NFT standard on the Bitcoin network: BRC-721

Author: @real_BRC721

What is BRC-20?

BRC-20 is an experimental format standard for issuing fungible tokens on the Bitcoin network, similar to ERC-20 on Ethereum.

Before understanding BRC-20, it's essential to grasp two concepts.

1. SATS: Satoshis, the smallest unit of Bitcoin, where 1 BTC equals 100 million SATS;
2. Ordinals Protocol: A protocol that assigns a number to each SATS.

Originally, each unit of SATS was indistinguishable, but through the Ordinals protocol, these SATS can be arranged in a specific order and attached with particular information, transforming each originally fungible SATS into a unique NFT.

This information can be text, images, or code, and the information attached to SATS is called "Inscriptions."

It is evident that the Ordinals protocol was initially designed to serve the issuance of NFTs on the Bitcoin network.

BRC-20 can be understood as a special type of Ordinals NFT, which standardizes the inscriptions into a unified JSON data format (text) that specifies token information, including the token's name, symbol, total supply, and decimal places. Developers can issue fungible tokens by following the standard.

What is BRC-721?

BRC-721 is an experimental standard for issuing non-fungible tokens (NFTs) on the Bitcoin network. It draws on the concepts and principles of BRC-20 and provides more functionality and flexibility by addressing the limitations of native Ordinals NFTs.

Using the BRC-721 standard, users can easily create, mint, transfer, and update unique digital assets, suitable for a wide range of applications, including digital art, collectibles, and virtual goods. The standard defines a series of operations, such as deployment, minting, transferring, and updating metadata, with each token assigned a unique identifier, ensuring the uniqueness of each NFT, making them non-interchangeable with other NFTs on a one-to-one basis.

How does BRC-721 differ from native Ordinals NFTs?

1. Data Storage

• Native Ordinals require each inscription to save images, leading to high minting costs and significant consumption of Bitcoin network space; whereas BRC-721 only needs to specify image and other information at deployment, and the minting operation does not require saving images, thus greatly reducing minting costs and Bitcoin network space usage;
• BRC-721 supports storing images in off-chain services like IPFS, which not only saves Bitcoin space but also provides flexible attribute information for each token;
• Native Ordinals NFTs cannot effectively index collections, while BRC-721 can effectively index and search NFTs within the same collection by providing a JSON specification similar to BRC-20.

1. Compatibility with BRC Protocol

• BRC-721 adopts a protocol format similar to BRC-20, defining different functionalities through JSON content, significantly enhancing the flexibility of NFTs. For example, the Reveal function can be implemented through the Update operation; the Tick field can effectively index NFTs within a collection.

1. Compatibility with the NFT Ecosystem

• NFTs based on the ERC-721 standard are currently more popular in the market. BRC-721 uses Token URI and Metadata specifications consistent with ERC-721, allowing for quick adaptation to the existing NFT ecosystem. Additionally, native Ordinals do not support fields like Trait, while BRC-721 can define NFT attributes and rarity information.

Therefore, compared to native Ordinals NFTs, using the BRC-721 protocol allows for more complex functionalities, bringing external resources into Ordinals, offering greater scalability, richer application scenarios, and being more developer-friendly.

Prospects and Challenges of BTC NFTs

The emergence of BTC NFTs provides an opportunity to further explore the diverse value of Bitcoin. Through the Ordinals protocol, SATS are transformed into unique NFTs, making the Bitcoin network more flexible and free.

However, to achieve widespread user adoption of BTC NFTs similar to Ethereum NFTs, there are still some challenges. A major issue is capacity limitations, with a maximum limit of 4MB for an Ordinals file, making it difficult for some artworks to be displayed on the Bitcoin network.

Additionally, native BTC NFTs are entirely on-chain, leading to very high storage costs, which may currently hinder large-scale application and adoption.

Nevertheless, the market prospects for BTC NFTs remain very attractive, and the introduction of the BRC-721 standard brings more flexibility and scalability to BTC NFTs. By storing NFT metadata in IPFS or other off-chain services, it saves space on the Bitcoin network, reduces user costs, and provides more attribute information for each NFT, increasing the playability and application scenarios of BTC NFTs.

It is hoped that over time, BTC NFTs will gain broader adoption and contribute more possibilities and innovations to the development of the Bitcoin network.