What is BRC-20

What is BRC-20 and How These Tokens on Bitcoin Work?

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Today’s practical application of blockchain technology enables many ambitious and promising projects, the vast majority of which are different tokens. The technical nature of token creation originates in the blockchain network using different standards for their deployment and accounting, such as BEP-20, ERC-20, and BRC-20 – a standard that has become a new developmental milestone in the field of fungible tokens in the Bitcoin blockchain network. 

This article will be your guide to the world of the BRC-20 standard and will tell you what it is and what functionality it has. In addition, you will learn about some of the most popular tokens created under the BRC-20 standard.

Key Takeaways

  1. BRC-20 tokens are digital assets created in the Bitcoin network based on the Ordinals protocol.
  2. The most popular, in terms of market capitalization, tokens on the market are Ordi, Pepe, Wojak and Piza.

What is the BRC-20 Standard?

BRC-20 is an experimental token standard developed on the Bitcoin blockchain (BTC) and inspired by the ERC-20 standard on Ethereum. It allows programmers to create and send interchangeable tokens via the Ordinals protocol. The new standard has become another hotspot in the crypto ecosystem, especially after a new kind of token appeared in the Bitcoin blockchain, around which a serious speculative frenzy has formed. Most of these tokens are so-called meme coins, named after famous memes without utility or functionality. Despite this, they have cumulatively risen in price by tens of thousands of percent in a few weeks and triggered a record increase in intra-network transfer fees for the first cryptocurrency.

BRC-20 tokens (similar to Ethereum’s ERC-20) are digital assets that can be created and transferred in the Bitcoin blockchain using the Bitcoin Ordinals protocol. This standard allows data to be written in satoshi, Bitcoin’s smallest unit, and turned into tokens. The Ordinals protocol has enabled the growth of meme coins placed on the Bitcoin blockchain, but has no utility. Instead, traders bought them up solely for speculative purposes. Thousands of BRC-20 tokens have been issued since the protocol emerged in March, with a combined market capitalization of more than $1 billion.

BRC-20 could be a promising technology within token creation of companies that focus on building Bitcoin network solutions (wallets, bridges, credit protocols, etc.) now have investment flows from major venture capital funds, which could help develop systems and software solutions to account for, store and trade such tokens, without mention it will bring even more attention to Bitcoin protocol.

The BRC-20 token standard was introduced by Twitter user domo on March 9, 2023.

Fast Fact

What Features Do BRC-20 Tokens Have?

All current BRC-20 tokens have only three functions embedded in their concept software. Let’s consider them below.

1. Deploy

Bitcoin Ordinals work to better understand BRC-20 tokens. The Ordinals protocol is a system for numbering satoshis and allows users to attach extra data to satoshis in a process known as “inscription.” BRC-20 tokens utilize Ordinals inscriptions of JSON (JavaScript Object Notation) data to deploy token contracts, mint, and transfer tokens based on JSON data.

The token deploy feature allows initiating the initial deployment of a token within a blockchain using a protocol. In doing so, the user can specify the maximum offer and the ticker of the new token and set a limit on the maximum number of tokens to be mined in one wallet.

2. Mint

The process of minting BRC-20 tokens is the redemption of a portion of future blocks in exchange for a share of the profits in the blockchain. That’s why token minting only happens in crypto systems with a commission for trading and transfers. Out of this amount, a reward is then paid to users, and its amount depends on the number of “frozen” tokens. The user chooses how many blocks he wants to create in the network. Accordingly, he has a certain amount of assets frozen, which cannot be moved for some time. That is, when new tokens are mined, the tokens already created are used.

3. Transfer

This feature allows the transfer of created tokens between Ordinal-compatible users’ wallets. The transfer possibilities are not limited by the volume or type of token, although the system is still young and requires some refinements in terms of transfer speed. Compared to other token deployment standards, BRC-20 currently suffers from an increased load on the Bitcoin network, which daily passes hundreds of thousands of transactions, which, by the way, have also recently increased in price amid the popularity of BRC-20 tokens.

What are the Most Popular BRC-20 Tokens?

Turning BRC-20 tokens into full-fledged digital assets with such limited functionality and no developed ecosystem would seem impossible. But, in just a few weeks, more than 20,000 tokens were launched on the experimental protocol, generating more than $200 million in daily trading volume with a total capitalization of $1 billion (May 2023). It is now a full-fledged marketplace with the following most popular tokens.

1. Ordi

Ordi is the first token created on BRC20. It is also one of the most popular in this market. Ordi uses the Ordinals protocol, and thanks to it, any information can be written into the smallest Bitcoin particle – satoshi. Considering that there are 2.1 quadrillion such particles, the possibilities are endless. Curiously enough, Ordi was created as a joke project. Adjusted for the revolutionary technology, the joking status quickly became more serious. Today, it is the benchmark for the capabilities of the BTC network.

2. Pepe

The Pepe token is based on the famous meme with the sad frog Pepe, which first appeared in 2005 in Matt Fury’s Boys Club comic strip and later became a symbol of support for former U.S. President Donald Trump. Like other meme coins, it has no fundamental value and only grow in value due to the interest of community members. At the time of writing this article, this token holds one of the leading positions on the BRC-20 token market with a daily trading volume above $600,000 thousand.

3. Wojak

Wojak is a cryptocurrency project that allows users to explore the world of memes, including buying and selling them through a decentralized network. It was inspired by the iconic Internet meme of the same name in the form of a drawing with a sad man’s face. 

To date, Wojak (WOJAK) is traded on 17 exchanges, including Bitget, LBank, Uniswap (v2) and others. The maximum trading volume is observed on the trading pair WOJAK/USDT, reaching $3 million (87% of the total volume on all exchanges).

4. Piza

The Piza meme token ranks among the top BRC-20 with a capitalization of more than $10 million and an average daily trading volume of $800,000, making it one of the most successful meme coins of recent times, which is second to the aforementioned in terms of capitalization.

Conclusion

The Bitcoin community is undergoing a major transformation designed to give a new lease of life to the token market by providing faster asset transfers, reduced transaction fees and increased transparency. BRC-20 tokens, despite their youth, will pave a new way for the formation of the meme coin market in the near future.

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