BRC-20: Bringing Tokens to the Bitcoin Network
Introduction
The Bitcoin network has traditionally been known for its decentralized currency and has been considered the ‘purest’ blockchain in terms of its functionality. Despite the concerns of Bitcoin maximalists, so-called ‘Ordinals’ and other tokens have been launched on the network. In this article, we will delve deeper into the launch of the BRC-20 tokens on the Bitcoin network.
BRC-20 Tokens on the Bitcoin Network
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In January of this year, the arrival of Ordinals paved the way for carrying data on individual satoshis. This introduced the possibility of incorporating images, videos, text, audio, and gifs into the smallest unit of BTC. In March, pseudonymous bitcoin developer Domo announced the arrival of ‘BRC-20’, an experimental token standard on the Bitcoin network, similar to ERC-20 on the Ethereum (ETH) network. BRC-20 is used to issue and transfer fungible tokens on the Bitcoin blockchain.
The BRC-20 Token Standard: Differences from ERC-20
Although BRC-20 is similar to ERC-20, it is fundamentally different. BRC-20 tokens do not use smart contracts, which facilitates the usage of the platform relative to Ethereum and lowers gas fees. In addition, the BRC-20 token standard logically requires a Bitcoin wallet to store and trade the tokens. This results in ease of usability since it relies on existing user experiences with the Bitcoin network.
Market Cap of BRC-20 Tokens
The market cap of BRC-20 tokens has exploded in the past month, with its current market cap standing at $120 million. In comparison, the market cap was only $20 million mid-April, and the increase over the past 7 days has been 600%. Meme coins such as pepe, meme, and SHIB are the primary tokens in the Bitcoin network, with ordi being the market leader in terms of the total market cap of $58 million.
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Insight into 3 Million BTC Inscriptions
More than 3.3 million inscriptions have been registered on the Bitcoin network according to Dune data, and most inscriptions are text-based. These text-based inscriptions cost considerably less compared to digital art, NFTs, and meme coins since the fees depend on the amount of registered data. Out of these inscriptions, there are more than 372,000 unique inscriptions, of which 371,175 were text-based. Only 316 inscriptions consisted of images with the remainder being applications or tokens.
Conclusion
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The emergence of tokens on the Bitcoin network raises questions on its potential impact on the ecosystem and its impact on the cryptocurrency industry. However, with the success of BRC-20 and other token standards to follow, it seems likely that Bitcoin will continue to be a strong player in the cryptocurrency world and drive innovation in finance as we move forward.