Bitcoin Ecosystem Outlook: The Game Between Innovation and Tradition

The market generally expects Bitcoin to break through the $70,000 barrier. Many investors believe that if Bitcoin can break through and stabilize at this price level, the long-awaited bull market will officially begin.

Driven by this optimistic sentiment, important assets in the Bitcoin ecosystem have generally risen. BRC-20 tokens $ORDI and $SATS have increased by 25% and 15% respectively in the past week.

The rune market is particularly active. The rune GIZMO•IMAGINARY•KITTEN, themed around the new cat "Gizmo", saw its market value rise to nearly 20 million dollars after all minting was completed. Although the creator denied any association with this rune, market enthusiasm remains high.

The rise of GIZMO•IMAGINARY•KITTEN has led to the emergence of two other "Golden Dog" runes: KODA•FLUFFINGTON, inspired by the dog "Koda" of the NodeMonkes founder, and POOKA•CANNOT•BE•STOPPED, themed around the dog "POOKA" of the suspected OMB founder zkshark. Both of these runes quickly surpassed a market value of 1 million USD, with KODA•FLUFFINGTON reaching nearly 4 million USD at its peak, and POOKA•CANNOT•BE•STOPPED peaking at nearly 3 million USD.

Several major assets in the Rune market have also seen significant increases. PUPS•WORLD•PEACE and BILLION•DOLLAR•CAT have risen nearly 9 times since the end of September, while DOG•GO•TO•THE•MOON has increased by about 1 time. Recently, there have been reports that a trading platform is conducting an internal security audit and compliance assessment on Runes, which has led to more speculation about the recent rise in Runes.

If a bull market is about to begin, what is the future development outlook of the Bitcoin ecosystem based on the current situation?

The Eve of Transformation: Conservative or Open?

The revival of OP_CAT on the Bitcoin mainnet is of great significance. For the vision of "implementing smart contracts on the Bitcoin mainnet," the question is no longer "can it be done," but rather "should it be done."

The popularity of the Ordinals protocol last year undoubtedly contributed significantly to the Bitcoin ecosystem moving towards openness, but this only opened a small gap. The consensus of the Ordinals protocol is just a small subset of Bitcoin's consensus, which also leads to the fact that token protocols on Bitcoin, such as BRC-20 and Rune, still have deficiencies in user experience compared to other blockchains.

Why is the lack of protocol functionality or user experience considered an issue of Bitcoin consensus? This is because the Bitcoin consensus has not further opened up, leading to many restrictions on the mainnet. Protocols like Ordinals, BRC-20, and Runes can only attempt to achieve the goal of "issuing tokens/images on the Bitcoin mainnet" under these constraints. Even so, some developers still believe that these protocols undermine the Bitcoin mainnet and have been resisting these innovations.

If the BIP-347 proposal "OP_CAT in Tapscript" is approved, and the Bitcoin mainnet ultimately completes the soft fork, it will mean a significant change in Bitcoin consensus, shifting from conservative to open, thereby expanding the development space of Bitcoin once again. The reason I say "once again" is that Runes have pushed the concept of "issuing tokens on the Bitcoin mainnet" to its limits, making it difficult for later entrants to shake its position, unless disruptive technologies such as smart contracts emerge.

However, there is still a significant uncertainty regarding whether OP_CAT can be revived in this bull market. Obtaining a BIP proposal number does not mean that the community has reached a consensus on this matter, but rather indicates that "the community can start discussions on this topic." We may not yet be at the stage of considering "whether sufficient support has been obtained," but are still in the stage of "this topic needs more discussion." One of the well-known NFT projects in the Bitcoin space, Quantum Cats, is essentially a "promotional campaign" for the OP_CAT issue. The project's initiator acts like a "politician" active in the Bitcoin circle, leading an important NFT community in calling for the revival of OP_CAT. He has repeatedly tried to engage opponents in public debates on social media, but they often take a "cold treatment" attitude, which has somewhat suppressed the voices of supporters.

If OP_CAT can successfully revive in this bull market, then the technical narrative of the Bitcoin ecosystem will almost certainly be dominated by OP_CAT. Currently, the main investment targets betting on the revival of OP_CAT are Quantum Cats and the CAT20 protocol.

If it cannot be revived, then the Rune is likely to continue to hold the position of the most influential token protocol in the Bitcoin ecosystem.

The Rune Market Faces More Challenges

A rune only truly becomes a token after being listed on a centralized exchange. Before that, the nature of a rune is not much different from that of an NFT, which is reflected in its market capitalization showing significant "volatility"—when liquidity is good, market capitalization can rise rapidly; conversely, there may be a large number of low-priced orders, leading to a continuous decline in price, falling into a vicious cycle of being ignored.

The true market value of Rune needs to be verified through liquidity checks on centralized exchanges, which may also be one of the reasons for the slow progress of listing Rune tokens on exchanges.

In addition to centralized exchanges, rune trading platforms like Dotswap have also emerged on the Bitcoin mainnet, and a certain trading platform is about to launch rune trading features. Interestingly, although Dotswap has a decent product quality, it has not managed to attract a sufficient number of users. Instead, CAT20 has brought considerable attention to Dotswap. It remains to be seen whether the upcoming platform with rune trading features can improve the on-chain liquidity of runes through its own traffic and user experience.

In terms of token types, Rune has seen the emergence of "community coins" like PUPS•WORLD•PEACE, but the hot topics are still relatively singular, currently mainly revolving around a few large NFT projects or simply generated based on the size of holders. More participants are needed to create a better environment for content creation and the formation of community coins. This can also be seen from the fact that both PUPS•WORLD•PEACE and BILLION•DOLLAR•CAT are seeking greater development by cross-chain interaction with other public chains.

In comparison, the prospects of BRC-20 currently appear rather dim, with only three main tokens: $ORDI, $SATS, and $PIZZA.

NFT blue chip tier tends to stabilize, and there is still room for exploration of narrative uniqueness

NodeMonkes, Bitcoin Puppets, OMB, Quantum Cats, and Pizza Ninjas have solidified their leading positions. In addition, Bitcoin Shrooms is a relatively special existence, with a very high inscription number, a low total supply, but a stable floor price above 1 BTC.

In the field of pure art NFTs, as generative art is no longer fresh on other public chains, the art on Bitcoin needs to seek breakthroughs in themes, such as conceptual art that incorporates the cultural attributes of Bitcoin itself, or AI art, etc. From this perspective, CENTS may be the most distinctive art series currently on Bitcoin, with its uniqueness lying in "the difficulty of replicating this Bitcoin-specific style on other public chains."

The artist behind CENTS selected pure copper penny coins from 1982 and earlier among hundreds of thousands of coins, not only engraving them onto Bitcoin but also melting the physical coins into a complete block of copper. This practice creates a unique "value entanglement" on Bitcoin:

• It's hard to distinguish whether it's 1 cent engraved on Bitcoin or 1 Satoshi engraved on a penny.
• Artificially caused the deflation of pennies and the "deflation" of Bitcoin.
• The legal value of a 1 cent coin presents an interesting contrast with its production cost and the value of 1 Satoshi.
• Over time, these value relationships may change.

Such narratives are difficult to replicate on other public blockchains, as the tokens of other public blockchains are hard to associate with physical currency like Bitcoin.

The DMT concept is also a unique artistic narrative of Bitcoin worth paying attention to. In brief, DMT aims to create specific digital assets based on various data in the Bitcoin blockchain such as block hash values, block sizes, etc. (. Currently, apart from the leading project Natcats, there are no other DMT concept projects that have attracted enough market attention.

Conclusion

The revival of OP_CAT in this bull market will determine the development direction of the Bitcoin ecosystem. Some areas that have not yet become market hotspots, such as the Lightning Network ) Taro, RGB, CKB (, and BitVM, may gain more attention in the event that OP_CAT fails to revive.

The Bitcoin ecosystem is currently the only area in the crypto market that can still drive the "technology narrative". The reason is that Bitcoin is like a computer still using an old processor; it already has sufficient hardware for upgrades. The key lies in whether the managers can reach a consensus. However, reaching a consensus is not an easy task, as it involves not only clashes of ideas but also potential entanglements of real interests.

Regardless, the Bitcoin ecosystem will undoubtedly become one of the important narratives of this bull market, and it will be a special existence that is completely different from other ecosystems.

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