BRC-721: A Deep Dive into Bitcoin’s Ordinals-Based NFT Standard

BRC-721 is the groundbreaking token standard for non-fungible tokens (NFTs) on the Bitcoin blockchain. Built upon the foundation of BRC-20 (the standard for fungible tokens on Bitcoin), BRC-721 leverages Ordinals inscriptions to assign each token a unique identifier, rendering them distinct and non-interchangeable. This unique identifier, known as an inscription ID, is sequentially assigned from 1 to the maximum supply defined for a specific NFT collection.

BRC-721 tokens unlock the potential for Bitcoin NFT growth.

BRC-20 vs. BRC-721: Key Distinctions

While both BRC-20 and BRC-721 utilize the Ordinals protocol for inscription on the Bitcoin blockchain, they serve distinct purposes and possess key differences:

• Token Functionality: BRC-20 caters to fungible tokens, while BRC-721 is specifically designed for NFTs. This fundamental difference stems from the inherent uniqueness of NFTs compared to the interchangeable nature of fungible tokens.
• Leveraging Ordinals: Both standards utilize JSON files to define token attributes and functionalities, adhering to the Ordinals protocol for inscription.
• Transaction Efficiency: BRC-20 transactions require minting a separate transfer inscription for each send operation, leading to higher transaction fees and increased on-chain data storage. BRC-721 optimizes this process by utilizing the ordinal inscription ID itself for transfer, significantly reducing both transaction costs and blockchain bloat. This efficiency is a crucial advantage for BRC-721.

The BRC-721 Creation Process: A Step-by-Step Guide

Deploying a BRC-721 token on the Bitcoin network essentially equates to creating an NFT. The process can be broken down into four key steps:

1. Deployment

This initial step involves providing the necessary on-chain data to define the BRC-721 token, including crucial information like the maximum supply, name, description, and visual representation.

{ 
  "p": "brc-721", 
  "op": "deploy", 
  "tick": "ordinals", 
  "max": "10000", 
  "meta": { 
      "name": "Ordinals", 
      "description": "Bring NFT to Bitcoin", 
      "image": "https://storage.googleapis.com/opensea-prod.appspot.com/puffs/3.png", 
      "attributes": [ 
          { 
              "trait_type": "trait1",  
              "value": "value1" 
          }, ... ] 
  } 
}

2. Minting

Similar to minting NFTs on other blockchains like Ethereum or Solana, this step generates a specific instance of the BRC-721 token, assigning it its unique inscription ID.

{ 
  "p": "brc-721", 
  "op": "mint", 
  "tick": "ordinals" 
}

3. Transfer

Transferring a BRC-721 token, or effectively trading an NFT, involves sending the associated inscription ID directly to the recipient. This streamlined process contrasts with BRC-20’s requirement for a separate transfer inscription.

4. Update

After a successful transfer, the sender utilizes a “buri” command to update the inscription ID, granting the recipient full ownership and control over the acquired NFT. This crucial step finalizes the transfer process.

{ 
  "p": "brc-721", 
  "op": "update", 
  "tick": "ordinals", 
  "buri": "https://ipfs.io/abc" 
}

Ordinals inscription data growth. Source: Dune Analytics

The Significance of BRC-721 for Bitcoin

BRC-721 represents a pivotal advancement for the Bitcoin ecosystem. By enabling the creation and management of NFTs, it opens up new possibilities for digital ownership, asset representation, and decentralized applications on the Bitcoin blockchain. The rapid growth of Ordinals inscriptions underscores the demand for this functionality.

Furthermore, BRC-721 offers improved security and efficiency compared to earlier methods like BRC-20. By streamlining the transaction process and leveraging the inherent properties of Ordinals, BRC-721 reduces costs and complexity, paving the way for broader adoption of Bitcoin-based NFTs.

Example of a Bitcoin Ordinals explorer.

Navigating the BRC-721 Landscape: Proceed with Caution

While BRC-721 presents exciting opportunities, it’s crucial to acknowledge the inherent risks associated with a nascent technology. The ease of deploying and minting NFTs on Bitcoin also creates an environment susceptible to scams and fraudulent activities. Due diligence and thorough research are paramount before engaging in any Bitcoin NFT transactions. Remember, the lack of intermediaries in this space requires heightened vigilance. BRC-721 aims to democratize access to Bitcoin NFTs, but users must remain cautious and informed to navigate this evolving landscape responsibly.