What are Bitcoin BRC-20 tokens

BRC-20 is an experimental token standard that allows fungible tokens to be minted and transferred via the Ordinals protocol on the Bitcoin blockchain. The BRC-20 token standards were created in March 2023 by a pseudonymous programmer named Domo to make the minting of fungible tokens in Bitcoin possible. Let's see what BRC-20 tokens are and how they work.

What are Bitcoin BRC-20 tokens

BRC-20 is an experimental token standard that allows fungible tokens to be minted and transferred via the Ordinals protocol on the Bitcoin blockchain. Following the example of Ethereum's ERC-20 tokens, BRC-20 tokens feature different mechanisms and functions. Despite gaining huge popularity during the first half of 2023, BRC-20 tokens are still experimental and users should be very careful.

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BRC-20 token creation process. Source: Binance.

How Bitcoin BRC-20 Tokens Were Created

Following the launch of the Bitcoin Ordinals protocol in January 2023, which allows NFTs (non-fungible tokens) to be enrolled in satoshis (sats), there has been curiosity about whether fungible tokens could be created in Bitcoin. The BRC-20 token standards were created in March 2023 by a pseudonymous programmer named Domo to make the minting of fungible tokens in Bitcoin possible. The first BRC-20 token implemented was called “ordi”. Bitcoin wallets quickly implemented tools to support BRC-20 tokens. Many other BRC-20 tokens, many of which are meme tokens, were launched in the following months. Starting in May 2023, some BRC-20 tokens experienced astronomical price increases and gained significant market capitalizations.

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Disproportionate growth of transaction fees on the Bitcoin network. Source: YCharts.

How Bitcoin BRC-20 Tokens Work

It is important to know how Bitcoin ordinals work to better understand BRC-20 tokens. The Ordinals protocol is a system for numbering satoshis and allows users to attach additional data to satoshis in a process known as “enrollment.” BRC-20 tokens use ordinal inscriptions of JSON (JavaScript Object Notation) data to implement token contracts, mint, and transfer tokens. Currently, the BRC-20 token standard allows you to create a BRC-20 token with the deploy function, mint a number of BRC-20 tokens with the mint function, and transfer a number of BRC-20 tokens via the transfer function. .

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«ORDI» token quote chart. Source: Coinmarketcap.

The BRC-20 token standard is new and the process of implementing, minting and transferring BRC-20 tokens is not user-friendly. There are also a limited number of support tools and services. The demand for BRC-20 tokens caused Bitcoin transaction fees to increase and caused significant congestion on the Bitcoin network.

Differences between BRC-20 and ERC-20 tokens

Despite the similarity of their names, there are significant differences between the two tokens. BRC-20 tokens exist on the Bitcoin network, while ERC-20 is a standard on the Ethereum network. BRC-20 tokens do not use smart contracts and therefore have much less functionality. In contrast, ERC-20 tokens can interact with other protocols and applications to enable a wide range of services, including borrowing and borrowing. ERC-20 is a mature token standard with a large number of ERC-20 tokens already created and widely used. Conceived in 2015 and officially recognized in 2017, ERC-20 tokens have been battle-tested and proven to work stably. That is not the case with BRC-20 tokens, whose future has a high degree of uncertainty.


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