BRC-20 is a new token standard developed on Bitcoin. So what is special about this standard?

What is BRC-20?

BRC-20 (aka Bitcoin Request for Comments) is an experimental token created by writing data directly to the Bitcoin network, created through the Ordinals protocol. This standard allows tokens to be deployed, minted, and transferred between different users.

Unlike the smart contract interoperable token standards we know about on EVM chains, BRC-20 is merely a way to store data on Bitcoin.

The BRC-20 token was created on March 8, 2023 by a Twitter user named @domodata.

in:

  • p: Tokens are issued according to the BRC-20 token standard

  • op: The operation called in this transaction is the deployment or initialization of the ordi token

  • tick: The token’s transaction code is ordi

  • max: The maximum supply of ordi tokens is 21,000,000 tokens

  • lim: The maximum number of ordi tokens that can be minted in one transaction is limited to 1,000 tokens

BRC-20 Token Market Overview

At the time of writing, there are 4,984 types of BRC-20 tokens with a total market value of approximately $42 million. Among them, ordi is the first BRC-20 token created and the largest token by market value, with a market value of up to $23 million, accounting for more than 50% of the total market value of the BRC-20 token market.

The Ordinals protocol allows many types of data to be written on the Bitcoin network, such as text, images, audio, and video, while the BRC-20 token is an asset created as text. From the chart above, we can see the strong growth of the BRC-20 token. So far, the BRC-20 token is still the most issued asset on Ordinals.

Although the BRC-20 token market has grown rapidly in the past two months, the token standard still lags far behind ERC-20. The total market capitalization of ERC-20 tokens is in the hundreds of billions of dollars.

Limitations of BRC-20

BRC-20 is not the only attempt to develop fungible tokens on the Bitcoin network during the evolution of Bitcoin. In 2012, a protocol called Colored Coins emerged for the same purpose. However, due to the high transaction fees on the Bitcoin network at the time and certain limitations in the programming of Bitcoin itself, this project later failed.

BRC-20 seems to be following in the footsteps of its predecessors, as this token standard is just a data type stored on the Bitcoin network, and users can only move this token between different wallets after issuance. Compared to ERC-20, BRC-20's practicality is too limited and it is completely unable to interoperate with smart contracts.

Where can the BRC-20 be stored?

The BRC-20 standard is currently only in the testing phase, and there are not many well-known wallet developers that support it. Currently, you can store BRC-20 tokens on the Unisat wallet, which is the most popular wallet application for BRC-20. However, this wallet application has also been exploited by hackers to affect users.

in conclusion

The emergence of the Ordinals protocol and Bitcoin NFT has brought new vitality to the cryptocurrency market. BRC-20 is a continuation of Bitcoin NFT, but due to the limitations of the Bitcoin network, the application of this token is not very widespread.

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