Recently, I’ve noticed that many people are asking what Bitcoin inscriptions actually are. This is definitely a topic worth discussing in depth. What are inscriptions? Simply put, they’re a new way to inscribe specific information onto Bitcoin—but to understand it clearly, you need to start with Bitcoin’s underlying structure.

Bitcoin’s total supply is fixed at 21 million coins. Each Bitcoin is made up of 100 million satoshis, which means there are a total of 2,100 trillion satoshis in circulation. In the past, Bitcoin and other Bitcoin units were interchangeable, just like two $100 bills that are indistinguishable. But the Ordinals protocol launched at the end of 2022 changed everything: it assigns a unique number to each satoshi, making them one-of-a-kind.

When a user writes an image, text, or code (limited to within 4M) onto a specific satoshi, that satoshi is given a special identity, and the information written onto it is what’s called an inscription. This process is called inscription minting. An analogy would be: a regular $100 bill and a $100 bill that has a celebrity’s autograph on it—while their face value is the same, their value is completely different. That’s the logic behind inscriptions.

Why did inscriptions suddenly become popular? There are several key drivers. In 2022, Bitcoin completed the Taproot upgrade. This major upgrade enabled large-scale scalability, attracting a large number of developers. Then, in March 2023, Twitter user domodata launched the BRC-20 protocol, which effectively provided standardized tools for inscriptions, greatly improving development efficiency. But the real turning point was the involvement of mainstream exchanges: once major exchanges started listing Bitcoin tokens, the trading costs for inscriptions dropped dramatically, and transaction speeds increased significantly.

From market performance, the number of inscription projects saw explosive growth in the second half of 2023. According to data, the trading volume of NFTs developed on Bitcoin has already reached the $1.84 billion level, ranking just behind Ethereum, Solana, and Ronin. The pace of growth really is astonishing. Compared with Ethereum’s historical accumulation, Bitcoin’s recognition in the market and its brand effect have brought even greater popularity to the inscriptions track.

If you want to participate in inscription minting, the process is actually not complicated. First, you need to set up a crypto wallet, then buy or transfer BTC into it. Next, in the wallet’s Ordinals feature, select the type you want to mint, enter the relevant information, and you can complete it. However, you should note that tokens and NFTs are two different things. Tokens are fungible assets that can be further divided, making them suitable for trading-related applications. NFTs are non-fungible; they represent unique digital assets that cannot be divided.

Now, when it comes to the future of inscriptions, I have to be honest: the situation is fairly complex. Although mainstream exchange support has indeed helped drive ecosystem development, it’s currently difficult to find cheap tokens, and transaction fees continue to rise. In addition, inscriptions with large data sizes need to occupy more block space, which further increases costs. Under the pressure of high fees, how long market enthusiasm can be sustained remains to be seen.

My view is that Bitcoin inscriptions are currently in a critical development period, achieving a delicate balance between innovation, decentralization, and security. But this also means that the future direction is still not clear. For retail investors, I suggest not rushing to put in large amounts of money. If you have a higher risk tolerance and want to give it a try, invest only limited funds and set stop-loss prices in advance. Short-term traders can also consider participating in Bitcoin-related trades through derivative tools such as contracts for difference (CFDs), so they don’t need to actually hold the assets.

Overall, the answer to what inscriptions are is that they are an emerging blockchain application direction, opening up new possibilities for Bitcoin. But investors need to stay calm and carefully evaluate risks. At this stage, it may be wiser to observe than to act.