The Bit ecosystem is one of the few narratives with technological innovation in this cycle and has been a super narrative that has thrived through three rounds of bull markets during the bear market.

On the occasion of the Bit ecosystem’s 2nd anniversary, this article is dedicated to recording the three mini bull markets over the past two years and to paying tribute to the friends who have consistently stood by the Bit ecosystem frontlines.

The Birth of the Bit Ecosystem

On December 14, 2022, Bitcoin’s #Ordinals protocol officially launched, with the protocol’s creator, Casey @rodarmor, inscribing the first inscription: the 0th inscription. This marked the official beginning of the ecosystem on the Bitcoin blockchain.

The Ordinals protocol can be simply understood as a protocol for inscribing data onto satoshis. The data can include images, text, JSON, GIFs, HTML, and more. Ordinals was born at the very bottom of this cycle’s bear market, during a time of dead silence in the market, with little promotion. As a result, very few people in the crypto community were aware of it.

It wasn’t until early February 2023 that the number of Ordinals inscriptions reached over 10,000 (now over 80 million). Most of these early inscriptions were images, with some GIFs and HTML files, mostly scattered, user-created images. There were also a few collections, numbering between 50 and 200, but their scale was small.

At this time, holders of CryptoPunks in the community initiated an activity to inscribe Bitcoin Punks on Ordinals, by downloading the pixel images of CryptoPunks and inscribing them.

Bitcoin Punks was the first 10K NFT collection on Ordinals, and it immediately made many people, including myself, aware of Ordinals, leaving a strong impression: What? You can inscribe small images on Bitcoin?!

This was a direct inscription of NFTs onto the Bitcoin blockchain! Unalterable, eternal existence! Each NFT inscription was given a verified inscription number and a timestamp! This was a completely new and disruptive narrative…

Previously, BTC could only be used for transactions, but now, BTC had an ecosystem; it could inscribe data.
https://x.com/AresWey/status/1660252926898585601…

I was extremely excited, feeling the same enthusiasm I had back in 2017 when blockchain was supposed to change the world. In the following months, I was almost obsessed with diving into the Bit ecosystem.

This was the first time Ordinals received significant attention in the community. People flocked to inscribe Bitcoin Punks. At that time, the infrastructure was almost nonexistent, with nothing like the many tools and platforms we have today. To inscribe Bitcoin Punks, you needed your own Bitcoin full node and technical knowledge. Despite this, Bitcoin Punks were completely inscribed in just a few days.

It took over two months for Ordinals inscriptions to go from 0 to 10,000, but only less than a week for the number to jump from 10,000 to 30,000…

Although Bitcoin Punks wasn’t an original collection, its appearance established two new rules for the Bitcoin ecosystem:

1/ First is First

Explanation: Only the first one is recognized. When inscribing an image on BTC, there’s no need for a smart contract, and anyone can inscribe it. But if two identical punks are inscribed, which one should be included in the collection? Bitcoin Punks introduced the “First is First” principle, which only recognizes the first inscription, meaning the one with the earlier inscription number.

Remember this “First” rule; it is extremely important and can be said to be the foundational law of the entire Bit ecosystem. Without this rule, subsequent protocols like BRC20 and Runes would not function.

2/ Fair Launch (Fair Mint)

Bitcoin Punks were not inscribed and distributed by a project team but were inscribed by users themselves. This marked the beginning of the Bit ecosystem’s Fair Launch model and set a precedent for later protocols like BRC20 and Runes. It also inspired other chains and ecosystems to adopt Fair Launch.

NFT Mini Bull Market of the Bit Ecosystem in February-March 2023

The popularity of Bitcoin Punks triggered the first mini bull market in the Bit ecosystem: the NFT mini bull market. This mini bull market lasted from early February to March 2023. \
The floor price of Bitcoin Punks rose from 0.2 ETH to 2 ETH, which was roughly 0.12 BTC at that time.

For the Sub10K (first 10,000 inscriptions) collection:

@Block_Munchers OTC selling price reaches 1.2BTC

@InscribedPepe Floor reached 1.6 BTC

Collection of Sub1K (first 1000 inscriptions)

@OrdinalPunks The floor even came to over 2 BTC.

At the beginning of February, the Bit ecosystem had almost no infrastructure or exchanges. Buying Bitcoin Punks was extremely difficult, requiring OTC deals through Discord. The price was only 0.2–0.3 ETH, but the MOD guarantee fee was 0.1 ETH, which was quite high. Despite this, everyone was eager to buy, as prices were rising so fast.

I personally bought quite a few Bitcoin Punks through OTC, and @LeonidasNFT also spent several BTC buying rare Bitcoin Punks—he’s now the founder of the Rune token, $dog. At that time, @z3thnft even set up the earliest Bitcoin Punks Chinese community, which I still fondly remember.

Later, several exchanges emerged, such as http://ordinals.market, ordinalswallet, and ordswap (which has since shut down). With trading platforms for NFTs on Bitcoin, prices surged significantly.

During that period, the hottest NFTs were Bitcoin Punks and Sub10K NFTs, with Bitcoin Punks having the highest trading volume.

Sub10K, on the other hand, was scarce in the market. There were only a few collections, so the number of valuable NFTs was also very limited. Many people who purchased Sub10K inscriptions were quite low-key; they bought them as collectibles and didn’t show them off or try to sell them.

At the time, buying a Sub10K collection NFT was a huge effort. It felt like an archaeological dig—spending every day in various collection Discord groups, searching for traces of collectors. Even when a lead was found, it wasn’t always easy to make contact. Getting your hands on a desirable Sub10K inscription was like finding a cherished antique.

March-May 2023: Entering a Brief Bear Market

After March, as more and more NFT projects were launched on Ordinals, the supply-demand balance in the market began to shift, leading to a prolonged two-month bear market. It was also the period I miss the most.

During that time, although we were all holding onto small images that had lost value, we were filled with confidence in the future of the Bit ecosystem. Every evening, a group of Bit ecosystem OGs would gather in spaces, not just talking about profits, but also about dreams and the future. We all envisioned Ordinals’ potential.

There were many OGs who frequently joined the Space sessions, including:
@unisat_wallet’s founder @lorenzonical

Ordinals official DC MOD Dr. Gold Dog @ordjingle

OKX wallet’s @KKyleChen

idclub’s founder @moffat2021

ordswap’s founder Jack

OrdinalsCN community creator CXO.egg

The first gamefi of Bit ecosystem, @OrdzGames’s founder @z3thnft

Orc-Cash protocol founder Sonic

CryptoPunk and BAYC community member @SuZhe_eth

Market experts paulwei @coolish, @Lioneming

Bit ecosystem educator @practice_y11, @ohxiyu, and many more.

Many OGs are still active.

At that time, everyone’s position was very consistent, there were no differences, they were full of longing for the future, and there were many idealistic Builders.

During this period, two things happened that changed the Bit ecological landscape:

1/ The Birth of the Sats Domain Protocol

At the end of February 2023, with the inscription number surpassing 160,000, the Sats domain protocol was born, becoming the first domain supported by Unisat and Xverse wallets.

The Sats protocol might seem unremarkable, but why do I single it out as a significant event? In fact, at the time, with few asset categories available, the Sats protocol stood out as one of the leaders, with active trading. It inherited the “First is First” principle and the “Fair Launch” rule from Bitcoin Punks, and also pioneered the JSON format for inscriptions.

The key difference between Sats domains and ETH domains is that there is no project owner, and they are free for life. As long as the sats domain address is used, it can be used for transactions. Both Unisat and Xverse wallets already support it.

The Sats domain protocol also inspired the later creation of BRC20.

2/ The birth of the BRC20 protocol

Engineer @domodata, inspired by the Sats domain, proposed a JSON-format inscription token protocol called BRC20, which became the first token protocol in the Bit ecosystem. The first genesis token was $ORDI, deployed by domo himself with the inscription number 348020.

(I thought the deployment inscription of ORDI would be a rare collectible, so I privately messaged domo to inquire about the price of the deploy inscription. Domo said he wouldn’t sell it for less than $1 million.)

However, domo lacked confidence in his BRC20 protocol, considering it just an experimental idea and advised against any FOMO (fear of missing out).

BRC20 was indeed quite rudimentary and caused a lot of wasted inscriptions, leading to negative discussions in both Eastern and Western spaces. People questioned why there was a need for such a complex token protocol when Bitcoin already existed, feeling it was a solution looking for a problem.

But gamblers with a keen sense of opportunity didn’t let this chance slip by: they’d rather be wrong than miss out.

Within two days, gamblers had minted all the ORDI tokens, totaling 21,000. The cost per token was around 2-3 USD, and each token contained 1,000 ORDI, meaning the cost per ORDI was about $0.003.

At that time, BRC20 was a new and unfamiliar concept, with no infrastructure or exchanges. OTC trades only occurred in WeChat groups, and no one knew what the future held for this asset.

So, after the ORDI minting was completed, its price didn’t surge immediately. The OTC price gradually increased, reaching around 50 USD per token by the end of April, with the price per ORDI at about $0.05. This marked a 20x increase from the mint price, with a market value of about $1 million.

I bought ORDI at 70 USD, initially having no interest in BRC20, believing that the protocol was too rough and wasted too many resources in the Ordinals system. But after hearing someone in a Space describe ORDI as the first token of the BTC ecosystem, I immediately realized its potential! Yes, no matter how rough it is, being the first is crucial. Even if it has no practical value, it holds collectible value.

As expected, ORDI went on to achieve an incredible journey of growth, becoming a thousandfold asset.

May to June 2023: The Second Mini Bull Market in the Bitcoin Ecosystem Driven by BRC20

The rise of BRC20 can be credited largely to @unisat_wallet. Without Unisat’s continued development, BRC20 might have faltered under the circumstances at the time. Thanks to Unisat’s efforts, the BRC20 index and trading markets launched in May, and BRC20 saw a significant surge, with the price of ORDI reaching 0.3 USD, a 100-fold increase from its mint price.

However, just a few days after the trading market opened, a bug was discovered: someone exploited a double-spending vulnerability in Unisat, stealing a large amount of money from traders. Once Unisat detected the issue, they quickly reimbursed the full amount lost due to the bug.

This became a major news event, widely reported by cryptocurrency media, effectively providing a large-scale publicity boost for both the Bitcoin ecosystem and BRC20.

As a result, outside gamblers flocked to the new Bitcoin casino, known as BRC20. This triggered the first BRC20 trading frenzy. On May 8, Gate Exchange listed ORDI, pushing its price to 29.58 USD, marking an extraordinary 10,000-fold increase, and making many early holders wealthy. On May 15, OKEx also listed ORDI, but its price never returned to the previous highs.

In May, Binance also launched the Ordinals NFT market (which was recently shut down).

The BRC20 craze reached such heights that Bitcoin transaction fees temporarily soared above 500 sats/vB. For a while, every time a BRC20 inscription was minted, the price would increase several times. The demand was so high that BRC20 tokens were scarce. \
After the BRC20 frenzy, traders turned their attention to the Ordinals NFT market. During this period, NFT images also saw explosive price increases. One example is @BitcoinFrogs, where prices surged from 0.002 BTC in March to 0.12 BTC, a 60-fold increase in BTC terms, transforming it from an obscure collection to one of the largest Bitcoin-based NFT collections.

Bitcoin Frogs marked a shift in the small image ecosystem within the Bitcoin ecosystem. People realized that smaller collections with low inscription numbers, like Sub10K, had fewer users and were better suited for collecting than speculation. In contrast, larger collections, such as 10K-sized sets, with a larger user base, were more suitable for speculative trading and the formation of a cultural and community consensus.}

Bitcoin Frogs gained popularity as the first original 10K collection on Bitcoin, and during March and April, it often held free giveaways on Space and Twitter. By then, every participant in Western spaces seemed to own a Bitcoin Frog.

I had a connection with Bitcoin Frogs, but no luck in acquiring them. I only focused on Sub10K collections and had little interest in high-numbered images. Additionally, I didn’t appreciate the artistic style of the little frogs, so I ended up selling the few I was gifted during the March-April downturn at the lowest prices.

After BRC20’s success, many new token protocols emerged using the JSON inscription format, much like the altcoins that followed Bitcoin’s birth. One of the first was ORC20, which added more smart features to the BRC20 protocol. Other projects, like BRC100, Orc-cash, and Stamp, followed suit, with some creating their own minting protocols and NFTs on platforms like Stamp.

Other blockchains also started replicating the inscription and BRC20 concepts, such as the DR-C20 token protocol on the Dogecoin chain and ETH-based ETHS inscriptions.

At the time, the internet was abuzz with people manually creating inscriptions, resulting in a truly vibrant and energetic atmosphere.

It was also popular to mint rare sats. At the time, an uncommon sat could cost up to 1,200 USD, and rarer sats, like “rare” ones, were priced at as much as 10 BTC. Later, the Blob team made a deal for an Epic rare sat for 33 BTC.

The hype in the Bitcoin ecosystem lasted for about a month. However, with the excessive issuance of inscriptions and the shortage of capital, the market once again fell into a period of stagnation. After all, the entire crypto industry was still in a bear market cycle.

From June To October 2023, The Market Returned To A Quiet State, But Innovation Continued In The Bitcoin Ecosystem

After June, the market reverted to a bear cycle, with BTC transaction fees dropping to 1 sats/vb.

During this period, several significant developments occurred in the Bitcoin ecosystem:

1/ The 21 million sats inscriptions continued to be slowly minted, with the expectation that minting would finish by October 2023.

2/ Ordinals underwent a technical upgrade, introducing parent-child inscriptions, recursive inscriptions, and the refinement of cursed inscriptions.

Parent-Child Inscriptions: A parent inscription could have a child inscription inscribed on it, creating a hierarchical relationship. This could be used for minting NFT collections, similar to Ethereum NFTs’ smart contract validation.

Recursive Inscriptions: Multiple other inscriptions could be used as components to assemble into a new inscription, offering a “Lego-like” effect, providing possibilities for the metaverse.

Cursed Inscriptions: These were inscriptions that Ordinals’ system didn’t recognize, categorized as cursed inscriptions with negative inscription numbers. After the upgrade, these cursed inscriptions were identified and categorized, becoming “vintage” (around several hundred thousand cursed inscriptions).

3/ The Bitmap project was launched, which used Bitcoin blocks as the map for a metaverse land project.

4/ The Merlin project began building the BRC420 protocol and Bitcoin Layer 2 called Merlin.

5/ The Atomics protocol, independent of Ordinals, was developing and gaining traction. It focused on a “colored coin” model for tokens, with the unique feature of 1 coin = 1 satoshi. Its transfers were much simpler than BRC20, similar to standard Bitcoin transactions.

6/ Casey announced the development of the Runes protocol.

Casey’s original intention for creating Ordinals was to build an art museum, library, and gallery on Bitcoin, but the appearance of BRC20 disrupted this plan.

At this point, it is important to mention the flaws of the BRC20 protocol:

◉ Excessive UTXOs and Wasted Inscriptions: BRC20 generates a lot of UTXOs and discarded inscriptions. Every mint and transaction invalidates previous inscriptions, making them useless. To transfer, a new inscription has to be minted, wasting inscription numbers. This results in a lot of “junk” in the system, with each piece of “junk” occupying at least 330 sats of UTXO, making it difficult to use or merge efficiently.

◉ Multiple Steps in BRC20 Transactions: BRC20 transfers involve multiple steps, wasting both time and money. A Bitcoin transfer requires one step with a network fee, but a BRC20 transfer involves minting an inscription (incurring inscription and network fees), sending it out (requiring another network fee), and taking at least two blocks to complete.

Casey is mainly dissatisfied with the abandoned inscriptions and UTXOs generated by BRC20. Abandoned inscriptions account for more than 95% of the total Ordinals inscriptions, and it’s all “garbage” when you look around.

He wants to create a token protocol that doesn’t generate a large number of UTXOs or abandoned inscriptions, and that allows transfers similar to Bitcoin. This later became the Runes protocol.

November 2023 to April 2024: The Third Mini Bull Market of the Bitcoin Ecosystem

This bull market was sparked by the listing of Ordi and sats on Binance on November 6.

The entire network once again entered a frenzy of manually crafting inscriptions, with the overall volume much larger than the May surge. A new batch of BRC20 tokens, represented by $rats, emerged and made many people wealthy.

By March 2024, Ordi peaked at $97, achieving a 30,000x increase.

$Sats reached a high of $94, also achieving more than 300x growth.

$Rats market cap surged to $600 million, with a 200x increase.

The #Atomicals protocol #ARC20 assets, including$atom and $quark , also soared.

Since June, previously overlooked #SRC20 tokens also experienced a surge.

Other non-mainstream protocols like orc20, brc100, brc420, veda, and others also saw a major rally.

Bitcoin Frogs increased from a low of 0.03 BTC to 0.43 BTC, a 14x gain in BTC terms.

Any asset within the Bitcoin ecosystem surged.

The capital flow of this bull market mirrored that of the May bull market: BRC20 → non-mainstream protocol tokens → NFTs.

However, this bull market lasted much longer than the one in May.

In late December, a project called @nodemonkes (Node Monkeys) began its Dutch auction, changing the landscape of BTC ecosystem NFTs. The Node Monkeys inscriptions numbered from 83522 to 111319, while Bitcoin Frogs were numbered from 321224 to 412389. People realized that Node Monkeys was the first original 10K collection in the Bitcoin ecosystem. As a result, Node Monkeys reclaimed the “First” narrative that it rightfully deserved, leading to a surge in its price. By March 3, 2024, the floor price of Node Monkeys increased from 0.03 BTC to 0.9 BTC, a 30x gain in BTC terms. At that time, a rare Alien Node Monkey sold for 17 BTC, equivalent to 560 ETH. This remains the highest transaction record for Bitcoin ecosystem assets to date.

The popularity of Node Monkeys boosted the entire BTC NFT market.

https://nodemonkes.com/monkedex

https://x.com/AresWey/status/1759480934645289263…

Merlin’s L2 staking also began, supporting staking for almost all Bitcoin ecosystem assets, including NFTs, BRC20, and BRC420 assets. Merlin is a pioneer of Bitcoin’s Layer 2, initiating the BTCfi era. Despite various doubts along the way, the final result was very rewarding for users in terms of staking returns.

As for Runes, Casey had announced early on that the Runes protocol would launch in April, coinciding with Bitcoin’s halving block.

At the end of January, the RSIC project innovated a Rune pre-mining model, cleverly designing human behavior and reward mechanisms. A large number of RSIC-inspired pre-mining projects emerged afterward, including the current leader in the Runes space, $dog. RSIC and DOG were even valued at 400-500 million before the Runes protocol even launched.

Between January and April, before Bitcoin’s halving, trading of NFTs and Rune pre-mining projects was exceptionally active. At that time, nearly everyone’s attention was on Runes. Discussions in groups and spaces were all about Runes. Many believed Runes would be a revolutionary token protocol for the Bitcoin ecosystem, sparking another wave of growth for the ecosystem.

But as the saying goes: “What gets too hot must die.” The greater the expectation, the greater the disappointment.

When the Runes protocol launched in April, it was popular for about 10 days before fizzling out, with a shorter lifespan than the BRC20 market surge.

The reasons are as follows:
1/ The initial expectations were too high, and the market’s anticipation was prematurely drained. Many people sold off overvalued pre-mining projects to cash out and exit.

2/ Only 3-4 of the top 100 Runes were Fair Launch mined, with the rest having reserved allocations, resulting in low playability and a decline in user participation.

3/ The Rune names had to be 13 characters or more, and each character could only be reduced once every 4 months. This strange setup made the token names appear long and odd.

4/ As the only officially designated Genesis Rune (Rune #0), Casey set a 4-year mint cycle for it, removing its potential as a short-term speculative token and deterring gamblers hoping to profit during this bull market.

While the Runes protocol’s design and mechanisms were almost perfect, it also posed a significant challenge to traditional token minting and naming rules, influenced by Casey’s personal aesthetic as an engineer. Clearly, the market did not buy into it in the short term.

May 2024 to Present: The Dormancy After the Market Frenzy

Ordi dropped from $97 to a low of $20.

Sats fell from $94 to a low of $11.

Node Monkeys dropped from 0.9 BTC to a low of 0.09 BTC.

Bitcoin Frogs fell from 0.43 BTC to a low of 0.028 BTC.

The Runes protocol never saw an explosion. Various Rune tokens continued to decline.

Other non-mainstream protocol assets also fell back into obscurity, with many low-traffic protocols teetering on the brink of death.

The Bitcoin ecosystem resembled an accelerated version of the crypto market, with three cycles of bull and bear markets within just two years.

In early November 2024, Bitcoin led the entire crypto market into a wild bull run. Over a month has passed, and every segment of the crypto market, even the long-neglected old altcoins, surged dramatically. Yet, the Bitcoin ecosystem remains stagnant, showing no signs of recovery.

Conclusion

The Bitcoin ecosystem, as the only narrative with technical innovation in this cycle, will not miss the wild bull market. After 7 months of dormancy and accumulation, it has built up enough strength.

Looking at the history of every bull market, they have all been driven by capital, creating asset bubbles.

—- When the capital (numerator) is larger and the assets (denominator) are smaller, the inflation of assets becomes more intense, and the bull market effect becomes more pronounced.

This is particularly evident in the three bull markets of the Bitcoin ecosystem, as its asset pool is smaller.

Currently, the total assets of the entire Bitcoin ecosystem are less than $10 billion, which is less than 0.5% of Bitcoin’s market cap.

In comparison, the total market value of the Ethereum ecosystem exceeds $300 billion, accounting for 66% of Ethereum’s total market cap.

Looking at it now, the story and innovation of the Bitcoin ecosystem are far from over. A large number of technically innovative projects are still on the way, such as BTCfi, Layer 2, Runes’ DeFi, and more. There are still many narratives in the Bitcoin ecosystem waiting to be uncovered.

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