- May 8, 2023
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Bitcoin has long been the only cryptocurrency supported by the Bitcoin blockchain, but this is changing with the introduction of BRC-20 tokens: the new standard. In March 2023, Domo (@domodata on Twitter) created the BRC-20 token standard, which allows users to trade fungible assets using the Ordinals protocol on the Bitcoin blockchain. BRC-20 is inspired by the highly popular ERC-20 standard used on Ethereum, which allows users to create and mint tokens. Unlike Ethereum, Bitcoin has never supported any cryptocurrency aside from BTC, so the launch of BRC-20 tokens is a significant development for Bitcoin.
BRC-20 tokens are entirely fungible, making them useful for creating and minting Bitcoin-based tokens via the Ordinals protocol. This protocol inscribes extra data on satoshis, which are tiny fractions of one BTC, before they enter a transaction. Once inscribed with the data, the satoshi becomes an Ordinal, which is non-fungible. The inscription data contains a serial number that leads to the location of the Bitcoin-based NFT.
BRC-20 Tokens: The New Standard
Since its launch, BRC-20 tokens have collectively reached a market cap of almost $1 billion, with over 8,000 BRC-20 tokens minted so far. The Pepe Coin BRC-20 token has gained significant popularity, reaching a 24-hour trading volume of over half a million dollars. Other BRC-20 tokens that have gained prominence include ORDI, MEME, and MOON.
There are some key differences between BRC-20 and ERC-20. Firstly, the two token standards exist on different blockchains. BRC-20 is Bitcoin-based, while ERC-20 is Ethereum-based. This means that BRC-20 and ERC-20 tokens will use different consensus mechanisms. Ethereum uses proof of stake, while Bitcoin uses proof of work. Secondly, ERC-20 uses smart contracts, while BRC-20 does not.
While it’s exciting to see BRC-20 tokens become a hot topic, it’s worth keeping in mind that this is still a very new token standard. It will take time to see whether it can gain a solid foothold in the crypto industry. Nonetheless, the launch of BRC-20 tokens represents an important development for Bitcoin, offering new ways to use the blockchain and opening up new possibilities for Bitcoin-based NFTs.
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