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The new era of Bitcoin: Profits, progress and potential in the inscription-driven crypto industry
Journal of Digital Banking,
9
(2),
150-171
(2024)
Abstract
The introduction of the Ordinals Protocol and BRC-20 tokens, featuring the pioneering concept of Inscriptions, signifies a pivotal evolution in the Bitcoin network. Officially launched on 21st January, 2023, this innovation embeds a unique blend of tokenisation and non-fungible attributes directly into Bitcoin’s base layer, akin to engraving precious metals. This paper thoroughly examines the technical underpinnings and market implications of BRC-20 tokens, focusing on the stark contrasts with traditional ERC-20 tokens and initial coin offerings. Unlike ERC-20, Inscriptions integrate seamlessly into Bitcoin’s existing structure, offering a decentralised model that strengthens the principles of a true fair launch in decentralised finance. The study critically assesses the reception within the Bitcoin community, balancing the potential enhancements in Blockchain functionality against concerns regarding foundational principles. Furthermore, it explores the profound implications for stakeholders such as miners, exchanges and developers and evaluates the transformative impact on the cryptocurrency ecosystem at large. Ultimately, this paper elucidates the role of Inscriptions in redefining the trajectory of Bitcoin and shaping the future landscape of Blockchain technologies, emphasising their potential to foster equity and innovation in token distribution.
Keywords: Bitcoin; BRC-20; decentralised finance; fair launch; Inscriptions; Ordinals
The full article is available to subscribers to the journal.
Author's Biography
Hui Gong is a lecturer in decentralised finance and Blockchain at the University College London (UCL) Institute of Finance and Technology, where his research has spanned cryptocurrencies, Web3, the metaverse and their transformative potential in modern finance. He holds a PhD in financial mathematics from UCL. During his doctoral studies, he was delegated for an exchange visit to the Institute for Pure and Applied Mathematics at the University of California, Los Angeles, and also collaborated with financial institutions like Credit Suisse and Citigroup on projects related to artificial intelligence and quantitative finance. In 2016, Gong founded the China UK Blockchain Association, fostering collaboration between China and the UK in the Blockchain sector. He also served as the Special Advisor on Fintech and Blockchain for the All-Party Parliamentary Group on Blockchain in 2018. Following his graduation, he joined the UCL Centre for Blockchain Technologies and Westminster Business School. Gong’s work has significantly contributed to the advancement of Blockchain technology and decentralised finance. Currently at UCL, Gong’s lectures encompass the fundamentals of Blockchain technology, Bitcoin, Ethereum, decentralised finance, consensus algorithms, smart contracts, Layer 2 solutions and practical applications such as decentralised exchanges, non-fungible tokens and tokenised real-world assets. Through his research, teaching and active involvement in industry initiatives, he has helped bridge the gap between academia and practical applications, promoting a deeper understanding and broader adoption of these revolutionary technologies.
Han Wang is a skilled professional with an MSc in financial risk management from University College London. She has conducted significant research on Blockchain technology, focusing on supply chain financing, cryptocurrencies and systemic risk in banking networks. As a fund of funds researcher at East Money Securities, she conducted in-depth analyses of over 150 fund managers, authored numerous research reports and developed asset allocation strategies, including crypto assets, for major financial institutions. She also spearheaded the creation of the Private Fund Knowledge Platform, enhancing the firm’s leadership in sustainable finance and Blockchain innovation. Her work in the Coffee Hour Finance Forum facilitated insightful discussions on Blockchain’s role in sustainable investment and carbon neutrality. Han Wang’s contributions to the financial sector extend beyond traditional roles. Through her research, industry involvement and strategic initiatives, she continues to drive innovation and promote sustainable financial practices.
