Last May, I wrote an article for Bitcoin Magazine in which I predicted that Layer 2 (L2) metaprotocol solutions would resolve the rankings debate. Now that two highly anticipated Layer 2 solutions, Taproot Assets (TA) and RGB, are either available or imminent, it's time to revisit this topic. In fact, it may be too late to judge by recent fee increases driven by renewed interest in BRC-20 tokens…
Based on my view that the price, fee, and flexibility benefits offered by on-chain L2 metaprotocol solutions across Ordinals will ultimately be decisive, I have focused my energies on developing such solutions. Over the past few months, I've been heavily involved in both the TA and RGB projects. In early September, I founded a group where developers of L2 metaprotocol wallets, exchanges, and projects – as well as any other interested parties – can collaborate. I traded my first tokens on the new “Tiramisu” and “NostrAssets” exchanges and named the now abandoned TapAss (get it?) exchange “Spank”. Recently, I created what will be the first 10,000-piece RGB Profile Photo (PFP) art collection, Single use stamp (Named after the primitive encoder invented by Peter Todd in 2016 that forms the basis of RGB).
Since creating the artwork for Seals, marketing the project and interacting with its (exceptional) community constitutes the most significant investment of my time in L2 metaprotocol projects, I believe RGB has greater potential than TA. However, unlike RGB which is currently undergoing code review by Blockstream before wide-opening the floodgates for user investment, TA is available as a functional alternative to Ordinals at the moment. From my personal experience, I can attest that TA tokens and NFTs are performing and trading extremely well, with Lightning support as standard… So why, in today's high fee environment, is the War of the Ordinals still raging on, as shown recently The Battle is Over Ordinal ocean mining pool filtering Transactions?
Photo engravings – here to stay?
As an artist (or, more accurately, an amateur cartoonist), I understand all too well that constraints often spur creativity. A blank page can be intimidating in its endless possibilities, while constraints suggest structure and sometimes represent a starting point. Clearly, Inscriptions' size limitations haven't stopped the explosion of creativity, from charming low-resolution pixel art to improved technical efficiencies, like recursive sprites. However, the strict file size limitations imposed by the format on the series rule out some possibilities.
For example, “Single-Use Seals” explores the role of the human artist in a culture increasingly fabricated by artificial intelligence. To achieve “Proof of Art” verification across the PFP pool and filter AI-generated entries from our various community contests, Seals relies on high-resolution images of handcrafted art. At a resolution of 3072 x 3072 pixels, it is possible to make an improvement over the CSI stamp pattern, enough to confirm irregular pen strokes, paper blemishes, and man-made photographic tones:
For a set of 10,000 coins, achieving this level of accuracy within engravings is prohibitively expensive — if not technically impossible, since each stamp image is roughly twice the maximum block size of a Bitcoin. The same restrictions apply more to high-quality audio and video content. However, the high cost of rare block size is as much a feature as a bug. Placement within the world's first, most affordable and secure blockchain confers undeniable prestige. Thus those with appropriately small artworks or deep pockets will continue to raise the perceived value of their work through a direct link to Bitcoin. This will inevitably lead to a situation where data-heavy art (or that produced by the typical starving artist) finds its natural place in Layer 2 protocols. Thus, I still expect a definite graphic bifurcation of Bitcoin-based art between classes.
BRC-20s – Time to go!
While photo engravings have their place, in my view the BRC-20 (and associated tokens) are now obsolete. There are some important and fundamental disadvantages of these codes:
- The BRC-20 is minted on a first-come, first-served, no-funds (FCFS/FU) basis. If your transaction arrives after claiming all supplies, your money will be wasted and you will get nothing. This leads to intense explosions of fee competition that disrupt the Bitcoin network – and cause a lot of backlash from Ordinals.
- The BRC-20 relies on centralized indexes, primarily run by exchanges, to keep a straight record of who owns what. The potential for desynchronization and fraud is high.
- BRC-20 transfers and procedures require on-chain Bitcoin transactions. This is expensive and relatively slow compared to tokens on competing chains.
- BRC-20 codes are limited in their application. To my knowledge, the basic functionality expected from tokens on other chains, such as any kind of decentralized financial application, has not yet been realized. There is certainly no such thing as a reputable BRC-20 stablecoin at the moment – Stable is not something I would even recommend to central bankers.
- The BRC-20 is limited to 4 letters – all 4-letter words have long been taken away.
In addition to point 1… new BRC-20 deployments are under constant threat by “The Sophon”, a rather aggressive piece of now public code, developed by Rijndael To throttle new tokens on the chain. Named after the single-proton supercomputers deployed by aliens to prevent scientific progress on Earth (at least in Cixin Liu's excellent sci-fi trilogy, “Memory of Earth's Past”), Bitcoin Sophons scan the memory pool for any BRC-activity. 20 new. Upon detection, Sophons pays for a high-fee transaction intended to pre-run the original BRC-20 post transaction and sets its total supply to 1. This effectively occupies the intended index of the BRC-20 and invalidates any transactions made from users, incidentally resulting in waste None of their transactions are on the way.
Suffice it to say, I'm one of the many Bitcoin users who think the BRC-20 is, in a word, bad. However, rather than trying to neutralize it through expensive Sophon transactions or censor it at the miner level, my preferred solution is to advertise superior alternatives. To that end:
AdamCoin (AC) is the first token published on the Tiramisu TA wallet and exchange. AC has an active bull market and, as with all Tiramisu tokens, can be traded through both the Liquidity Pool and Order Book. Many tokens and non-fungible tokens (NFTs) are available for trading on Tiramisu, and the process of creating new ones is cheap and reliable (without the threat of multi-dimensional microcomputers). As an added bonus in these times of high fees, Tiramisu deposits and withdrawals can be made via Lightning.
TRICK and TREAT are double TA tokens traded on the NostrAssets open source platform. With a Telegram channel of over 13,000 members, trading is already active and has the added advantage of integration with the Nostr protocol (despite Fiatjaf's heated objections). The only real drawback to NostrAsset currently is that it does not allow the minting of new tokens or NFTs.
Baby-RGB It is an RGB-based project in the final stages of launch preparations. PePe has already attracted a massive Twitter following of over 28,500 people, and enthusiasm has been high in PePe's initial phase; Launching the world's first popular RGB-20 code. There's a lot more to PePe's plan, however, and there's already a fully 3D animated avatar, the grandson of the ubiquitous meme frog, who plays the hero in a story set across a cyberpunk metropolis. It is even rumored that certain Seal He might guest star… and even release his own token to benefit the future verified human art market!
So, with these L2 tokens available, the question is why does anyone still care about BRC-20? As even the most die-hard Bitcoin Maxi must admit, Shitcoins on Bitcoin are a damned better site than Shitcoins on Bitcoin!
Stablecoins hidden in colorful darkness
Speaking of tokens, it is understandable that many Bitcoin users do not care much about them. However, stablecoins – like it or not – are the main players in our space. The third largest coin by market cap, Tether, is particularly noteworthy as it regularly enjoys the highest daily trading volumes across the market. Fiat currencies and the BRC-20 appear to have similar continued demand, despite the presence of vastly superior alternatives… And although fiat-pegged cryptocurrency may be far from the cypherpunk model, that doesn't mean it can't be improved. . For example, a digital dollar that is invisible to analysts and regulators alike (24:30) offers some interesting new possibilities in a world of increasing monetary sanctions and surveillance. Perhaps with these possibilities in mind, Paolo Ardoino, CEO of Tether and CTO of Bifinex, named RGB as the legitimate successor to the original stablecoin platform, and the best opportunity to issue stablecoins on BTC.
In fact, although there is nothing preventing the issuance of stablecoins on TA, RGB has some technical advantages that make it an ideal platform. First, TA has the limitations of its own universe model, where each asset source creates its own unique and separate universe in which its assets operate. While it is possible to link universes, this requires permission from the original issuer. For assets intended to be traded freely across the web – and stablecoins are certainly very useful when they can be easily transferred between different exchanges, wallets, etc. – this structure presents some obvious difficulties and centralization issues. RGB has no such limitations. Any two parties using the RGB system can freely exchange any amount of assets. Additionally, due to RGB's client-side verification model, only those parties would be aware that any such exchange occurred… Could we be looking at “gaining a new multi-year zone of freedom”, some 15 years after Satoshi's original statement?
The RGB rabbit hole goes into a lot Deeper, to the extreme future possibility of Prime, where Bitcoin reverts itself from the blockchain to a client-side verification model – all of which could be achieved on a voluntary basis without the need for any hard or soft fork. Such a possibility is beyond the scope of this article, so let's limit ourselves to another exciting feature of RGB – the complex smart contracts that run on Bitcoin. This opens the door to all the opportunities (and risks) in DeFi, but hopefully done privately and in a low-cost, scalable way on top of Bitcoin. While some will have their objections, the prospect of making Ethereum and other on-chain smart contract platforms obsolete holds undeniable appeal…
Conclusion: The second layer is bullish for Bitcoin
As Bitcoin's next bull market begins, Bitcoin users have the opportunity to make Layer 2 metaprotocol solutions part of the narrative. By failing to do so, more attention will flow to familiar and flawed options like the BRC-20, which will exacerbate the fee pressures typical of hot Bitcoin markets. Even for Bitcoin users who have no interest in the potential and prospects of the L2 metaprotocol asset, understanding and promoting it is a good way to support Bitcoin's next growth phase.
This is a guest post by Stephen Hay. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
