What Is BRC20?
BRC20 is an innovative token standard that has been making waves in the cryptocurrency world. This exciting standard was created for the Bitcoin network to enable the creation and transfer of fungible tokens, similar to the Ethereum’s ERC20 token standard.
BRC20 tokens were introduced in 2023, and since then, they’ve been gaining popularity among crypto enthusiasts, especially those who are interested in Bitcoin’s evolving capabilities. Keep in mind that BRC20 tokens, despite their growing popularity, are still experimental. So, if you’re thinking of diving into the world of BRC20 tokens, it’s essential to do your homework and tread carefully.
Key Takeaways
- BRC20 is an experimental token standard that enables the creation and transfer of fungible tokens on the Bitcoin blockchain through the Ordinals protocol1.
- The standard was created in March 2023 by a pseudonymous programmer named Domo, with the first BRC20 token being called “ordi".
- BRC20 tokens utilize JSON (JavaScript Object Notation) inscriptions to deploy token contracts, mint, and transfer tokens.
- As of June 2023, the BRC20 market cap was approximately $276 Million, with several tokens experiencing significant market caps and price increases.
How Does the BRC20 Work?
The BRC20 token standard employs a system called the Ordinals protocol. Now, you might be asking, “What on earth is that?” Simply put, the Ordinals protocol is a system for numbering satoshis (the smallest unit of Bitcoin) and attaching extra data to them. This process of attaching data to satoshis is known as “inscription.”
With BRC20, these inscriptions are used to deploy token contracts, mint new tokens, and transfer tokens between users. Right now, you can create a BRC20 token with the deploy function, mint more BRC20 tokens with the mint function, and transfer them with the transfer function. Sounds pretty cool, right?
But bear in mind that the BRC20 token standard is still new, and the process of deploying, minting, and transferring these tokens isn’t as user-friendly as other established token standards. Plus, there are only a limited number of tools and support services available for BRC20.
What Is the Difference Between BRC20 and ERC20?
You might be wondering, “BRC20, ERC20, what’s the difference?” Well, while they may seem similar, they have some significant differences.
First off, BRC20 tokens exist on the Bitcoin network, while ERC20 tokens are native to the Ethereum network. BRC20 tokens do not use smart contracts, which means they have less functionality compared to ERC20 tokens. On the other hand, ERC20 tokens can interact with other protocols and applications to enable a wide range of services, including borrowing and lending.
ERC20 tokens have been around since 2015, and they’re widely used and tested. But BRC20 tokens, being newer, face a higher degree of uncertainty regarding their future. So, if you’re thinking of getting involved with BRC20 tokens, it’s crucial to understand the risks involved.
What Is a BRC20 Wallet?
A BRC20 wallet is a digital wallet that supports BRC20 tokens. Just like how you need a physical wallet to store your cash and cards, you need a digital wallet to store your BRC20 tokens.
These wallets enable you to store, receive, and send BRC20 tokens safely and securely. They come in many forms, including desktop, mobile, and hardware wallets, each offering different levels of convenience and security.
