Those who constantly follow the life of the world's first cryptocurrency will tell you that Bitcoin ( BTC ) hasn't had major updates in a long time. However, in March 2023 bitcoin broke into the market, shaking up its community nicely: new standard BRC-20 tokens were launched.
What is BRC-20?
Bitcoin Request for Comment (BRC-20) is a new experimental standard for issuing fungible tokens. It works on Protocol Ordinals . Previously Ordinals was only used to issue at NFT , but now there is a new feature.
This technology has allowed developers to apply Ordinals technology to the bitcoin network to create exchangeable tokens as on Ethereum ( ETH ) or any other blockchain with smart contracts . The first appearance of BRC-20 is dated 8 March 2023. A full description of this experiment can be found at here .
Similarity to Ethereum
Many may notice the similarity in the names of the technologies BRC-20 and ERC-20 and start making analogies. But it's worth noting right away: the similarities end with the letters. Let's look at the main differences between these standards:
How does the BRC-20 work?
Since all BRC-20 transactions are controlled by a single JSON system rather than a branching system of smart contracts, the number of token possibilities is not huge. In fact, BRC-20 can be used to:
- Deploy . Users can set the maximum offer parameters, mint limit and ticker for their new token.
- Peppermint . Users can accept embedded tokens.
- Transfer . Ability to transfer tokens between wallets.
How to create your own BRC-20 token from scratch?
In case you want to create your own tokens on the bitcoin network, there are instructions for you:
Step 1. Install an appropriate crypto wallet. It should be compatible with Ordinals and TapRoot (a new system released in 2021 and aimed at improving bitcoin security, privacy and scalability).
Step 2 . Create new ordinals using the JSON code in the caption instead of a file.
Step 3. Write the new blockchain code. The code will be attached to the satoshi (the smallest bitcoin unit) using the Ordinals Protocols numbering system.
BRC-20 on the market
The total number of transactions using the BRC-20 is more than 10 million, according to data from the Dune . Some have already compared the BRC-20 market today to the NFT market in 2021. We can now trade BRC-20 tokens on the UniSat and Gate.io platforms. For example BANK , PEPE , PIZA , BSV were successfully listed on the exchanges.
So far the project has had limited use, but this is common for the early stages of projects. The developers and community members are doing their best to actively develop it and meet the needs of their customers. For example, the project's partner, the Gamma marketplace, provides users with the ability to make captions in the new ordinal code easier and faster.
How did the new tokens affect bitcoin?
With the launch of the BRC-20, there was a big "boom": consumers increased their demand for transactions and, consequently, the average commission rate jumped. Between 7 and 8 May 2023, the fee increased to $31, although previously its average value ranged around $2. By early June, commissions had fallen to $5.
Conclusion
BRC-20 tokens are an experimental bitcoin project built on Ordinals Protocol technologies. As the project is young, it has yet to strengthen its position in the market, to cope with falling demand and crises. The new tokens so far have an extremely poor feature set and utility. But the experiment is quite ambitious and in the future could turn the whole bitcoin system upside down.
By the end of the spring, BRC-20 was able to raise the capitalization of its assets to $1 billion! Analysts are still skeptical about the new project, but they do not give special comments for or against. BRC-20 is definitely worth a closer look in the summer of 2023.