Decoding Atomicals The Halal ARC-20 Token Protocol with Hidden Huge Potential?

Unraveling the Atomicals Revealing the Hidden Potential of the Halal ARC-20 Token Protocol

Original | Odaily Planet Daily

Editor | 0xAyA

With the rising price, the Bitcoin ecosystem has recently exploded, and various derivative protocol ecosystems have also been hyped, among which Ordinals is the most popular ordinal number scheme for satoshis, which allows tracking and transferring individual sats. These numbers are called Ordinals. Satoshis are numbered according to the order in which they are mined and transferred from transaction inputs to transaction outputs, first in, first out. Both the numbering scheme and the transfer scheme depend on order, the numbering scheme depends on the order of mining, and the transfer scheme depends on the order of transaction inputs and outputs. More protocols and their BRC20 token standards are highly focused.

However, with a large influx of hot money, the expected profit space of Ordinals is gradually shrinking, and for players eager for alpha returns (excess returns), the risk-reward ratio is also deteriorating. Within the Bitcoin derivative ecosystem, is there a more promising track to bet on? This article will briefly introduce the “halal” Atomicals protocol and its ARC-20.

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Introduction

The ARC-20 token standard is provided by the Atomicals protocol and is minted and transferred based on BTC’s UTXO. Its basic unit “Atom” consists of the smallest unit of Bitcoin, sat, which means that each unit of ARC-20 token is always backed by 1 sat, i.e., 1 Token = 1 sat. At the same time, ARC-20 is also the first token protocol to be minted with POW, which means that participants can directly mine inscriptions/NFTs like they used to mine Bitcoin.

There are many advantages to 1 Token = 1 sat. First of all, by definition, the value of each token will never be less than 1 sat, which is equivalent to sat acting as a “digital gold anchor” supporting the value of the token; secondly, verifying transactions only requires querying the UTXO itself corresponding to sat; moreover, unlike BRC 20, which requires recording the ledger status off-chain and requires a two-step transaction through a third-party sorter, all executable operations of ARC-20 can be completed using the BTC network without the need for additional steps; finally, thanks to the composability of UTXO, direct swapping between ARC-20 tokens and BTC is theoretically possible, and this underlying design advantage allows ARC-20 to have better liquidity once relevant tools emerge in the future.

The Atomicals protocol also provides ARC-20 with the prefix parameter settings for Bitwork Mining. The issuer of the token can choose a special prefix, and users who want to mint the token must calculate the matching prefix through CPU mining before they can qualify to mint this ARC-20 token. Here, the subject participating in minting has actually changed from wallets to CPU, and this “one CPU, one vote” concept coincides with the ideals of Bitcoin OGs.

ARC-20 faithfully adheres to the “Not your keys, not your coins” principle advocated by Bitcoin OGs, and both in principle and actual participation, it is closer to BTC fundamentalism. One can say that the ARC-20 token is BTC itself.

Differences from other protocols

Due to its underlying design features, ARC-20 has significant differences from other protocol tokens, as shown in the diagram below:

From the table, it can be seen that the ARC-20 token standard benefits from the UTXO binding design of the Atomicals protocol, cleverly avoiding the complexity faced by the BRC-20 standard (such as double sorting, adding useless transactions, etc.), making it more closely aligned with the native features of Bitcoin and leaving room for possible NFT/domain extensions. More importantly, ARC-20 as a whole aligns more with the ideals of Bitcoin OG, making it more likely to receive support from the core community than the Ordinals ecosystem.

Ecosystem status

Due to the current imperfections in tools and protocol development, there are fewer tokens issued based on ARC-20, with most of the funds concentrated in the first token, ATOM. For specific token data, please refer to this source.

Currently, there are two markets that support ARC-20 token trading: SatsX @SatsXio and Atomicals Market @atomicalsmarket.

Due to the nature of ARC-20, the tokens you acquire may be mistaken for regular sats and used as transaction fees. Therefore, it is essential to create a separate wallet to receive assets related to the Atomicals protocol. You can use Atom Wallet or Wizz Wallet.

Conclusion

With the booming development of the Bitcoin ecosystem, more opportunities are emerging.

Compared to the crowded Ordinals ecosystem, the Atomicals protocol and its ARC-20, which are more aligned with the original Bitcoin ideology, still hold untapped potential. They may provide investors with more choices and opportunities.

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