Hello everyone, I am Dazhuzi. Today I will talk about what is the orc-20 token.
ORC-20 tokens run on the Bitcoin blockchain and are represented as JSON (JavaScript Object Notation) files recorded in satoshis with a sequential serial number, similar to BRC-20 tokens. Following closely the BRC-20 standard, ORC-20 aims to address some of the limitations of BRC-20 by improving security and enhancing flexibility.
ORC-20 extends the scope of BRC-20 by supporting more data formats and leveraging Bitcoin’s unspent transaction output (UTXO) model to avoid the double-spending problem, which has been a major concern regarding some BRC-20 tokens.
What is the ORC-20 standard?
The ORC-20 standard is an open standard that aims to improve BRC-20 on the Bitcoin network. The goal of the ORC-20 standard is to maintain backward compatibility with BRC-20 while improving adaptability, scalability, and security.
BRC-20 is an experimental token standard that allows users to mint and transfer fungible tokens through the Ordinals protocol on the Bitcoin blockchain.
How does ORC-20 improve upon the BRC-20 standard?
The ORC-20 protocol is built on top of the Ordinals and BRC-20 token standards. The main goal of the ORC-20 protocol is to facilitate the adoption of ordinals, which are digital works that can carry various types of data on the Bitcoin network. It allows users to deploy new ORC-20 tokens and migrate existing BRC-20 tokens.
BRC-20 is an experimental token standard on the Bitcoin blockchain, named after Ethereum's ERC-20. It allows developers to create and transfer fungible tokens through the Ordinals protocol. BRC-20 has become popular in the cryptocurrency ecosystem, especially after the rapid rise of many memecoins such as Pepe (PEPE) in May 2023.
The current limitations of the BRC-20 standard, such as double spending and limited namespace, lead to the need for improvement. The ORC-20 protocol introduces multiple upgrades, such as UTXO and flexible namespace, to address these limitations.
How does ORC-20 prevent double spending?
The transaction model used in ORC-20 is based on Bitcoin's UTXO model. When transferring money, the remitter specifies the amount that the recipient will receive and specifies the remaining balance to be sent to himself, thus simplifying the remittance process.
In the UTXO model, previously recorded balances become invalid after each transaction is completed, in line with the UTXO principle. Each ORC-20 token "send" event can include a random number. This allows the sender to include a unique identifier for the transaction, which can be used to partially cancel the transaction if necessary. By specifying a random number, the sender can undo and reverse transactions that have not been fully processed.
Risks of ORC-20 Tokens
Those interested in investing in ORC-20 tokens should first understand that ORC-20 is an experimental project and there is no guarantee of the value or usefulness of tokens produced under this standard. Although ORC-20 has the potential to improve the Bitcoin network’s token standards, it has been criticized for being too complex and not offering significant advantages over existing standards.
The fate of ORC-20 depends on how the community responds to it and its ability to resolve these issues. Users should exercise caution and research carefully before interacting with ORC-20.
