The emergence of cross-chain trading of inscription tokens in 2024

Interoperability of blockchain networks in 2024

In 2024, it is considered that the development of cross-chain and blockchain interoperability, supported by the need for rapid data exchange, can enhance the integration of blockchain networks and provide more opportunities for future growth. While many enterprise blockchain applications operate on private blockchain networks, there is an increasingly evident shift towards public networks.  
In the context of blockchain technology, interoperability refers to a blockchain’s capacity to seamlessly exchange data with other blockchains. Having the right interoperability solution means that any economic activity that takes place on one blockchain network can be represented on another. 
The crypto market acknowledges the significance of interoperability and the need to implement cross-chain solutions. Many bridge-related solutions are considered to pose risks to network security; for example, 50% of all blockchain exploits within the space of decentralised finance (DeFi) back in 2022 were bridge-related. 
Blockchains aren't designed to be interoperable and exist as isolated domains. The growing demand to move assets between divergent blockchains gave rise to various interoperability solutions such as blockchain bridges. To learn more about this solution, we suggest reading this article: 'What are Blockchain Bridges & how do they work?'.
Therefore, the crypto industry is now on the path of introducing novel interoperability solutions; the development of cross-chain trading services and the interoperability of blockchain ecosystems could widen the adoption of public blockchain networks, introduce a more connected digital economy, and thus, an engaging crypto ecosystem.

What is cross-chain technology?

Cross-chain technology enhances interoperability and blockchain integration because it facilitates data interchange among distributed ledger technology (DLT) designs or external systems. That kind of data exchange can enhance security, flexibility and resolve performance-related issues. 
The cross-chain concept is based on the ability of two blockchains to communicate with one another while remaining autonomous. Cross-chain technology gets around the limitations of a single blockchain. 
Due to the cross-chain function’s isolation, users haven’t been able to fully benefit from blockchain technology; it was a challenging task to get various blockchain ecosystems to connect.  
Cross-chain protocols make it possible to transfer information and value between blockchain networks. The implementation of these protocols is considered to lay a foundation for a mass adoption of blockchain technology and usage when linked to decentralised public chains. 
Potential use cases of cross-chain technology are, for example, asset transfers, cross-chain smart contracts, and cross-chain oracles. While asset transfers are obviously about transferring assets from one distributed ledger to another, cross-chain oracles provide data instead of exchanging assets. 
On the other hand, cross-chain smart contracts represent the capacity to start an execution of smart contracts on other blockchain networks. 
If you are a beginner in the crypto ecosystem, it is important to understand the underlying technology properly. To learn more about smart contracts, why not read this article: 'What are Smart Contracts?'.

A new protocol to facilitate trading inscription tokens is here

After the Bitcoin network skyrocketed the crypto ecosystem as well as the emergence of Ethereum and smart contracts, many innovations came to the scene such as non-fungible tokens (NFTs) and the Web3 gaming environment. Now the crypto space has found a new way to work with the underlying technology in inscriptions. 
Inscriptions refer to unique data embedded within blockchain transactions which started with Bitcoin Ordinals. The most popular inscription tokens are ORDI and BRC-20 tokens. 
The popularity of inscription tokens has led to increased transaction fees on the Bitcoin blockchain which influenced economic sustainability discussions within the community.
ORDI tokens present specific inscription tokens implemented on Bitcoin’s blockchain where unique identifiers known as ordinals are inscribed onto individual Satoshis, the smallest unit of Bitcoin. On the other hand, BRC-20 tokens refer to a standard of inscription tokens on the Binance Smart Chain. 
The crypto builders’ community soon recognised that similar methods could be applied to chains based on the Ethereum Virtual Machine (EVM) to create unique digital assets with real-world applications. The idea to facilitate trading inscription tokens across various blockchain networks became a significant step for the crypto community.

Why is the development of cross-chain trading important?

The current state of the crypto market is focused on all kinds of digital assets. Cross-chain methods try to resolve mainly the problem of transferring a token from one blockchain to another.
For example, if we take a look from the book-keeping aspect, one blockchain addresses the issue of a transaction’s accurate booking; on the other hand, cross-chain technology aims to resolve how two blockchains can accurately book-keep on a certain transaction. 
Problems cross-chain trading aims to resolve can be roughly divided into three main categories. Primarily, cross-chain trading services aid in ensuring the credibility and authenticity of cross-chain data. In contrast to the original blockchain, the data from another chain is deemed as external information so cross-chain technology needs to ensure that the received external data is accurate.
If you are looking for courses on crypto trading, check out the Learn Crypto Academy. 
Secondly, cross-chain trading should ensure that the total number of tokens on the blockchain will not decrease or increase after the mechanism is enabled. Simply put, tokens need to be transferred to another chain and returned securely. 
Finally, it aims to resolve the automation matter; double payment should not happen due to information inconsistency caused by partial executions of transactions that can be cancelled during the process.

Defining inscriptions

This buzzword implies a new manner of embedding data directly on the blockchain. In simple terms, an inscription refers to a piece of data that is permanently inscribed on the blockchain. Various forms of data can be engraved, from a simple message to a digital artwork. 
Once the data has been carved on the blockchain, it becomes immutable. In contrast to traditional crypto transactions which are based on transferring cryptocurrency from one digital wallet to another, inscriptions are about adding an extra layer of information to the blockchain. 
The trend of inscription tokens, initially popularised in Bitcoin's Ordinals protocol within the Bitcoin ecosystem has rapidly expanded to other blockchain ecosystems; the concept of Bitcoin inscriptions has spilled over to developer communities of other blockchains.

For example, Ethscriptions leverage Ethereum’s smart contract capabilities and ability to pass on data during a transaction while SPL-20 inscriptions utilise Solana’s blockchain by directly storing data on the chain and eliminating dependence on external servers. Popular EVM chains such as the BNB chain and Arbitrum witnessed a spike in the trading volume that was mainly attributed to inscription activities.

Why are inscription tokens important?

When tokenised real-world assets became increasingly significant, inscription tokens assumed a key role in streamlining activities and improving user experience. Without a verifiable record of creation and ownership, it would be very difficult to prove the authenticity of real-world assets in a digital form. 
Therefore, inscriptions provide new opportunities for data storage, the creation of NFTs, and decentralised applications (Dapps). In terms of trading, the on-chain inscribing process provides crypto inscriptions independence from external servers. 
Inscriptions are considered to democratise access to tokenisation, allowing anyone to create, trade, and interact with digital assets without any external barriers. 
A part of the crypto industry thinks that the next bull run could be led by the rise of community-driven inscription tokens; they think that inscriptions could lead to retail investors taking charge of price discovery and development of projects in a fair and equal way.

The progress of inscriptions

Inscriptions have progressed beyond simple images and messages since they provide several potential real-world applications. For example, their programmable nature implies that they could be used to enhance activities of dynamic NFTs or provide data storage for important pieces of information such as credentials or identity. 
In terms of crypto trading activities, several multi-chain aggregators, that provide a wide range of financial services, decided to address key challenges related to inscriptions such as trading or mining processes.
For example, blockchain platforms are working on integrating inscription protocols such as BRC-20, BSC-20, and SOLS-20 to simplify trading and unlock an additional layer of utility for inscription tokens. 
Cross-chain communication is believed to introduce a new paradigm in inscription trading by improving crypto transactions' efficiency, flexibility, and convenience.

Building an inscriptions marketplace

Due to the emergence of new protocols and utilities, it became important to build platforms that bring divergent inscription protocols together and resolve the issue of a fragmented landscape for trading inscription tokens. 
In February 2024, Binance announced the launch of the Binance Inscriptions Marketplace as a one-stop solution hosted within the Binance Web3 wallet.
As mentioned above in the text, the concept of trading inscriptions gained popularity in 2023 following the launch of Bitcoin Ordinals on the Bitcoin network. At the beginning of 2024, several major blockchain-based platforms launched their inscriptions’ marketplaces to provide users with access to various features of inscription tokens’ trading activities.  

Can these unique digital assets drive the next bull run?

Investors have gathered around multiple chains driven by the fairness distribution and wealth effect, but inscription tokens and cross-chain technology both include a series of challenges.
For example, inscriptions include high network costs and certain scripting issues while developers still need to work out interoperability standards and security concerns related to cross-chain protocols. 
Currently, most inscription-based projects still rely on institutional support, community-driven endeavours and the meme culture to enhance market sentiment while facing several significant issues such as a lack of liquidity and fragmented infrastructure. 
On the other hand, the advancements to inscriptions have brought several different characteristics, such as token creation, extensive transaction data, and the improvement of managing digital assets. After meme tokens, NFTs and Web3 gaming, the crypto community found its way to use tinker-with-technology itch with inscriptions.
While it is uncertain whether inscriptions and cross-chain mechanisms could trigger a novel bull run, many crypto industry leaders claim that the future seems promising since both technologies are developing rapidly, paving the way for a smoother interaction between multiple chains.