BRC-20 is an experimental standard for fungible tokens on the Bitcoin blockchain. It enables new functionalities for the Bitcoin network, including usage in DeFi protocols and blockchain applications.
WHAT IS BRC?
BRC-20 utilizes ordinal inscription and is an experimental token standard. It was launched by an anonymous developer named Domo on March 09, 2023. BRC-20 tokens are native to Bitcoin and are fungible. Unlike popular token standards on EVM blockchains, BRC-20 does not rely on smart contracts. Instead, it allows users to store a script file on Bitcoin to associate tokens with specific satoshis. BRC-20 tokens embed JSON data into ordinal inscriptions for deployment, minting, and transfer.
Despite being an experimental token, BRC-20 has gained significant interest in the Bitcoin community. Infrastructure providers, such as wallet services and marketplaces, have started integrating BRC-20 to facilitate the creation and trading of these tokens.
The open-source nature of BRC-20 tokens demonstrates the power of collaborative communities. By sharing novel ideas and making them open-source, developers can push the boundaries of experimentation, leading to advancements in the underlying technology.
HISTORY OF BRC-20
BRC-20 emerged as a faster and more cost-effective alternative to the Ethereum blockchain on the rise of the Binance Smart Chain (BSC) in September 2020. It quickly gained popularity among developers and users, becoming a hub for DeFi initiatives. Its appeal lies in its user-friendly nature, affordability, and compatibility with existing Ethereum tools and infrastructure. The BRC-20 token standard was developed using Ordinals and Inscriptions on the Bitcoin base chain, allowing users to store files on the Bitcoin blockchain.
HOW DO BRC-20 TOKENS WORK?
BRC-20 tokens utilize the Ordinals protocol, where satoshis are assigned a "serial number" based on their order of mining on the Bitcoin blockchain. This protocol enables the attachment of additional data to a single Satoshi through inscription. BRC-20 tokens are a type of ordinals inscription that always contains JSON data. This code enables the deployment, minting, and transfer of tokens on the Bitcoin network.
IMPACTS OF BRC-20 TOKENS ON TRANSACTION FEES
Transacting BRC-20 tokens requires more space on the blockchain compared to peer-to-peer transactions. This can lead to an increase in transaction fees. Unlike traditional NFTs that store data externally, BRC-20 tokens store all data directly on-chain within the inscription.
The BRC-20 market is experiencing rapid growth, with over 14,709 tokens already created using this standard. It is becoming a revolutionary force, with its tokens approaching a market cap of $1 billion. The BRC-20 team is also continuously improving the standard, making it easier for developers to create tokens. As the DeFi space expands, we can expect to see more tokens and financial products utilizing BRC-20. In summary, BRC-20 is poised for a bright future and will play a significant role in the world of cryptocurrencies. The blockchain industry's impact and numerous use cases will further enhance the utility of the BRC-20 token standard, ensuring its inevitable growth despite the challenges faced by any emerging technology.