What comes to mind when you hear “Atomicals”? For many, it evokes the intricate interplay of mathematics and science. However, the image below isn’t far from its meaning within the Bitcoin ecosystem.
Atomicals Protocol
The Atomicals protocol is an innovative framework for creating and managing digital objects on the Bitcoin blockchain. This protocol was created to address limitations in earlier Bitcoin token standards, like BRC-20, which suffered from complexities in asset management and data storage. Atomicals introduced the ARC-20 token standard, which provides more flexibility and better data handling capabilities. The protocol’s development emphasizes simplicity, decentralization, and comprehensive tracking of transaction histories for all digital objects?.
It was introduced in September 2023 and aims to enhance the Bitcoin network’s utility by providing a structured yet flexible approach to organizing digital property. This protocol is particularly notable for its support of both fungible and non-fungible tokens, termed “digital objects” or “Atomicals”?
Yes but… What are Atomicals Digital Objects?
An Atomical digital object, or simply “Atomical,” is a new type of Non-Fungible Token (NFT) that you can create, transfer, and update on Bitcoin. Unlike other NFTs, Atomicals don’t need a centralized service or middleman to verify transactions. They work directly on Bitcoin without requiring any changes, side-chains, or additional layers.
Atomicals are easy to verify, making them perfect for digital collectibles, social media, gaming, authentication, and any situation where ownership and authenticity are crucial. The protocol is simple but provides top-level security and verification, leaving no room for error.
The beginning of the Atomicals protocol was quite dramatic. Its founder, Arthur, initially aimed to build a Decentralized ID (DID) project on the newly launched Ordinals protocol. However, during development, he encountered numerous limitations within Ordinals that prevented the integration of desired features.
As a result, Arthur shared the first tweet announcing the inception of the Atomicals protocol on May 29, 2023. Following several months of development, the Atomicals protocol was officially launched on September 17, 2023.
The ARC-20 Standard
As said before, in September 2023, Atomicals protocol brought the ARC-20 fungible token standard to Bitcoin. In this standard, each token is backed by one Satoshi, the smallest unit of Bitcoin. For example, minting 100 million tokens requires 1 Bitcoin, since 1 Bitcoin equals 100 million Satoshis. This ensures that each token always holds a value equivalent to, at least, 1 Satoshi.
Atomicals is different from the Ordinals protocol and aims to enhance the BRC-20 standard. Contrary to popular belief, ARC-20 is not merely another inscription protocol; it is more akin to colored coins. It means each time a colored token is created, it is linked to an individual satoshi and carries a comprehensive record of all its transaction history from creation to the most recent transfer. This provides a more precise method of tracking interchangeable token payments compared to existing fungible standards.It leverages the smallest unit of Bitcoin, a Satoshi (Sat), as its fundamental “atom.”
Each Bitcoin UTXO (Unspent Transaction Output) is linked to a specific number of Sats, which represent the amount of ARC-20 assets, with 1 Sat equating to 1 token. This approach aligns better with Bitcoin’s structure, minimizing the creation of unnecessary transactions. Additionally, it eliminates the need for an off-chain ledger by utilizing the UTXO model, ensuring a more efficient and streamlined process.
Over 2 million atomicals have been minted through March 2024.
The Differences Between BRC-20 And ARC-20
ARC-20s, known as the Atomicals protocol, is designed to complement and synergize with earlier protocols running on Bitcoin networks like Ordinals and Nostr while introducing several enhancements that distinguish it.
One significant advancement of ARC-20 is its capability to store multiple files on chain upon minting, whereas the BRC-20 protocol is limited to handling only a single file. Allowing multiple files means that images, videos, or documents can be digitized on the blockchain without the need for an external server or any centralized service; this capability significantly enhances the versatility and utility of Atomicals, accommodating a wider array of digital assets.
Another notable difference lies in how digital object states are defined and updated. While Ordinals allow for state definition on an application-specific basis, Atomicals improve upon this by enabling state definition and updates for both basic and complex file types. This flexibility marks a significant leap in digital asset management.
Both Ordinals and Atomicals require the use of P2TR addresses for minting and updating (Pay-to-Taproot address is a type of Bitcoin address introduced with the Taproot update, which was activated in November 2021). However, Atomicals streamline the transfer process by not requiring these addresses, thereby simplifying operations and expanding accessibility.
Moreover, Atomicals introduce the innovative concept of a “container” for collections. Containers are human-readable identifiers to represent collections of NFTs and metadata. A Container name begins with the hashtag # sign. Container names are self-owned and self-managed directly on the Bitcoin blockchain using the Atomicals Digital Object format — add and update items in the container collection, and optionally seal the container permanently to prevent future changes
With this introduction, they facilitate identification and updates. This functionality is currently in development for Ordinals, highlighting another area where Atomicals are more advanced.
Here show key differences from other protocols:
The Bitcoin Name service
One of the most unique and groundbreaking features of Atomicals is their ability to introduce a naming service to Bitcoin, similar to Ethereum’s ENS. This service, called Realm Names, is the first permissionless name system for identifying wallets on the Bitcoin network.
Realm Names adhere to a simple set of rules: all names must start with a “+” sign and include at least one alphabetic character. This allows for names as short as “+abc” or as long as “+bitcoinminer20.” Once a name is claimed, it remains yours permanently unless transferred to another wallet address.
While these highlights capture some key differences between BRC-20 and ARC-20, they represent just a small part of the comprehensive features and innovations of the Atomicals protocol. For a deeper understanding of Atomicals’ unique attributes, the protocol’s documentation provides extensive information and insights.
Here you can see a comparative table to understand differences between DNS, ENS and Realm Names
AVM: Atomicals Virtual Machine
The Atomicals Virtual Machine (AVM) is a smart contract system designed to operate on top of Bitcoin by simulating the Bitcoin Virtual Machine. It leverages Bitcoin as a global database, storing smart contract code within Bitcoin transactions and executing them in a sandboxed runtime environment through overlay digital asset indexers.
This layer allows the creation of Turing Complete smart contracts, enabling developers to define custom state machine logic for creating and transferring digital assets. AVM uses the original Bitcoin Script opcode instruction set, ensuring efficient execution in resource-constrained environments. The system introduces state hashes to track transactions and maintain synchronization among participants, providing a flexible and secure platform for smart contracts on Bitcoin.
The Atomicals Ecosystem
Tokens
ARC-20 tokens are designed for ease of use and accessibility, enabling anyone to deploy them with customizable features. Deployers can choose a specific ticker, set a maximum supply, select an image for the token logo, and designate a starting block for minting. Once the chosen block is mined, the minting process begins, allowing all market participants to engage in the creation of new tokens.
$ATOM is the first ARC-20 token issued on Atomicals. Although it has no direct association with the Atomicals protocol, the success of $ORDI suggests a promising future value for $ATOM. It was fairly launched through Bitwork PoW and is 100% minted. Currently, $ATOM has no specific utility, but there is ongoing speculation about its potential uses. The ability to split $ATOM into smaller trading units is still in development. At the time of writing, it trades in units of 1000 tokens, with an upfront cost of over ~$2000.
$QUARK is named after the smallest unit of any substance, similar to how $SATS relate to $BTC. It has the highest number of holders among the top 5 trending ARC-20 tokens at the time of writing. $QUARK is easier to mine compared to $ELECTRON and $NEUTRON.
$ELECTRON: Electron is the first experimental high-difficulty POW mining token in the ARC20 ecosystem. Is harder to mine than $QUARK, resulting in fewer holders. This mining difficulty makes it more challenging to generate junk tokens, thereby giving the concept as much strength as Bitcoin itself.
$AVM is a meme coin named after the “Atomicals Virtual Machine”
$NEUTRON is similar to $ELECTRON in its characteristics and mining difficulty.
Marketplaces
Atomicals Market is the main marketplace for trading Atomicals and was exclusively created to exchange ARC-20 tokens. Other platforms to highlight include Bitatom Marketplace, which also offers decentralized buying and selling of ARC-20 tokens exclusively for Atomicals.
On the centralized side, Bingx and OKX supports the trading of these assets.
Wallets
Among the most well-known that also support Atomical tokens are Unisat, followed by Wizz, Okx Wallet, and Binance wallet. Additionally, an Atomicals native wallet is AtomicalMarket.
Conclusion
ARC-20 Token Standard: ARC-20 tokens are a key feature of the Atomicals protocol, offering enhanced flexibility and data handling capabilities compared to earlier standards. Each token is backed by one Satoshi since the beginning, which in theory reduces the creation of random tokens
Naming Service: Atomicals introduce Realm Names, a naming service similar to Ethereum’s ENS, providing a permissionless system for identifying wallets on the Bitcoin network.
Atomicals Virtual Machine (AVM): AVM facilitates the creation and execution of smart contracts on Bitcoin, utilizing Bitcoin’s original Script opcode instruction set to ensure efficient execution.
Token Offerings: Tokens like $ATOM, $ELECTRON, $QUARK, and $NEUTRON are part of the ARC-20 ecosystem, each with unique characteristics and mining difficulties.
Ecosystem: The ecosystem around Atomicals includes dedicated marketplaces like Atomicals Market and Bitatom Marketplace for trading ARC-20 tokens, supported by well-known wallets such as Unisat, Wizz, Okx Wallet, and Binance Wallet, further solidifying its presence and usability in the Bitcoin community.
Final Words
With the launch of the AVM and the enablement of smart contracts, it will be possible to program Bitcoin’s layer 1, which will foster the creation of DApps, thus initiating a new era in the Bitcoin ecosystem. For more information you can consult the Atomical whitepapper.
This article has been written and prepared by Renato Martinez, a member of the GCR Research Team, a group of dedicated professionals with extensive knowledge and expertise in their field. Committed to staying current with industry developments and providing accurate and valuable information. GlobalCoinResearch.com is a trusted source for insightful news, research, and analysis.
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