Bringing Ethereum NFTs to Bitcoin Blockchain in ’23

Bitcoin ordinals/ordinal inscriptions, which can easily be created by anyone thanks to tools like Gamma.io, brought NFTs to the Bitcoin network in early 2023. Prior to that, users could only store digital artifacts on other blockchains, like Ethereum, Stacks and more. But the Ordinals protocol now enables users to create Bitcoin ordinals and store it on the Bitcoin blockchain.

This development has made the Bitcoin network the second¹ blockchain for most NFT sales, behind Ethereum (Figure 1). This fact becomes more impressive when we consider that Ordinals protocol has only been around for 6 months, yet it’s already challenging Ethereum’s supremacy in the NFT space.

Now, the gap between Bitcoin and Ethereum can be narrowed down even further, thanks to the BRC-721E standard released this week. This new token standard creates a “bridge” that lets users transfer their Ethereum NFTs to Bitcoin.

In this article, we will explain the BRC-721E protocol in more detail and discuss its impact on the Ordinals market and the wider Bitcoin network in general.

What is BRC-721E?

The BRC-721E token standard was jointly introduced by Ordinals Market and Bitcoin Miladys NFT Collection. Its purpose is to turn an ERC-721 Ethereum NFT into a BRC-721E Bitcoin NFT.

According to its creators² :

1. The migration from Ethereum NFT to Bitcoin Ordinals will be immutable and verifiable
2. Your NFTs will burn via an ETH call function, transfer to Bitcoin, and automatically appear on the Ordinals marketplace (Figure 2)

3. There’s no possibility of double-counting across the two blockchains thanks to verification of the burn transaction call data
4. Your Ethereum NFT content, such as a raw image data, can be as small as 100 bytes but yet be turned into a custom Ordinal

Perhaps the biggest caveat with BRC-721E is that the complete metadata going from Ethereum to Bitcoin will not be stored on chain, but off of it, like on the custom Ordinals Market collection page. Nevertheless, the protocol allows a lower quality preview image of the NFT to be present on chain, wallets, and marketplaces. 

Lastly, note that the “bridge” is only one-way. So once you turn your Ethereum NFT into a satoshi in Bitcoin, you can’t undo it.

How will BRC-721E affect Bitcoin Ordinals?

The effect of the BRC-721E token standard on Bitcoin Ordinals will be to increase their popularity and adoption rate, in addition to getting more people involved with Bitcoin. That is best illustrated by the numbers gathered by Dune Analytics: the total number of unique inscriptions has quickly jumped to 10M³ (Figure 3), and we can partially attribute that to the conversion process that’s bringing inscriptions from Ethereum to Bitcoin.

How will BRC-721E affect the Bitcoin network?

We cannot expect the BRC-721E token standard to impact the Bitcoin network and the amount stored on it, more than the Ordinals protocol already has. Since their introduction, Bitcoin NFTs have increased:

1. Network congestion⁴
2. Transaction fees (Figure 4)

3. Transaction confirmation times (Figure 5)

4. Bitcoin block space (Figure 6)

So once each transferred NFT from Ethereum makes its way to Bitcoin, it will exacerbate these impacts.

However, Ordinals also have numerous benefits, which arguably outweigh their downsides. So more inscriptions will be, in the long run, beneficial to Bitcoin. 

We shouldn’t overlook the fact that although the total number of inscriptions has reached 10M, the daily amount has been decreasing since early May, hinting at a possible stabilization of the hype. And recently, Casey Rodarmour, the creator of the protocol himself stepped down⁵ from leading the team.

This new development from Ordinals Marketplace and Bitcoin Miladys has the potential to put Ordinals back at the forefront. 

For more on Ordinal Inscriptions

To learn more about Ordinal Inscriptions, read:

1. “NFT by Sales Volume.” Crypto Slam!. Retrieved on June 6, 2023.
2. “Bridge any NFT to Ordinals” Ordinals Market. Retrieved on June 6, 2023.
3. “Bitcoin Ordinals Inscriptions Analysis.” Dune. Retrieved on June 6, 2023.
4. “Bitcoin NFTs Level Up: Introducing BRC-721E Token Standard for Ethereum Migration.” NFT Evening. June 1, 2023. Retrieved on June 6, 2023.
5. “Casey Rodarmour’s Twitter.” Twitter. May 28, 2023. Retrieved on June 9, 2023.

Bardia is an industry analyst at AIMultiple. He received his bachelor’s degree in economics from the University of California, Davis, and his master’s degree in economics and finance from Bogazici University. He writes on IoT, RPA, process automation, and to jazz it up a bit, sometimes fintech.