What is your view on on-chain Bitcoin assets?

Writing: Brother Dao

At the end of the article on April 23, a reader left a very long comment, discussing many views on Bitcoin’s on-chain assets DMT-NAT, decentralization, and more.

I generally agree with these opinions about Bitcoin, Ethereum, and decentralization.

This article mainly shares my thoughts on DMT-NAT and other Bitcoin on-chain assets.

Regarding the Bitcoin on-chain asset DMT-NAT, I bought some when it first emerged, and I shared my views on this asset in an article from 2023 to 2024 (if I recall correctly, it was in a Q&A section). However, I really can’t find the specific article now.

Like other popular Bitcoin on-chain assets back then (such as inscriptions, runes, BRC-20, SRC-20, etc.), I still hold onto DMT-NAT today.

Seeing these assets always reminds me of the expectations I once had for Bitcoin on-chain assets and the Bitcoin ecosystem.

Whenever I recall and summarize that period of history, I reflect again on some of the lessons and experiences.

I try to use more straightforward language to share and summarize my views on these Bitcoin on-chain assets.

Whether it’s DMT-NAT or any other Bitcoin on-chain asset, we can generally see that they are realized through two steps:

The first step is to write information representing the characteristics and states of these assets onto the Bitcoin blockchain in character form.

The second step is to interpret this information using an algorithm capable of recognizing what the information represents—such as which part indicates the asset type (DMT-NAT or BRC-20), which part indicates the quantity (100 or 1000), which part indicates the owner (Account A or Account B), and so on.

In these two steps, the first step is relatively simple and can be considered close to decentralization; to some extent, once this information is written onto the Bitcoin chain, it becomes difficult to tamper with.

The second step, however, is the key to the entire implementation process and also its weak point.

Anyone who has participated in these Bitcoin on-chain assets should remember that when engaging with an asset (like DMT-NAT), they are always told to download a specific wallet, say XXX Wallet.

Why is it necessary to tell participants to download a specific wallet like XXX, rather than just saying “please download any Bitcoin wallet” or providing a broad list of wallets?

This is where the second step comes into play.

Earlier, I mentioned that interpreting the state of such an asset (i.e., interpreting the information written onto the Bitcoin chain) requires an algorithm capable of recognizing this information.

But this algorithm is not part of Bitcoin’s universal consensus protocol; it is only a specific protocol, or a small community (such as the DMT-NAT community and enthusiasts) consensus.

Therefore, supporting or parsing this asset (DMT-NAT) requires embedding this specific algorithm into the wallet, and only a few pioneering wallet developers can do this, not all Bitcoin wallet developers.

Specifically, for DMT-NAT, only wallets that support inscriptions (Ordinals), Tap Protocol, and other specific protocols can support it, not general Bitcoin wallets.

Taking the implementation process of DMT-NAT as an example:

The first step involves inscribing its asset information onto the Bitcoin chain using inscription techniques (inscription with the Ordinal protocol).

The second step involves using a wallet capable of parsing the DMT (Digital Matter Theory) protocol to interpret the asset information read from the Bitcoin chain. More specifically, the DMT protocol requires the wallet to parse the following fields (more details can be found in the link at the end of the article):

“p”: “tap”,

“op”: “dmt-deploy”,

“tick”: “nat”,

These three fields are unique to the DMT-NAT asset.

Other Bitcoin on-chain assets like BRC-20 define these three fields differently, for example:

“p”: “brc-20”,

“op”: “mint”,

“tick”: “ordi”,

By comparing these, we can see that each Bitcoin on-chain asset has its own unique definition and parsing algorithm.

However, the parsing algorithms for these fields are not part of Bitcoin’s universal consensus protocol. Currently, only a very small number of advanced nodes/wallets in the Bitcoin network support this protocol—they are willing to promote this ecosystem, lead it, or for various other reasons.

Because support for these assets is limited to only a few nodes/wallets, centralized risks become apparent—if, in extreme cases, these few nodes are compromised (which is technically feasible, depending on whether attackers have enough incentive or the cost-benefit ratio), the entire DMT-NAT asset could be at risk.

This is why I say this is the key and the weak point in the entire process.

DMT-NAT is like this, and any other Bitcoin on-chain asset (including inscriptions) is the same.

Of course, today, if we visit the relevant websites for DMT-NAT, we will find that there are quite a few wallets supporting it, including Bitcoin wallets, Ethereum wallets (like MetaMask), and even platforms like Uniswap that support its trading.

How is this possible? How can Ethereum wallets support Bitcoin assets?

In fact, the so-called “DMT-NAT” assets supported by Ethereum wallets and exchanges are not the native DMT-NAT assets on the Bitcoin network. Instead, they are “wrapped assets” transferred via cross-chain bridges by enthusiasts or small teams from Bitcoin to Ethereum.

Fundamentally, these assets still trace back to the few specific nodes/wallets that support DMT-NAT.

Returning to the earlier discussion of the centralization risk, how can we address this issue?

In my view, there are only two ways:

One is to form a new blockchain network with strong consensus, where all nodes support this parsing algorithm, to fully support DMT-NAT assets.

The other is to incorporate this specific algorithm/protocol (the DMT-NAT protocol) directly into Bitcoin’s universal consensus protocol.

The first approach is not easy.

How can the initiator of DMT-NAT get the vast majority of Bitcoin nodes and wallet developers involved in supporting this protocol?

Rely on incentives or a grand vision?

In fact, even the most consensus-driven inscription asset in Bitcoin (BRC-20) has not achieved this.

The second approach is the most thorough and permanent. As long as the Bitcoin CORE team approves adding the DMT protocol in the next Bitcoin update, everything is settled.

But would the Bitcoin CORE team be willing?

The answer is quite clear.

They have strongly rejected the inscription protocol, so how could they accept DMT-NAT?

Don’t even mention the CORE team; I believe many readers of this article are thinking: Bitcoin doesn’t need extensions or on-chain assets like this, just keep Bitcoin pure.

Some might say, why not just do a hard fork and create a “new Bitcoin” supported by enthusiasts and communities who want to promote these on-chain assets?

Theoretically and technically, that’s feasible.

But the bigger question is: after the fork, will the industry recognize the “old Bitcoin” or the “new Bitcoin”?

I believe most will still recognize the “old Bitcoin.”

So, from any perspective, the consensus on these on-chain assets in the Bitcoin ecosystem is weak, and I doubt it will strengthen significantly in the future.

I once had high hopes for Bitcoin on-chain assets and the Bitcoin ecosystem. If the vibrant community-driven innovation movement within Bitcoin had been accepted by the CORE team, pushing for protocol upgrades and expansions, Bitcoin could have truly caught up with or even surpassed Ethereum.

But various realities later forced me to admit that this path is highly unlikely to succeed, and it will be even harder in the future.

Therefore, I think Bitcoin assets and the Bitcoin ecosystem, as niche hobbies and explorations, are fine. But to grow into a robust ecosystem with strong consensus on assets, the difficulty is immense.

However, I also want to reiterate what I’ve said in previous articles:

I continue to admire and support the enthusiasts who have been working and contributing within the Bitcoin ecosystem.

If they succeed, that’s even better. But even if they don’t, perhaps by chance, some unexpected innovations might be discovered—many major inventions and innovations in technological history were not planned in advance but discovered by accident.