BRC-20 has taken the Bitcoin community by storm since @Domodata created it on March 8, 2023. But what is the BRC-20 token standard?
BRC-20 in brief
BRC-20 is a fungible token standard made explicitly for the Bitcoin blockchain. BRC-20 uses ordinal inscriptions of JavaScript Object Notation (JSON) to deploy token contracts and mint and transfer tokens. Tokens can be attributed to satoshis and then traded or swapped with others, just like with other tokens.
Although it sounds similar to Ethereum's ERC-20 token standard, there are key differences you need to be aware of. BRC-20 uses a proof-of-work mechanism since it's on the Bitcoin blockchain, while ERC-20 uses proof-of-stake mechanism on the Ethereum blockchain.
The BRC-20 token standard also doesn't support smart contracts, a feature that has made ERC-20 tokens popular in the DeFi community. Smart contracts enable developers to create programmable money, automating various financial processes and creating new types of financial products. However, despite this limitation, BRC-20 tokens like ORDI, PEPE, and PUNK are gaining traction and attention.
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The benefits of BRC-20
While it's still early days for BRC-20, the token standard is gaining momentum as people experiment with its capabilities.
- Fungibility: BRC-20 tokens are fungible, meaning they are interchangeable and easily traded on exchanges. Bitcoin can be intimidating to new traders, but the innovation of BRC-20 provides an opportunity to use the Bitcoin blockchain without trading BTC itself.
- Security: BRC-20 tokens are built on the Bitcoin protocol, known for its high level of security and resistance to hacking attempts. This is due to Bitcoin's use of a proof-of-work mechanism, which makes it difficult for attackers to manipulate the blockchain.
- Compatibility: BRC-20 tokens are designed to work seamlessly with the Bitcoin protocol, which means they can be easily integrated into the Bitcoin ecosystem. There are also relatively low barriers to entry for developers looking to build on top of the Bitcoin protocol.
BRC-20's limitations
It's no secret that the Bitcoin community's opinion is divided on ordinals and BRC-20. Some have embraced this new experiment, while others believe they go against Satoshi Nakamoto's original vision of Bitcoin. Some of the limitations of BRC-20 are:
- Limited ecosystem: While BRC-20 is gaining popularity, it is still relatively new and has a smaller ecosystem compared to other token standards like ERC-20. Fewer developers, tools, and resources are available to build and manage BRC-20 tokens.
- Limited adoption: Bitcoin is primarily known as a store of value rather than a platform for creating and managing tokens. This may limit the adoption of BRC-20 tokens, whereas ERC-20 has smart contract capabilities that BRC-20 doesn't have.
- Potential increase of gas fees: It's too soon to tell, but some long-time Bitcoin community members feel BRC-20 takes up valuable block space, which could lead to a rise in gas fee transactions.
Meet ORDI: The first BRC-20 token
The ORDI token was the first BRC-20 token ever created. It was designed as a meme to demonstrate the potential of the new standard. The ORDI deployment was limited to 1,000 tokens per mint, with a total supply cap of 21 million tokens.
Since the creation of ORDI, multiple startups have developed tools to allow users to mint BRC-20 tokens and store them in their wallets. However, the supply cap for ORDI has since been reached, meaning tokens are no longer directly claimable and must be purchased from other holders.
The popularity of BRC-20 tokens has continued to grow, and individuals are creating various meme tokens to experiment with the technology. You can track and analyze on-chain details for these tokens at brc-20.io. Meanwhile, you can explore a raft of data on ORDI, including total supply, holders, addresses, and more, using our intelligent Web3 data platform.
OKX Wallet: More options for your Bitcoin
At OKX, we're constantly engaging with our community to understand what they're interested in. At the same time, we're also building tools to help you do more with your Bitcoin.
For example, we've upgraded our multichain wallet to support Taproot address formats, which opens us up to ordinal capabilities. You can view and transfer ordinals on the web extension and app, while inscription functionality is coming soon.
Once R&D is complete, you will be trade ordinals and BRC-20 with the OKX Wallet. Our priority is to make it easy, robust and secure.
What's next for BRC-20
Bitcoin's ecosystem is unique because it is intentionally limited to one token. Ethereum, on the other hand, took a different approach by introducing the Ethereum Virtual Machine (EVM), which allowed the creation of multiple tokens on the platform.
With the introduction of ordinals and the BRC-20 token standard, the potential for new and exciting possibilities has opened up even further. BRC-20 tokens offer a simple yet powerful way to create and manage tokens on the Bitcoin blockchain.
It's important to note that this standard is still experimental, so it's crucial to conduct your research and rely on trusted sources when working with it. Stay tuned, as OKX Wallet will soon offer more features to help you maximize your experience with BRC-20 tokens.
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