In a very short time frame, Bitcoin’s ordinals and meme coins became hot. However, some developers created a new token standard called BRC-20. The inspiration for these tokens came from the well-known ERC-20 token.
So, let’s find out what is cooking with the BRC-20 token and see the differences between this token standard and ERC-20. This is Part 1 of a 2-part series on BRC-20 tokens.
Today, we are grateful to release something very special for the Ordinals and brc20 ecosystem.
We consider it our most precious piece of arts that we built over the past few months.
— UniSat Wallet – Store, Inscribe and Search. (@unisat_wallet) May 4, 2023
What Is the BRC-20 Token Standard?
The BRC-20 standard is new. It didn’t launch until 8th March 2023. That’s only two months ago by the time we publish this article. In the meantime, the total market cap of these tokens is well above $680 million. It already topped $1 billion, only 2 days ago. Twitter user ‘Domo’ developed this token.
A BRC-20 token is a fungible token that let users inscribe satoshis. This is the smallest Bitcoin unit. By inscribing them, they become non-fungible and unique. So, the Ordinals protocol takes care of these inscriptions. It assigns a unique number to a satoshi. A satoshi is 0.00000001 Bitcoin.
This numbering we call an ‘inscription’. On 11th May, there were 14,307 BRC-20 tokens. For example, MetaMask and Ledger support these tokens. On the other hand, Trust Wallet is not yet. The picture below shows the real-life tracking of BRC-20 tokens.
Source: BRC-20 website
BRC-20 vs ERC-20
There are quite a few differences between a BRC-20 and ERC-20 token. The most significant difference is that a BRC-20 token doesn’t use a smart contract. As a result, it provides less functionality. On the other hand, ERC-20 tokens can interact with other Dapps and protocols. For example, in DeFi, with lending and borrowing.
The BRC-20 token is a standard for the Bitcoin blockchain. In contrast, ERC-20 tokens exist on the Ethereum network. The utility of the BRC-20 tokens is small. As the developer ‘Domo’ already mentioned, they may well become worthless.
gm. I'm glad that some people like the experiment. Some additional notes.
1. These will be worthless. Please do not waste money mass minting.
2. Due to how some inscription tools are set up, the 'balance' may be minted to the intermediary address used in https://t.co/mja39YGIow…
— domo (@domodata) March 9, 2023
BRC-20 Use Cases
The use cases for the BRC-20 tokens are still limited. It is a new and experimental token. We still don’t know all potential use cases. However, here are some current uses cases for this token. For example:
- DeFi – This is still in development on the Bitcoin blockchain. Unlike the rigid Bitcoin, the BRC-20 tokens are more flexible. For instance, you can integrate them into DeFi protocols. This may be the start of a livelier DeFi ecosystem on Bitcoin.
- P2P Transfers – This is at the core of Bitcoin, a P2P trading platform. However, transaction fees are in BTC. This has recently led to congestion of the Bitcoin network. Transaction fees also saw an increase.
- Tokenization – With this token standard, you can tokenize real-world assets (RWA’s). For example, the same as what Realio, GoldFinch or Centrifuge offer.
🚸 New Kid on the Block
The brainchild of @domodata, the BRC-20 experiment produced a fungible, limited use case (mint and transfer) ERC-20 style token on Bitcoin using ordinal theory
— Bankless (@BanklessHQ) May 10, 2023
Most of the current BRC-20 tokens are meme coins. This includes, among others, the well-known Pepe token. All tokens have an ID. Ordi has ID #1, and Pepe comes in with ID #4. The Meme token has ID #2. All three tokens are in the top 5 by market cap.
The supply of the tokens varies a lot. As a result, low supplies most often have higher prices. For example, Oshi on spot #8 by market cap, has a supply of 13,337. Its token price is currently $707.52. ID #3 Punk, has a supply of 10,000. Its token price is currently $402.48. On the other hand, SHIB has a supply of 100 trillion and a current price of $0.000000046. Below is a list of BRC-20 tokens.
BRC-20 vs Ordinals
The BRC-20 token is a token standard. On the other hand, Ordinals are a technique to inscribe satoshis. With the Ordinals technique, you can turn a fungible token into an NFT. Or, in other words, into a non-fungible token.
It’s a fascinating development. On one side, the tokens, and Ordinals have brought new live into the Bitcoin chain. On the other side, it caused a lot of congestion and an increase in transaction fees. Recently, on 9th May, fees went up to $26 and $31 on 8th May. So, we have annoyed chain users on one side and excited users on the other side.
Having said this, Bitcoin miners are having a field day. The hash price went up by 66% since 1st May. Below shows the inscription and Ordinals fees to date, 11th May 2023.
This is Part 1 of a 2-part series about the new BRC-20 tokens. We looked at what the token standard is and some use cases. We also compared the token to the ERC-20 token and the Ordinals, and we discussed some BRC-20 tokens. Here is Part 2.
⬆️ For more cryptocurrency news, check out the Altcoin Buzz YouTube channel.
⬆️ Our popular Altcoin Buzz Access group generates tons of alpha for our subscribers. And for a limited time, it’s Free. Click the link and join the conversation today.