Inscription Protocol Explained: Implementation Principles, Use Cases, and Security Considerations

Recently, several mainstream trading platforms have successively launched the inscription market, supporting various inscription protocols such as BRC-20 and EVM, which has triggered widespread attention in the market towards inscriptions. However, due to the complexity and novelty of the inscription protocols, various security issues have emerged frequently, which not only threaten the security of user assets but also have a negative impact on the healthy development of the entire inscription ecosystem.

This article will summarize the mainstream inscription protocols, helping users understand the uses of inscription protocols, their implementation methods, and how to protect inscription assets.

Inscription Overview

The so-called inscriptions on the blockchain refer to using certain characteristics of the blockchain to record specific and meaningful information on the chain. Once this information is recorded, it will be permanently preserved and difficult to modify. The types of information that can be recorded are diverse, including simple text, complex code, images, etc., thus achieving digital asset functionality.

Inscription Ecological Status

The inscription ecosystem is developing rapidly, from the initial Bitcoin public chain inscription such as BRC-20, to new inscription protocols and projects emerging almost daily now. Major public chains are joining the inscription ecosystem, such as Ethereum's Ethscription protocol, Bitcoin's ARC-20 protocol, BSC's BSC-20 protocol, Polygon's PRC-20 protocol, and so on. These protocols were all created to release inscriptions on their respective public chains.

Detailed Explanation of Mainstream Inscription Protocols

1. BRC-20

BRC-20 is implemented based on Bitcoin's UTXO model and the Ordinals protocol.

The UTXO model records transaction events rather than final states, and calculating the user's coin holdings requires summing all UTXOs associated with their address.

The Ordinals protocol assigns a unique number to each satoshi in every UTXO, supporting the ability to inscribe text, images, and more onto satoshis, making each satoshi unique, similar to Ethereum NFTs.

BRC-20 uses the Ordinals protocol to write uniformly formatted JSON text data into Satoshi, serving as a token ledger. It mainly includes three operations: deploy( deployment ), mint( minting ), and transfer( transferring ).

2. ARC-20

ARC-20 is also an inscription protocol on the Bitcoin public chain, implemented by writing standard data in UTXO. The difference is that ARC-20 uses the amount of satoshis in UTXO to represent the number of tokens, with the rule that 1 satoshi equals 1 ARC-20 token.

ARC-20 is also divided into three steps: deployment, minting, and transfer. During the minting process, the number of satoshis in the UTXO is the amount minted. During the transfer, the UTXO holding the tokens is directly transferred to another address without the need to input additional data.

3. Ethscription

Ethscription is a protocol for creating and sharing data on Ethereum. It utilizes the calldata data blocks of Ethereum transactions to add standard data during regular ETH transfers, giving specific meaning.

When creating an Ethscription, the content ( needs to be converted into a Base64 encoded URI, as shown in the image ), and then converted into a hexadecimal string to be filled in calldata. During the transfer, fill in the transaction hash that created the Ethscription in the calldata.

4. EVM blockchain inscription

EVM blockchains such as BSC, Ethereum, and Polygon have a common inscription burning method, which is to store fixed-format text data in calldata.

Taking BSC as an example, the inscription format is: data:,{"p":"","op":"","tick":"","amt":""}. Where p represents the protocol name, op represents the operation, tick represents the token name, and amt represents the amount.

When transferring tokens, you need to fill in the transaction hash that created the token in the calldata. There may be slight differences between different EVM chains or protocols, but the basic principle is the same.

Security Precautions

Due to the fact that Bitcoin inscription protocols like BRC-20 and ARC-20 are based on UTXO transactions, users conducting regular BTC transfers without fully understanding may lead to inscription assets being mistakenly transferred or "burned". Users need to thoroughly understand the implementation of the inscription protocol to avoid causing irreversible losses.

Summary

This article discusses the implementation principles of inscriptions on multiple chains. These inscriptions utilize the characteristics of public chain systems to store offline information on the blockchain according to specified standards, and are displayed through offline servers. Most inscriptions do not use smart contracts, which can reduce additional transaction costs for users, but users need to fully understand the protocol implementation methods to avoid asset losses caused by operational errors.