Inscription Protocol Depth Analysis: Implementation Principles, Application Scenarios, and Security Considerations

Recently, several well-known trading platforms have successively launched inscription markets, supporting various inscription protocols including BRC-20 and EVM. This move has sparked widespread attention in the market towards inscriptions. However, due to the complexity and novelty of the inscription protocols themselves, various security issues have frequently arisen, which not only threaten the safety of users' assets but also have a negative impact on the healthy development of the entire inscription ecosystem.

inscription Overview

Inscription is a way to permanently record information with specific meaning on the blockchain by utilizing specific attributes of the blockchain. Once this information is written to the blockchain, it will be permanently stored and difficult to tamper with. The types of information that can be recorded are diverse, including simple text, complex code, images, etc., providing a standardized solution for realizing digital asset functions.

inscription ecological status

Since the emergence of BRC-20 and other Bitcoin blockchain inscriptions, the inscription ecosystem has developed rapidly. Currently, new inscription protocols and projects are emerging almost daily. Major mainstream blockchains are joining the inscription ecosystem, such as the Ethscription protocol on the ETH blockchain, the ARC-20 protocol on the BTC blockchain, the BSC-20 protocol on the BSC blockchain, and the PRC-20 protocol on the Polygon blockchain. These protocols are all designed to publish inscriptions on their respective blockchains.

Detailed Explanation of Mainstream Inscription Protocols

1. BRC-20

The BRC-20 protocol is built on top of Bitcoin's UTXO model and the Ordinals system. The UTXO model records transaction events rather than final states, and a user's Bitcoin balance needs to be calculated by summing all UTXOs associated with their address. The Ordinals system assigns a unique number to each satoshi and supports writing various types of data, giving each satoshi uniqueness, similar to Ethereum's NFTs.

The BRC-20 protocol writes uniformly formatted JSON text data into satoshis through Ordinals, serving as the ledger for BRC-20 tokens. It mainly includes three operations: deploy, mint, and transfer. Token transfer is achieved by sending the inscription to the target address to effect a balance change.

2. ARC-20

ARC-20 is also an inscription protocol on the Bitcoin public chain, but its characteristic is that it uses the number of satoshis in UTXO to directly represent the quantity of ARC-20 tokens, with the rule being 1 satoshi equals 1 ARC-20 token. The ARC-20 protocol also includes three steps: deployment, minting, and transfer, but during the minting and transfer processes, the number of satoshis in UTXO directly determines the token quantity, without the need to fill in additional data.

3. Ethscription

Ethscription is an inscription protocol on Ethereum, utilizing the calldata data block of transactions to implement it. When creating an Ethscription, it is necessary to convert the content (such as an image) into a Base64 encoded URI, then convert it into a hexadecimal string, and fill it in the calldata to send a regular transfer transaction. To transfer an Ethscription, the transaction hash that created the Ethscription needs to be filled in the calldata.

4. EVM-compatible chain inscription

EVM-compatible chains such as BSC, Ethereum, and Polygon use similar inscription burning methods, utilizing calldata to store fixed-format text data. Taking BSC as an example, the inscription format is typically in JSON format, containing information such as protocol name, operation type, token name, and quantity. When transferring tokens, it is also necessary to fill in the transaction hash that created the token in calldata.

Security Precautions

1. Fully understand the principle of the inscription protocol: There are differences in implementation methods between different protocols, and users should have a deep understanding of the specific protocol they are participating in.

2. Exercise caution when performing transfer operations: Especially for UTXO-based BTC inscriptions, ordinary BTC transfers may result in the mistransfer or "burning" of inscription assets.

3. Verify transaction details: When performing operations related to inscription, carefully check the calldata or other key information in the transaction.

4. Use trusted platforms and tools: Choose verified trading platforms and wallets for inscription operations.

5. Keep software updated: Update the wallet and related tools you use in a timely manner to obtain the latest security protection.

6. Diversify risk: Do not concentrate all inscription assets in a single address or platform.

7. Regular Backups: Regularly back up important inscription asset information.

By deeply understanding the implementation principles and application scenarios of the inscription protocol, users can better grasp participation opportunities while effectively avoiding potential risks, contributing to the healthy development of the inscription ecosystem.