Hem
Ordlista
BRC-20 Tokens

BRC-20 Tokens

Intermediate

BRC-20 is an experimental token standard that enables the minting and transferring of fungible tokens via the Ordinals protocol on the Bitcoin blockchain. 

Taking a cue from Ethereum's ERC-20 tokens, BRC-20 tokens feature different mechanisms and functions. Despite gaining massive popularity during the first half of 2023, BRC-20 tokens are still experimental, and users should exercise extreme caution.

How Were BRC-20 Tokens Created?

After the Bitcoin Ordinals protocol launched in January 2023, enabling NFTs (non-fungible tokens) to be inscribed on satoshis (sats), there has been curiosity about whether fungible tokens could be created on Bitcoin. BRC-20 token standards were created in March 2023 by a pseudonymous programmer named Domo to make minting fungible tokens on Bitcoin possible. 
The first BRC-20 token deployed was called "ordi." Bitcoin wallets quickly deployed tooling to support BRC-20 tokens. Numerous other BRC-20 tokens, many of which are meme tokens, were launched in the months after. As of May 2023, some BRC-20 tokens have experienced astronomical price increases and obtained significant market caps. The demand for BRC-20 tokens caused Bitcoin transaction fees to surge and caused significant congestion on the Bitcoin network.

How Do BRC-20 Tokens Work?

It's 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 extra data to satoshis in a process known as "inscription."

BRC-20 tokens utilize Ordinals inscriptions of JSON (JavaScript Object Notation) data to deploy token contracts, mint, and transfer tokens. Currently, the BRC-20 token standard allows creating a BRC-20 token with the deploy function, minting an amount of BRC-20 tokens with the mint function, and transferring an amount of BRC-20 tokens via the transfer function.

The BRC-20 token standard is new and the process of deploying, minting, and transferring BRC-20 tokens isn't user-friendly. There are also a limited number of tooling and supporting services.

Differences Between BRC-20 and ERC-20 Tokens

Despite the similarity in 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 don't use smart contracts and, therefore, have much less functionality. On the contrary, ERC-20 tokens can interact with other protocols and applications to enable a wide range of services, including borrowing and lending.

ERC-20 is a mature token standard with a massive 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 function stably. That's not the case with BRC-20 tokens, whose future has a high degree of uncertainty.

Risks of BRC-20 Tokens

The BRC-20 token standard is currently an experiment by programmers to facilitate fungibility on the Bitcoin blockchain. As it's still being tested, many things could go wrong.

Despite the hype, BRC-20 tokens have little utility at present. The outlook is also highly questionable. Due to the ease of minting BRC-20 tokens, it's possible that most could end up being worthless. Users and investors should be cautious and conduct proper research before engaging with this new token type. 

Also learn: What Are Ordinals? An Overview of Bitcoin NFTs
Dela inlägg
Relaterade ordlistor
Inskription

En bit data kopplad till enskilda enheter av kryptovaluta.

Blue-chip-token

Blue-chip-krypto är de coin som har klarat sig bäst historiskt sett. Dessa tillgångar är etablerade och til...

Kvantitativa lättnader

En strategi som används av centralbanker för att stärka ekonomin när den inte går bra.

Registrera ett konto
Omsätt din kunskap i praktiken genom att öppna ett Binance-konto idag.