The BRC-20 token standard is a new type of cryptocurrency that operates on the Bitcoin blockchain, utilizing the Ordinals protocol to inscribe data on satoshis, the smallest unit of Bitcoin. The protocol was launched in March 2023 by an anonymous developer, and since then, the market has rapidly grown to a total market cap of over $700 million.
With a significant portion of Bitcoin transactions now attributed to BRC-20 tokens, this new token standard has garnered the attention of the blockchain and cryptocurrency community. However, the launch of any new token standard in the blockchain ecosystem often leads to confusion and the proliferation of meme coins.
Join us on this journey to uncover the truth about BRC-20 tokens. We will delve into what BRC-20 tokens are, how they work, and what they actually do, as we separate fact from fiction in this forweb3 deep dive into BRC-20.
The token standard
Token standards are a set of guidelines that govern the behavior of a cryptocurrency token, ensuring its functionality and security. These standards are closely related to smart contract standards, which are the rules that govern how smart contracts behave on a blockchain network.
Smart contract standards provide a foundation for the creation and deployment of new tokens, ensuring that they can be used and understood by all parties involved. Token standards, on the other hand, are more specific to tokens, focusing on how they can be created, issued, and deployed on a particular blockchain network.
Some of the most well-known token standards include ERC-20, ERC-721, ERC-777, and ERC-1155. These standards are commonly used in Ethereum-based smart contracts and provide a framework for creating and managing tokens within the Ethereum ecosystem.
By following these standards, developers can create new tokens that are secure, interoperable, and easy to use, enabling them to build innovative applications and services on the blockchain.
The KNOW IT ALL of BRC-20
What are BRC-20 tokens, you ask? Well, hold onto your satoshis, because we’re about to blow your mind!
BRC-20 tokens are a brand-spanking-new type of token that’s all the rage in the blockchain world. And, if you’re a fan of the latest and greatest tech, you’ll be thrilled to know that these tokens are powered by none other than the mighty Bitcoin!
Yup, you read that right. BRC-20 tokens are all about leveraging a recent innovation in the Bitcoin world called Ordinals. And, just like non-fungible tokens (NFTs), these tokens are unique and can’t be replicated. But, instead of being stored on a separate blockchain, they’re inscribed right onto the Bitcoin blockchain!
The BRC-20 token standard is a new token standard designed for the Bitcoin blockchain using the Ordinals protocol. Ordinals is a protocol that enables the creation of fungible, non-fungible, and utility tokens on the Bitcoin network. BRC-20 tokens are designed to offer the benefits of fungibility, security, and compatibility with the Bitcoin blockchain.
Fungibility is the property of a commodity or currency that allows it to be interchangeable with other identical units. In other words, fungible tokens are interchangeable and can be used as a medium of exchange or stored value. BRC-20 tokens are designed to be fungible, meaning that they can be traded or exchanged just like other assets.
How is this possible, you ask? Well, it all has to do with the Taproot upgrade, which added a feature called the witness to the Bitcoin blockchain. And, by utilizing Ordinals and Inscriptions, BRC-20 tokens can be created, mined, and transferred all in the name of fun and excitement!
But, before you start minting like a pro, it’s important to know that BRC-20 tokens operate differently than traditional token standards on EVM chains. Instead of relying on smart contracts to manage rules and regulations, BRC-20 tokens store a script file in Bitcoin and attribute tokens to satoshis.
In other words, BRC-20 tokens are a step closer to Bitcoin-based tokens that operate on the Bitcoin network – but, at the moment, without the smart contract functionality.
Difference between ERC-20 & BRC-20
BRC-20 and ERC-20 are two different types of token standards that have some distinct differences. While BRC-20 tokens run on the Bitcoin blockchain, ERC-20 tokens operate on the Ethereum blockchain.
One thing that sets BRC-20 tokens apart is that they’re secured by Bitcoin’s Proof of Work consensus mechanism, while ERC-20 tokens are secured by Ethereum’s Proof of Stake consensus mechanism. On the other hand, ERC-20 tokens can be used to interact with smart contracts and execute condition-based transactions, while BRC-20 tokens rely on inscriptions through the Ordinals protocol to function as fungible assets.
It’s worth noting that ERC-20 tokens are much more widely supported and versatile than BRC-20 tokens, thanks to their widespread adoption and compatibility with various blockchain networks. However, as the BRC-20 ecosystem continues to grow, it’s possible that these tokens may develop more advanced features to compete with ERC-20 tokens.
Exploring the MEME world of BRC-20
The BRC-20 token frenzy has resulted in an explosion of new projects since March 9, 2023, with over 14,000 different BRC-20 tokens currently in circulation. But with so many options to choose from, it can be tough to keep track of them all.
As of May 10, only a small handful of BRC-20 tokens have a market cap over $1 million, with ORDI leading the pack as one of the first and most established BRC-20 tokens. Other top BRC-20 tokens include NALS, Meme, PEPE, and PIZA.
But be warned, not all BRC-20 tokens are created equal. Many of them are little more than meme coins with no real utility or value, and some have even been accused of scams. So before you jump on the BRC-20 bandwagon, make sure you do your research and choose wisely.
The network effect & the downside:
The recent BRC-20 hype has had a detrimental impact on the performance of the Bitcoin network. The surge in BRC-20 activity has resulted in a significant increase in the number of transactions being processed on the network, causing delays and higher transaction fees for users.
BRC-20 tokens rely on the Bitcoin network for transactions, which has led to a strain on the network’s capacity. The high volume of BRC-20 transactions has resulted in long wait times and increased fees for other users on the network.
While Bitcoin is known for its high level of security and the use of the Proof of Work consensus mechanism, it is not well-suited for high-speed transaction processing. As a result, the recent BRC-20 hype has highlighted the limitations of the Bitcoin network in handling large volumes of transactions in a timely and cost-effective manner.
It is important for users to be aware of the potential consequences of relying on the Bitcoin network for high-speed transactions, particularly when new and less established cryptocurrencies are gaining traction.
BRC-20 tokens utilize Ordinals inscriptions of JSON (JavaScript Object Notation) data to deploy token contracts, and mint, and transfer tokens. Currently, the BRC-20 token standard allows creating a BRC-20 token with the deploy function, minting an amount of BRC-20 tokens with the mint function, and transferring an amount of BRC-20 tokens via the transfer function.
In fact, BRC-20 has already issued over 14,000 tokens, and some of the most popular ones include ORDI, PIZA, MEME, and MOON. $ORDI was even designed as a meme to showcase the potential of the token standard in the industry.
For developers, it’s important to note that BRC-20 tokens require a different programming language from the Ethereum Network. Can you guess which one? It’s actually Bitcoin Script, which is used to create complex transactions on the Bitcoin network.
Now, I know what you’re thinking: Gas-Fees. Yes, BRC-20 tokens do consume valuable block space, which can lead to increased gas fees. But hey, at least the network is secure and immutable, right? And as more developers experiment with the BRC-20, who knows what kind of new possibilities it could open up for the web3 ecosystem?
So there you have it, folks. BRC-20 tokens might have some limitations, but the potential benefits are significant. Who knows, maybe one day we’ll see BRC-20 tokens being used for all kinds of cool stuff, like buying pizza or investing in memes. Just think about it: the possibilities are endless!
The BRC-20 token standard is a new token standard designed for the Bitcoin blockchain using the Ordinals protocol. Ordinals is a protocol that enables the creation of fungible, non-fungible, and utility tokens on the Bitcoin network. BRC-20 tokens are designed to offer the benefits of fungibility, security, and compatibility with the Bitcoin blockchain.
Despite the benefits of BRC-20 tokens, there are some limitations to consider. One of the main limitations is that BRC-20 tokens are not EVM-compatible and do not support smart contracts. Smart contracts are self-executing contracts with the terms of the agreement written directly into lines of code. While BRC-20 tokens offer many benefits, they are not able to support smart contracts, which limits the potential of the token standard.
In conclusion, the BRC-20 token standard is a new token standard designed for the Bitcoin blockchain using the Ordinals protocol. BRC-20 tokens are designed to offer the benefits of fungibility, security, and compatibility with the Bitcoin blockchain. Despite some limitations, such as not being EVM-compatible and consuming valuable block space, BRC-20 tokens have already gained popularity and have the potential to open up new possibilities for the web3 ecosystem