Introduction

Inscriptions are the new way arbitrary content is written into the Bitcoin blockchain by embedding them in Bitcoin satoshis. This allows any data, including text, images, or code, to be permanently and immutably stored on the Bitcoin blockchain. These inscribed sats can be transferred through Bitcoin transactions, sent to Bitcoin addresses, and held in Bitcoin unspent transaction outputs (UTXOs). The Ordinal theory, developed by Casey Rodarmor, plays a crucial role in numbering each satoshi in the order they are mined, preserving this order through a first-in, first-out system based on transaction history.

In this piece, we highlight some popular inscription tokens listed on Gate.io and their growing popularity in the crypto space.

Understanding Inscriptions

Inscriptions refer to a new and exciting development that allows you to store data of various kinds directly on the blockchain. Essentially, inscriptions are tiny pieces of data like text, images, videos, or even audio files attached to Bitcoin transactions (or, increasingly, transactions on other blockchains). These attachments are called “digital artifacts” and come in two main categories:

1. Ordinal Inscriptions: These are unique and directly embedded on individual Satoshis (the smallest units of Bitcoin), making them essentially Bitcoin-native NFTs.

2. OP_RETURN Inscriptions: These reside in a dedicated space within Bitcoin transactions and are not tied to individual Satoshis, similar to how Ethereum stores data for NFTs.

Inscriptions gained popularity in May 2023, with the development of BRC-20 tokens on the Bitcoin blockchain, and since then other blockchains have developed their inscription mechanism.

Bitcoin Inscriptions

The concept of Inscription has been used to create unique digital assets in the Bitcoin ecosystem, amassing over $3 billion in market cap. The BRC-20 is an experimental token standard on the Bitcoin blockchain, introduced by Domo, the pseudonymous developer. It leverages ordinal inscriptions to create semi-fungible tokens by embedding specific types of text into satoshis. They are classified as semi-fungible because the ability to inscribe custom media into each satoshi linked to a token potentially violates the idea of fungibility. BRC-20 tokens coexist alongside Bitcoin on the blockchain, similar to how altcoins operate on the Ethereum blockchain. However, BRC-20 tokens do not make use of smart contracts and offer a simplified feature set.

They offer users the ability to mint and trade tokens by inscribing data, like a string of words or pictures, onto satoshis, the smallest unit of Bitcoin. The inscribing process involves attaching a short piece of JSON (JavaScript Object Notation) code to satoshis, which would define the various attributes such as the token name, symbol, supply, minting conditions, and transfer conditions from one address to the other.

Ethereum Inscriptions

Ethereum Inscriptions, known as Ethscriptions, launched on June 17, 2023, inscribes data directly onto the Ethereum chain, using Ethereum’s “call data” contained in on-chain transactions.

Ethscription uses a mechanism known as URI (Uniform Resource Identifier), to ensure the originality and uniqueness of the inscribed data.

How Do Inscriptions Work?

Source: Xverse

Inscription protocol refers to the mechanism used to store data in an “envelope.” Envelopes are built using Bitcoin’s scripting language, creating a special script that conceals the data you want to inscribe. This script doesn’t actually get executed, ensuring it doesn’t interfere with the transaction’s validity.

The data to be inscribed (text, images, code) is encoded within the envelope using “data pushes” within unexecuted conditional statements. The envelope remains hidden until the inscription is revealed in a subsequent transaction. This transaction spends the Bitcoin output containing the envelope, exposing the encoded data.

To inscribe a specific satoshi with data, users must send an individual satoshi to a Taproot-compatible wallet and attach the desired metadata as part of the transaction.

The inscription software runs on a Bitcoin Core full node and enables users to encode computer files into hexadecimal data inside a Bitcoin transaction. The transaction includes a special field known as the “inscription” field. The inscription field is capable of accommodating any type of data up to a maximum size of 4MB.

Upon confirmation of the transaction, the inscription is stored permanently on the blockchain and is associated with the satoshi that it was added to, so it can be viewed by anyone who knows the satoshi’s address.

Top 5 Inscription Tokens

BRC-20 tokens are at the forefront of the inscription trend, and they make up our list of top inscription tokens. However, most BRC-20 tokens do not have utility and are mainly of speculative value.

The inscription tokens discussed below are based on market capitalization, popularity on social media, utility, and trading volume.

Note: Click the link on each token to get real-time details on the tokens, like current price and market cap.

ORDI

Source: CoinMarketCap

Ordinals (ORDI) launched as the first BRC-20 token, operating based on the inscription feature on the Bitcoin blockchain. The platform owns a mechanism that allows users to attach data (images, text, audio, video, etc.) to the smallest unit of bitcoin, the satoshi. Users can mint 100 million NFTs on a single bitcoin. These NFTs can be traded and operated without needing a layer 2 solution.

Created by the anonymous Domo using the Ordinals protocol, ORDI has emerged as one of the most popular inscription tokens and has grown to a market capitalization of over $1 billion since the first inscription in March 2023. ORDI has a total supply capped at 21 million units, mirroring Bitcoin’s maximum supply. Its impressive growth sparked the demand for Bitcoin-based assets.

It is listed on major centralized exchange platforms, including Gate.io. Within a few months, the price of ORDI went from its all-time low of $2.86 on September 11, 2023, to an all-time high of $90.96 in early January 2024, recording an almost 1400% increase.

TRAC

Source: Ordinal Labs

Trac is one of the few BRC-20 tokens with a use case, it’s an infrastructure project within Ordinals that aims to provide a decentralized system for tracking and accessing Ordinals-related meta protocols, such as BRC-20, sats domains, and more. The decentralized system offers incentives to secure the tracking of the network and enable voting on new and updated protocols, as well as general governance.

TRAC listed on Gate on the 11th of May 2023, with a max supply of 21 million, and ranks high on Gate’s Top 20 BRC-20 tokens.

SATS (Ordinals)

Source: Satsvipordinal

SATS (Ordinals) launched in early June 2023 and has risen to rival ORDI in market cap rankings at $1.2 billion. SATS is a meme coin with no defined utility on the blockchain. The token’s name, SATS is derived from the term Satoshi, the smallest unit of Bitcoin.

VMPX

Source: CoinMarketCap

VMPX Coin is a BRC-20 token created by Jack Levin, the founder of XEN Crypto. Jack Levin is a popular personality in the crypto world and well-experienced in the world of technology. Levin was Google’s first backend architect and has gone on to develop several technology start-ups. His foray into Bitcoin began in 2010, and he has been actively involved in the cryptocurrency space ever since.

VMPX is another BRC-20 token with significant utility. The VMPX project aims to establish close connectivity between Bitcoin and Ethereum in the future. VMPX’s role will be to serve as a liquidity token on the cross-chain bridge. Besides its BRC-20 version on Bitcoin, VMPX also exists as an ERC-20 token on the Ethereum chain.

VMPX market cap is almost at $6M, with a maximum supply of 108.62M VMPX in circulation.

RATS

Source: Coinbay

Rats (Ordinals) is a meme coin built on the BRC-20 standard with a huge community base. RATS launched in November 2023 and is currently one of the most actively traded BRC-20 assets. The platform has a total supply of one trillion tokens with 100% of tokens in circulation and currently valued at a market cap of $319.14 million.

RATS is a meme coin movement focused on empowering retail investors, to become pioneers in cryptocurrency trading, seizing potential market opportunities.

The Rats symbol is based on Bitcoin being founded in the year of the Rat, signifying the spirit of advancement. RATS has a large community base across different languages and countries. Token holders donate assets to the platform, which is in turn used for community activities and promotions.

Worthy Mentions

NALS

Source: NALSBRC-20

NALS is a meme coin in the family of BRC-20 tokens, with no defined utility. Its assigned X account states that the token is a tribute to Satoshi Nakamoto, the anonymous creator of the Bitcoin blockchain. With a market cap of $7.8M, NALS is one of the well-ranked BRC-20 tokens on Gate.io.

DRAC

Source: CoinMarketCap

DRAC is a BRC-20 token based on the vampire Count Dracula, created through a network-wide cryptographic puzzle-solving event and a subsequent decentralized dynamic auction game.

DRAC has a limited supply of 106,824,000 tokens, with 1,260 set as the maximum number of tokens that can be minted in one transaction, based on the vampire number “1260,” implying that DRAC’s value is partially based on a fixed supply.

DRAC was listed on Gate.io on May 9, 2023, with a free offering to qualified users.

BitcoinCats ($1Cat)

Source: BULB

BitcoinCats is a GameFi platform in the Bitcoin Ecosystem, by mapping Bitcoin assets (BRC-20, Ordinals NFT, and others) to Ethereum (and other Layer-2) networks, BitcoinCats brings many new elements to the Bitcoin ecosystem, including but not limited to Play2Earn, Staking, Farmland, SocialFi and many others. The mission of BitcoinCats is to build the next-gen gaming ecosystem across Bitcoin and EVM networks.

On December 22, 2023, Gate.io held a non-initial airdrop offering 2.7M 1CAT to eligible users. 1CAT is the native token of the BitcoinCats Gaming Ecosystem. It is originally inscribed on Bitcoin and part of it is bridged to Ethereum to benefit from the well-developed DeFi and GameFi infrastructure.

The token can be used to purchase and upgrade in-game assets, including avatars, pets, equipment, farmlands, etc.

Are Inscription Tokens a Good Investment?

Inscription tokens are still a relatively new development, and the landscape is evolving rapidly. They could offer significant returns if they gain wider adoption and applicable use cases. It’s also a good way to diversify your portfolio beyond popular cryptocurrencies and tap into the burgeoning Bitcoin ecosystem.

However, there are technical limitations and potential risks associated with inscriptions, such as storage constraints and potential vulnerabilities in scripting techniques. They should be considered a high-risk, high-reward investment option, not a guaranteed profit opportunity. Before investing in inscription tokens, conduct thorough research, exercise caution, and invest responsibly.

Conclusion

Inscription tokens are still on a nascent run in the crypto space, with the major challenge being that most inscription tokens lack utility except for tokens such as VMPX and TRAC, which could have a significant use case soon.

Inscription tokens are still experimental and are mostly meme tokens. So far, ORDI, the first inscription token, is still the most traded and highly valued.

SATS is another meme token that closely rivals ORDI in market cap, while RATS is a meme token with a large community base inspired by the most popular rodent. Other worthy mentions are NALS, 1CAT, and DRAC.