After 2021, we entered an era in cryptocurrency where people stopped talking only about financial decentralization and started to broadly discuss the tokenization of everything, thanks in part to nonfungible tokens (NFTs).
This shift represents a critical perspective that is set to guide three theses for the upcoming bull market. To fully grasp these theses, it is crucial to understand that everything is data. Money is data. Your engagement with a brand is data. Your credentials are data. The ticket for your favorite show is data.
Since 2021, the ecosystem has increasingly started to store a large part of this data in the form of fungible tokens, NFTs, and timestamps on the blockchain, which acts as a data repository in this context.
While not all data needs to be on the blockchain, the ability to place data on the blockchain radically transforms how we store, share, and utilize data for automated and secure instructions and transactions.
Re: non-financial blockchain use cases. pic.twitter.com/lYZFprXAry
— vitalik.eth (@VitalikButerin) May 27, 2022
And it seems that this prospect of tokenizing everything is coming to Bitcoin. This gives rise to the first thesis.
Ordinals and similar protocols continue to grow, while Bitcoin becomes a network for multi-assets (or multiple data types)
In January 2023, Casey Rodamor publicly released the Ordinals protocol, which, in short, allows for the permanent insertion of any file type into the Bitcoin blockchain.
In less than a year, the community has already conducted experiments in which music, artwork, journalistic articles, and even video games are being inscribed on the world’s leading blockchain.
The Ordinals protocol was not the first to allow this, but it has gained the most traction. And everything indicates that this is a flame that will not go out.
More than just a technical protocol, a culture and a mindset have been created where more and more builders see Bitcoin as a canvas for the creation of other projects and applications, and nothing can stop well-established cultural movements.
But remember: not everything needs to be stored 100% on-chain, as this is expensive and, for some applications, inefficient.
Therefore, protocols such as Taproot Assets — which enable the creation of other assets — on the Bitcoin network but in a way that keeps most of the information off-chain, will be essential.
Speaking of storage costs on layer-1…