November 10th AMA Playback What can you still buy with BRC20?

Rewatch of November 10th AMA What Can You Purchase with BRC20 Tokens?

Bitcoin ecosystem is about to explode? BRC20 starting the next bull market? Who can tell me what I can buy now, I don’t want to miss out!

On November 10th, LianGuai held a Twitter SLianGuaice, inviting 8 guests to share industry observations.

Important note: The opinions expressed in this article are personal observations and sharing, and do not constitute any investment advice. Any fortune or loss is unrelated to the platform, this live broadcast, and the guests.

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Please introduce yourself, guests.

Sonic Zhang: I entered the blockchain industry in 2017 and have worked on wallets, exchanges, and two funds. Now I am a CyberMonk, a monk that can’t stop talking about Bitcoin.

Xiaoyufu: Hello, everyone, I am Xiaoyufu. I am currently mainly involved in Weibo IP, and my account has a Weibo gold V status with a total of 200,000 followers. I have experience in finance and project incubation. Currently, my main focus is on trading layouts. I am good at positioning in hot sectors. This year, I established an investment and speculative fund similar to DWF. I didn’t start with Ordi, I bought it after a friend’s recommendation. My first impression of it was the meme brought about by technological breakthroughs, which was different from the past.

Leo: I am an old leek with a technical background. I am now a co-founder of 3P Labs investment research institution, exploring first and second-level investment opportunities in the BTC ecosystem.

Bit Duck: I entered the circle in 2018, a personal developer. I have previously developed an NFT exchange and an on-chain trading terminal. Recently, I have been paying attention to the development of the Bitcoin protocol and have started a Bitcoin community with friends.

Xiyu: I entered the circle in 2013. In the first two years, I didn’t pay much attention to Web3 as it felt too noisy. But personally, I am more inclined towards Bitcoin. I paid attention to Ordinals early this year and posted some tutorials, which attracted a lot of attention.

Da Shan: I am Da Shan from Shuidi Capital. Shuidi Capital is a VC established in 2017. In addition to our main funds, we also manage two licensed digital asset funds in Hong Kong. We were originally miners, so we have always been interested in the Bitcoin ecosystem. However, the progress of the Bitcoin ecosystem has been relatively slow. This year, Ordinals showed us the potential, so we shifted some of our investments to this track.

Just a reminder, although BRC20 is very hot, if you haven’t entered before, don’t be anxious now because this is just the beginning. There will be many opportunities ahead. I believe that projects in the Ethereum ecosystem will be able to find their place in the Bitcoin ecosystem in the next 1-2 years, and they will do even better.

Guanghua: Six years ago, I was working on BTC Layer2. The well-known project at that time was the first chain of Polkadot called Chainx, which went live five years ago. Back then, there were 100,000 BTC crossed over to mine Chainx tokens, but once the mining was done, everyone left, and there was no way to make it work. So, we always thought that the BTC ecosystem couldn’t take off until this year when we saw Ordinals and Unisat skyrocket. We decided to inherit the technology from Chainx and continue working on Layer2. The BTC Layer2 project we are currently working on is called bevm. We also created a platform called Bitbox, which has a significant market share. Bitbox has struck 20% of Sats.

Ivan: I am the author of BRC-1155. I started studying Ordinals in February and began writing protocols and starting projects. In March, I became one of the first few people to mint 100 Ordi OGs, earning nearly 30 pieces. Later, I joined Magic Eden as the Bitcoin community manager for the Asia Pacific region. I built the community and made a lot of friends.

What caused the second wave of BRC20’s popularity?

Sonic Zhang: In May, I happened to be working for Unisat. The surge in popularity was mainly due to Unisat launching trading, and everyone started creating their meme coins, driving up transaction fees. At one point, the transaction fees for a block exceeded the block rewards, which made miners realize the potential of Ordinals. This surge in popularity coincided with the Bitcoin bull run, drawing attention to the Bitcoin-related ecosystem.

Guanghua: In May, when I noticed Unisat, I suddenly realized that the reason our BTC Layer2 project failed six years ago was the lack of practical applications. But this time is completely different; the narrative of the Bitcoin ecosystem has begun, and tokens can be issued, just like Ethereum in 2016 when it could issue tokens. Moreover, BTC’s market value is three times that of ETH.

The reason for the May frenzy was Unisat, and this time it was the fee-free collector trading platform launched by OKX Wallet. People minted collectibles and put them up for sale on the platform, attracting many users’ attention to this field. However, these were just catalysts; the fundamental reason was the opening of the narrative.

Xiaoyufu: The defining event of the second wave was Ordi listing on Binance. The thriving user experience as an internal drive came from the functionality of the OK Wallet.

The first reason for the popularity was the flow and aggregation of token chips. After Ordi went public, some holders lost confidence in trading due to the price drop, and more chips gradually accumulated in the hands of major players. The second reason was ecosystem development. I believe the development of Ordi must have three releases of buying power. The wallet is also part of the ecosystem, and OKX Wallet, which allows trading, is an important release of buying power. By participating in the BRC project, it also created a prosperous scene similar to the Ethereum meme zoo.

Some people say that this wave of excitement is the beginning of a bull market, while others think that this wave will soon cool down. What do you think?

Xiyu: The rise in Bitcoin prices has led to capital outflows, with some of it flowing into Ordinals. This is good because previously, when Bitcoin prices rose, capital would overflow into altcoins, Ethereum, or other ecosystems. But now, the Bitcoin ecosystem is closer and can handle this portion of the capital. For example, if lightning network applications become popular in the future, people may transfer their profits from exchanges to lightning network wallets, further fueling the prosperity of the lightning network.

There’s no need to worry about the sustained heat. There have already been two small bull markets for Ordinals in the last six months. Maybe there will be another one in three months or even one month later, so there’s no need to be overly concerned. As for a true bull market, I think it’s still a bit early. The current bounce is not very strong and doesn’t have the feeling of breaking out after being suppressed for a long time. In my opinion, this is a rebound after a one-sided decline, but since the first half of the year didn’t see a full rebound, I think this rebound might continue, but I don’t think the bull market is coming yet.

Bitcoin Duck: A bull market sneaks up without a sound. By the time everyone realizes it, it may not even be a bull market anymore. In the crypto space, 80% of the time is spent in a downturn, while only 20% is spent in a bull market. Actually, prices have already risen a lot, but a bull market cannot be predicted.

Recently, the Bitcoin ecosystem has been booming for several reasons. Firstly, the technology has matured, with innovations like SegWit and Schnorr signatures in 2017, the Taproot upgrade activation last year, and this year’s introduction of the BRC20 concept by Domo. Additionally, protocols like Pipe, BitVM, Atom, and RGB have emerged. In 2016, Ethereum introduced its own way of issuing tokens, and this year Bitcoin also has its own way. Furthermore, the inscription trading platform in OKX’s Web3 wallet is exceptionally smooth, Ordinals has been launched on Binance, and more and more people are participating in the ecosystem’s development, shaping it into a new track.

Da Shan: The bull market for BRC20 and Bitcoin are different. The Bitcoin bull market is very deterministic, with three positive factors: the conclusion of the US Federal Reserve’s interest rate hikes, the halving event next year, and the imminent approval of ETFs. In September, I discussed this with Token2049 and related companies, and they believed that the probability of ETF approval in February next year is 80%, and in April it is 90%. It’s not that the SEC is not approving, it’s that the relevant companies don’t want the SEC to approve yet because their infrastructure is not ready. Fidelity’s digital asset department already has more than 600 employees, with 400 of them being engineers. They are starting from building the infrastructure, and only after it’s completed will they seek SEC approval.

The relationship between BRC20 and Bitcoin only has two aspects. First, BRC20 increases transactions and raises on-chain profits. Second, it attracts attention to the Bitcoin ecosystem. In the past two years, people have been entering the space for Web3. Many people believe that Web3 development is only done on Ethereum, but BRC20 has made people pay attention to Bitcoin’s RGB, Lightning Network, and Ordinals, and Bitcoin is even more decentralized than Ethereum. Last month, I met a team working on ZK rollups on Ethereum, and they have already started building Layer 2 networks on Bitcoin now.

I expect BTC to reach 100,000 in this round, and there should be no problem for large funds to buy Bitcoin. As for BRC20, it’s hard to say. Many people see its market value of 1 billion USD, but based on the current price of Ordi, the risk is high and the profit is low. So I don’t recommend chasing high anymore. Go and check out other small and beautiful things and enter early.

Some people say BRC20 is revolutionary, while others say it’s garbage and meaningless. Why are opinions so polarized in this matter? What is your own view?

Leo: Pessimists are always right, optimists reap wealth. When it comes to controversial things in the industry, either they are amazing or they go to zero. This is how BTC was born. Even now, there are people who say it’s a scam, but it doesn’t affect its development. In the previous bull market, there was SHIB, but as long as it is embraced by major exchanges in the end, people won’t discuss too many negative aspects.

From a technical perspective, the BRC20 protocol doesn’t have much technical threshold. People with technical backgrounds look down on it. But as ordinary investors and VCs, when faced with new things, the more controversial and heated they are, the more they should study them. You can take some small positions to research, try not to be swayed by market sentiment, but rather use market sentiment as an observational indicator to see how the market develops.

Ivan: BRC20 is a protocol for fair distribution of tokens. Retail investors are willing to spend money to engrave the inscriptions, which in itself is a recognition and affirmation of Sats in the market. The barriers to entry for BRC20 and ERC20 are low. Anyone can issue tokens, allowing even teams without technical expertise to create and speculate. All protocols are the same, BRC20 and ERC20 alike. As long as they can be indexed and the ledger is fair, and as long as they are recognized by the community, they can succeed.

Xiyu: The BRC20 system has many flaws. First, it cannot bear funds as a financial system because the underlying infrastructure is unstable. Now that BRC20 indexing is open-sourced, it will improve to some extent. If this system is understood as specifically for speculating on “doggos,” then that’s fine. However, it is inefficient, centralized, and prone to attacks. In the previous phase, there were issues with inconsistent synchronization due to Ordinals version, so it is still risky to use it as a financial system to bear funds.

Second, it is not fair. Some people think it allows for fair token distribution, but it’s not really the case. BRC20 limits to 4 characters and allows for early deployment, so many Asian teams play the game of “doggos” where they create their own pool. Although everyone mines together, they will mine more.

Third, this system has wasted a lot of Bitcoin. Many small amounts of Bitcoin, close to dust, have been locked up. When calculated carefully, it amounts to a significant sum of money, but the locking up also plays a small role in the rise of Bitcoin prices.

There are many Bitcoin ecosystem protocols, such as BRC20, ARC20, RGB protocol, Taproot assets, sidechain Liquid, L2 Stacks, BitVM, etc. Which ones do you favor?

Da Shan: We are optimistic about Layer2. The original intention of building blockchain applications is for mass adoption. Satoshi Nakamoto posted in late 2013 and early 2014 that Bitcoin will either go to zero or become a global settlement network in 30 years. So when building Bitcoin, we need to have an open vision and do something that everyone in the world can use. BRC20 and Ordinals cannot achieve this. They are limited to a small circle. To promote blockchain and Bitcoin to the majority of people, we can only rely on Layer2. The Lightning Network is very important. If you look at the code, you will see that the Lightning Network is in line with Satoshi Nakamoto’s vision. It has high TPS and large capacity. Moreover, Bitcoin is even more decentralized than Ethereum. Perhaps on the basis of the Lightning Network, Bitcoin can become a platform for smart contracts, just like Ethereum.

Recently, there has been a narrative from abroad, stating that the entire industry was born because of Bitcoin and will eventually be dominated by the Bitcoin ecosystem. All other public chains in between are meaningful tests.

Ivan: I also favor the Lightning Network. The Lightning Network has the highest TPS among all public chains, theoretically up to 40 million. Nowadays, many blockchain technologies and projects have no meaning. The demand is mostly fake and doesn’t necessarily require blockchain. But Bitcoin and the Lightning Network have practical significance and have the greatest chance of achieving a monetary revolution. For example, some small countries that have adopted Bitcoin as legal tender are using the Lightning Network for daily interactions and transactions.

Guanghua: I think BRC20 is already finished and has no future. But Sats and Ordi are meme coins. I believe the market value of Sats will rise to three times that of SHIB, because SHIB is the meme leader of Ethereum, while Sats is the meme leader of Bitcoin. BTC’s market value is three times that of ETH.

I fully agree with what Da Shan said about the narrative from abroad. I believe that in the future, any project not linked to BTC will disappear, and all public chains are just tests for Bitcoin.

I am waiting for the issuance protocol of the Bitcoin mainnet, but it is not the currently popular BRC20. BRC20 can only be used for memes and cannot support large-scale financial applications like Uniswap and Aave. I think Rune’s thinking and direction are more promising. We need to establish a closed-loop mechanism like ERC20 that allows institutions to issue and exit their own tokens.

Speaking of large-scale financial applications, everyone seems to have high hopes for the Lightning Network. However, there are issues with issuing assets on the Lightning Network. There are more cases of lost assets and scammers on the Lightning Network than cross-chain bridges. Ordinary users don’t understand how to open trading channels and prevent malicious transactions, so they should not use it easily, otherwise they may suffer financial losses. I think the Lightning Network team needs to reflect on themselves. The Lightning Network and Ethereum’s DeFi emerged almost simultaneously, but the scale of the Lightning Network’s DeFi is still far behind Ethereum’s. Personally, I think the Lightning Network should not be done offline, but should be a Layer2 solution, storing the account ledger on-chain to improve security. However, it is uncertain whether the Lightning Network’s technology will mature in the next bull market. I personally estimate that it will take at least two years for the Lightning Network to be fully developed, and by then, the next bull market will definitely be over.

Any investment advice?

Sonic Zhang: For short-term speculation, you can invest in meme coins like Shib and Roup that have recently started. For medium to long-term investments, you can consider investing in domain name protocols on the Bitcoin ecosystem, as well as projects like bitmap that revolve around the concept of metaverse. For collecting digital assets, you can consider items like Sub10k that are valued below 10,000, as well as early assets on the blockchain like Bitfrog and Bithu.

The trend of Bitcoin’s price before the halving should be a wave-like increase. This recent rise is due to the prosperity of the Ordinals ecosystem. The fundamental reason is the continuous improvement of the Bitcoin trading closed loop. Now, tokens not only can be obtained through mining, but can also be directly issued and sold, even with swap functionalities. I have a company in Hong Kong called ZeroSat Group, which is based on the ORC Cash protocol. We have developed the InfoSat.io browser analytics, the GoSat.io wallet (based on the further development of the Unisat open-source wallet), and we are soon going to launch OshSwap, which will enable orderbook functionality on the first layer network.

Xiaoyufu: Bitcoin carries the value of the blockchain industry’s development, while Ordi carries the value of BRC20’s development. That’s why I say Ordi is a smaller Bitcoin.

When talking about Ordi to fans and friends in the early days, I mentioned that the development of BRC20 needs to go through three releases of purchasing power. The first release was the emergence of Unisat, which allowed us to move away from the original OTC method. The second stage is listing on exchanges, and the third stage involves the participation of miners and major exchanges to drive ecosystem development.

In the current market sentiment this year, the simple trading sentiment has reached its peak. Therefore, we should pay attention to new protocols and new gameplay, such as the combination of BRC20 and recursive protocols, as well as the combination of blockchain gaming, inscriptions, and domain names. In addition to Bitcoin, we can also look for opportunities on other public chains.

The prosperity created by Ordi deserves us to make more discoveries.

In addition, after the phenomenon-level projects, there will be more scams and quick money-making schemes that might earn you a few thousand dollars and then disappear. Pay attention if you have limited funds to invest.

Leo: BRC20 has already been very hot. Looking at the macro market conditions, it will likely continue to rise until the end of the month or at the latest, early December. Afterward, there will be a correction. If you haven’t entered the market, don’t FOMO (fear of missing out). The correction is a cooling-off period, providing ample time to explore other projects, especially those on the Lightning Network that haven’t been hyped yet, such as the RGB protocol. Though the products and applications may not be catching up, as long as there are asset issuances, there will be speculation opportunities to take advantage of. For the longer term, DeFi is a significant challenge that tests cognitive and research skills. NFTs are relatively easier to hold onto, like assets leveraged with BTC, providing potentially significant returns. During the cooling-off period, everyone can select more valuable targets.

You can still keep an eye on BRC20 or projects similar to the Atom protocol, including Unisat, to see what their next moves are because they have capital support and are building good products.

In this Bitcoin ecosystem frenzy, do you have any experiences and advice to share with everyone?

Ivan: Half a year ago, Ordi rose to 30U, and I started selling around 18U. I sold all the way up to 30U, and after it dropped to 10U, I bought back in. I believe in it, but I also engaged in some arbitrage. I took out some of the principal first, and when the price dropped, I bought the coins back.

Diversify your investments, don’t put all your money in one basket. Put some money into more stable assets, like bonds or watches. These have more stable prices and aren’t subject to big fluctuations, but they have high liquidity, so you can withdraw funds at any time and invest in the Bitcoin ecosystem. But don’t invest everything.

Da Shan: Making money in the coin market is difficult in the first bull market; even if you make money, you might lose it before the bear market arrives. It’s hard not to make money in the second bull market. If you want to make money, secure your profits first, take out your principal, and play with the profits.

The Bitcoin ecosystem requires experimentation. We invested in NostrAsset, which launched two coins, Treat and Trick, on the Lightning Network. We initially tried with 10U, and it later rose to 2000U. There is also a project called UXUI in the testing phase, and it may have an airdrop for the testnet. If you have a small principal, don’t be lazy, work hard. If you have a large principal, allocate it properly.

Xiyu:

● Pay attention to fees. When engraving, if you don’t provide enough Gas fees, the engraving will fail, and the Gas fees won’t be refunded. You can slightly increase the transaction fees to avoid waste.

● Visit https://xiyu.im/ to read some articles I previously summarized when you have time.

● If you missed something, at least you didn’t lose money. Don’t regret because you missed an opportunity.

● Everyone should truly hold Bitcoin, not just play with the Bitcoin ecosystem.

● The Bitcoin ecosystem is just storytelling, its sole purpose is to exchange “fake coins” for real ones. Whether you are gambling or speculating, you must understand this.

● Lastly, don’t lose everything.

Bitcoin Duck: Maintain an open-minded attitude and avoid biases. Actually, in March, some people were discussing Ordi. The off-market cost could have gone from $1 to $100 within a day. Many people thought it was a scam. Of course, Ordi took a long time to take off, but don’t have biases. Pay more attention to the market and do your research first.

Don’t FOMO (fear of missing out). As long as the money is in your pocket, it is safe, and there are still opportunities. Don’t let market sentiment trigger FOMO. Many “shitcoins” don’t really have much value now. Many people incurred losses by rushing into them due to FOMO.

If you want to invest in mainstream assets, you can hold Bitcoin and Ethereum for the long term.

You can continue to pay attention to the BRC20 protocol to see if there are any upcoming leading projects.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!