Renewed excitement about the Bitcoin network began in early 2023 with the launch of a few new developments, including Ordinals (which revived interest in Bitcoin NFTs), the RGB protocol, and the BRC-20 token standard. Now, people are starting to migrate NFTs from Ethereum to Bitcoin with the BRC-721E token standard.
In just a few months, Bitcoin emerged as a central pillar of crypto innovation, and the latest BRC-721E token standard is yet another example. Many people believed that nothing interesting could happen on Bitcoin, but that’s changing. So, what is the BRC-721E standard and how does it work?
What are Bitcoin Ordinals?
First, it’s important to recap Bitcoin Ordinals theory. In January 2023, BTC Ordinals made a splash by allowing users to inscribe data on to the Bitcoin blockchain. The Ordinals protocol made it possible to inscribe nearly any kind of digital information directly onto the blockchain, including images, audio files, text, and code.
Ordinals created a way to assign satoshis with individual identities, making specific sats trackable, almost like NFTs. In addition, the data that users inscribe via Ordinals is stored directly on-chain.
Very quickly, Ordinals inscriptions dominated Bitcoin transactions. This sparked disagreements about whether users should bog down the network with extra data and high transaction volumes. But regardless of differing opinions on acceptable usage of a public blockchain, Ordinals have undeniably breathed new life into Bitcoin.
This includes the development of a number of Ordinals-related token standards.
How Do Token Standards Work?
Token standards are a set of rules that govern digital tokens. A standard usually defines how tokens get created, managed, and used on a blockchain. They also ensure compatibility between different tokens, allowing them to be easily traded or used for various applications.
The most popular token standard is the ERC-20 standard on the Ethereum blockchain. Because Ethereum uses smart contracts, ERC-20 tokens are versatile and programmable, which has led them to become the most commonly used blockchain token on the ETH network.
Another common token standard on Ethereum is the ERC-721 token standard, which is a widely adopted standard for creating non-fungible tokens (NFTs) on the Ethereum blockchain. ERC-721 tokens (and ERC-721 NFTs, by extension) are distinct and unique, making them non-fungible, and many of the standard's features were replicated with the BRC-721 token standard on Bitcoin. Namely, the new standard allowed marketplaces to more effectively identify Bitcoin Ordinals collections and their metadata directly on the blockchain.
More recently, the rise of Bitcoin Ordinals has also led to the development of a new token standard known as BRC-20. The BRC-20 standard allows users to create semi-fungible tokens on Bitcoin by inscribing JSON code in an Ordinal.
The New BRC-721E Token Standard: Migrating Ethereum NFTs to Bitcoin
Soon after the BRC-20 token standard became popular and jumpstarted its own memecoin season, BRC-721E emerged. The introduction of the BRC-721E token standard allows users to bridge NFTs from Ethereum to Bitcoin, an innovation that opens the possibility of cross-chain interactions and allows for NFTs to migrate to the Bitcoin network.
BRC-721E tokens came out of a collaboration between Bitcoin Miladys, Ordinals Market, and Bitcoin wallet Xverse. Miladys are a popular, anime-inspired profile picture (PFP) NFT collection on Ethereum, and the first BRC-721E non-fungible token bridged from Ethereum became a Bitcoin Milady.
What is a Bridge and How Does BRC-721E Work?
A blockchain bridge (or cross-chain bridge) allows users to transfer digital assets and data between two different blockchain networks. The goal of the BRC-721E token standard is to bridge NFTs from Ethereum to Bitcoin and, as we mentioned previously, migrate Ethereum NFTs to Bitcoin.
“Tele-burning” NFTs onto Bitcoin in an Ordinal Inscription
First, users need to send their ERC-721 token on Ethereum to a burn address. Then, they need to mint the NFT on Bitcoin using Ordinals inscriptions, which they can do via the Bitcoin Milady Bridge. This process prevents duplicate NFTs because once the Ethereum token is burned, it’s considered bridged to Bitcoin.
Currently, BRC-721E tokens inscribe a less detailed version of the NFT on Bitcoin with a link to the original Ethereum token. It is possible, however, that the token standard will evolve to allow full metadata in the future.
BRC-721E Features and Benefits
After users bridge an NFT to Bitcoin, it will automatically appear on Ordinals Market, a popular Ordinals marketplace that has emerged as a key player in the Bitcoin NFT market. NFT listings on Ordinals Market have comprehensive metadata, giving NFT holders the information they need in a transparent way.
Other features include airdrop capability, allowing users to receive BRC-721E airdrops. Bridging NFTs to Bitcoin also reduces the costs of transferring NFTs.
Why is NFT Migration Between ETH and BTC Important?
Just like Ordinals and the BRC-20 token standard, bridging NFTs from Ethereum to Bitcoin opens new possibilities. Many people still hold the belief that Bitcoin is mostly suitable only as a medium of exchange or store of value. With new and innovative protocols getting implemented on the world’s largest blockchain, more users are coming to the network.
Creating fresh ways to make blockchains interoperable also moves us closer to the multi-chain world so many dream about. By June 2023, more than 10 million Ordinals had been inscribed on Bitcoin. And despite a dip in inscription volume during the second half of May, BRC-721E bridging NFTs from Ethereum to Bitcoin promises to bring more excitement as more users experiment with the interoperability that comes with moving assets from Ethereum to Bitcoin.
However, it’s important to note that moving NFTs from Ethereum to Bitcoin is a permanent, one-way transaction. Because you send the ERC-721 token to a burn address, it’s unrecoverable.
Bitcoin Miladys reminded users of this on Twitter.
NFT Communities on Bitcoin and NFT Dominance
Since NFTs blew up in 2020, Ethereum has been the dominant blockchain for non-fungible tokens. But with Bitcoin Ordinals, BRC-20, and now BRC-721E, Bitcoin is quickly becoming a contender. Communities for new NFTs and beloved existing collections that are being bridged to Bitcoin have become the place to be as more and more users explore Bitcoin Ordinals and new tokens on the Bitcoin network that have come as a result of Ordinals-inspired developments.
Thanks to these new protocols and standards, Bitcoin became the second-largest NFT blockchain with nearly $200 million in NFT sales volume in a matter of months. For ages, most people described Ethereum as the innovative blockchain and Bitcoin as the slow but secure chain. Now, with the NFT revival party on Bitcoin, Ordinals and the developments that have subsequently followed the protocol have breathed new life into the ecosystem.
Every era of crypto has a hallmark idea that changes the landscape. As time goes on, it may not exist as it did at inception, like the ICO boom of 2018. But these new ideas are how builders and users think about crypto, and they keep the industry moving forward. NFTs did that, DeFi did that, and now new innovations on Bitcoin are poised to change the game again.