Hello, community! As
@coloredbitcoin,
I'm always exploring how Bitcoin can evolve without losing its decentralized essence. Today, I want to share a detailed thread on why Atomicals is the most native Layer 1 (L1) protocol on Bitcoin. Forget the myths: not all protocols on BTC are created equal. Let's break it down step by step, based on technical facts and the current state in 2026.
The Rise of L1 Protocols on Bitcoin: Bitcoin isn't just "digital gold." Since the Taproot upgrade in 2021, we've seen an explosion of protocols that allow you to create digital assets directly on the main chain (L1). This includes NFTs, fungible tokens, and more, all grounded in Bitcoin's unbeatable security. Key Players: Ordinals: Encode data (like JSON or images) into individual satoshis.
BRC-20 and Runes: Standards for fungible tokens, inspired by Ethereum's ERC-20.
Atomicals (and ARC-20): A purer approach, treating satoshis as verifiable "atomic" units.
In 2026, according to reports from KuCoin and Grayscale Research, the Bitcoin ecosystem grew to a TVL of over $1.1 trillion in L1 and L2 tokens. But not all tokens are "native" in the same way. Atomicals stands out for its deep integration with Bitcoin's UTXO model.
What are Ordinals and why aren't they so "native"? Ordinals, launched in 2023 by Casey Rodarmor, allows arbitrary data to be "enrolled" in satoshis using Taproot's witness data. It's innovative: it converts satoshis into unique assets (like NFTs) or metadata for tokens (BRC-20). Pros: Facilitates atomic swaps in L1 without intermediaries.
It has boosted BTCFi (Bitcoin DeFi), with Ordinals trading volumes exceeding $596 million in 2023 and projected to reach $5 billion by 2025 (Galaxy Digital).
Cons: They rely on off-chain indexers to track statuses and balances. Without them, purely on-chain ownership verification is difficult.
Assets are more like "JSON files attached" to satoshis, not natively integrated. This generates "garbage" UTXOs and congestion (remember the 2024 sign-up boom that drove up fees).
In 2026, Ordinals remain popular for NFTs (with integrations in L2s like Stacks), but critics see them as an "overlay" that doesn't fully respect Bitcoin's minimalist design.
Ordinals are great for creativity, but they aren't the most "native L1" because they require external tools to function fully.