Those who constantly follow the life of the first cryptocurrency in the world will tell you that Bitcoin (BTC) has not had large-scale updates for a long time. However, in March 2023, Bitcoin broke into the market, giving a good shake to its community: there was a launch of new BRC-20 standard tokens.
What is BRC-20?
Bitcoin Request for Comment (BRC-20) is a new experimental standard for issuing fungible tokens. It works on the Ordinals protocol. Previously, Ordinals was used only for issuing NFTs, but now there is a new feature.
This technology allowed developers to apply Ordinals technologies to the Bitcoin network in order to create fungible tokens like on Ethereum (ETH) or any other blockchain with smart contracts. The first appearance of the BRC-20 dates back to March 8, 2023. A full description of this experiment can be found here.
Similarity to Ethereum
Many may notice the similarity in the names of the BRC-20 and ERC-20 technologies and begin to draw analogies. But it is worth noting right away: the similarities end with the letters. Let’s take a look at the main differences between these standards:
How does BRC-20 work?
Since all BRC-20 transactions are controlled by a single JSON system, rather than a forked system of smart contracts, the number of token capabilities isn’t huge. In fact, the BRC-20 can be used to:
Deploy. Users can set the maximum offer parameters, the mint limit and the ticker for their new token.
Mint. Users can accept deployed tokens.
Transfer. Possibility to transfer tokens between wallets.
How to create your own BRC-20 token from scratch?
In case you would like to create your own tokens on Bitcoin network, then there is an instruction for you:
Step 1. Install a suitable crypto wallet. It should be compatible with the Ordinals and TapRoot systems (a new system released in 2021 and aimed at improving the security, privacy and scalability of Bitcoin).
Step 2. Create new Ordinals, using the JSON code in inscription instead of a file.
Step 3. Write the new code on the blockchain. The code will be attached to satoshi (the smallest unit of Bitcoin) via the Ordinals Protocols numbering system.
BRC-20 on the market
The total number of transactions using BRC-20 is more than 10 million, according to data from Dune. Some have already compared the BRC-20 market today with the NFT market in 2021: “no one fully understands what it is, but the demand is growing”. Now we can trade BRC-20 tokens on the UniSat and Gate.io platforms. For instance, BANK, PEPE, PIZA, BSV were successfully listed on exchanges.
So far, the project has limited usage, but this is usual for the early stages of projects. Developers and community members are doing everything possible to actively develop it and satisfy the needs of its customers. For example, the partner of the project, the Gamma marketplace, provides users with the opportunity to make inscriptions in the new Ordinals code easier and faster.
How did the new tokens affect Bitcoin?
With the launch of BRC-20, there was a big “boom”: users raised the demand for transactions, and therefore the average size of commissions jumped. Between May 7 and May 8, 2023, the fee increased to $31, although earlier its average value fluctuated around $2. By the beginning of June, commissions had dropped to $5.
Conclusion
BRC-20 tokens are an experimental Bitcoin project built on Ordinals Protocol technologies. Since the project is young, it has yet to strengthen its position in the market, cope with falling demand and crises. New tokens so far have an extremely poor set of functions and utility. But the experiment is quite ambitious and, in the future, it is able to turn the whole Bitcoin system upside down.
By the end of spring, BRC-20 was able to raise the capitalization of its assets to $1 billion! Analysts are still skeptical about the new project, but they do not give any special comments “for” or “against”. The BRC-20 is definitely worth a closer look in the summer of 2023.