klimt’s “The Kiss,” whose works are said to resemble generative art, it launched on February 14 for free (only inscription fee), with a current floor price of 0.003 BTC ($150).

The collection uses parent-child provenance, enabling clear on-chain lineage for the set. This benefits collectors, future dapps, marketplaces, wallets, and explorers without relying on off-chain references. The generative set uses recursive inscriptions: each piece exceeds 2MB when downloaded, but the inscription itself is only 160 bytes. The parent recursive inscription is also efficiently compressed at just 12KB.

Harto’s Golden Ratio

Another sought-after Ordinals art collection in recent weeks is Harto’s Golden Ratio, curated by VIVID Gallery. The project had a free mint with a supply of 420, currently holding a floor price of 0.1 BTC ($5,200). It may be one of the most intriguing generative artworks on Bitcoin today.

Harto’s series combines the Fibonacci sequence with recursive algorithms and fractal geometry, offering glimpses into harmony between digits and nature. Inspired by cosmic symmetry and chaos theory, each piece showcases the beauty of randomness and order. Aesthetically, the series draws heavily from cryptography and the Bauhaus movement.

Golden Ratio stands out because it is both “recursive” and “inscribed with incantations.” Recursive inscriptions can reference data from other inscriptions. Due to its recursive artistry, it could become the “Holy Grail” of recursive sets, perfectly embodying the golden ratio—a hallmark of natural proportion.

“Inscribed with incantations” marks a pivotal historical moment in Ordinals history, previously overlooked by Ordinals indexers, causing negative numbers. This issue has since been resolved via updates. Inscriptions like Golden Ratio may hold special significance in the evolving cultural movement of Bitcoin art.