BRC-20 Tokens: A New Frontier in Bitcoin’s Evolution or A Misstep? A Comprehensive Exploration
1- What is the BRC-20 standard?
BRC-20 is a new token standard introduced on the Bitcoin network by DOMO on March 8, 2023. This experimental standard, akin to Ethereum’s ERC-20, is designed to support the creation and management of tokens within the Bitcoin network, a feature previously absent in Bitcoin’s functionality.
2- How does it work?
BRC-20 utilizes a novel concept called Ordinals to function. Ordinals enable users to interact with individual satoshis, the smallest unit of Bitcoin, in a way that allows unique data inscription, such as text, images, or videos. BRC-20 uses Ordinals to write JSON data into Satoshis, thus enabling the deployment, minting, and transfer of tokens on the Bitcoin network.
3- How to create a BRC-20 token?
Creating a BRC-20 token involves deploying the appropriate JSON data using an ordinal-compatible wallet, such as @unisat_wallet. This process involves entering the necessary token information within the wallet’s “Inscribe” tab and selecting “BRC-20” to deploy the token.
4- How to mint a BRC-20 token?
Minting a BRC-20 token is similar to its creation process but involves slightly different JSON parameters. The same ordinal-compatible wallet can be used for this process by selecting the “Mint” option.
5- How to transfer a BRC-20 token?
Transferring BRC-20 tokens involves a two-step process: inscribing the transfer function to your ordinal compatible wallet and then sending this inscription to the desired recipient. The transaction involves two steps, hence two transaction fees.
6- Analytics
Since its creation, the BRC-20 token has seen widespread adoption, with most Bitcoin transactions now involving BRC-20 transactions. However, this has led to a significant increase in Bitcoin transaction fees, outpacing even block rewards for the first time since January 2018.
7- My opinion
While the introduction of BRC-20 tokens demonstrates Bitcoin’s evolving capabilities, there are potential downsides. Bitcoin was not originally designed for token operations, and this new addition could complicate its structure, potentially jeopardizing its key advantages, including simplicity, accessibility, security, and decentralization. Furthermore, the current primary use of BRC-20 tokens is speculative, adding another layer of risk for users.
8- Resources
@domodata’s Twitter account, @unisat_wallet, and BRC-20.io website are some of the key resources to learn more about BRC-20 tokens. Additionally, crypto analytics dashboard by @CryptoKoryo provides valuable metrics related to BRC-20’s usage and impact.
Resources:
https://twitter.com/domodata
