A new token type, known as the BRC-20 has been buzzing the Web3 space and providing an Ethereum-like shitcoining experience on Bitcoin.
It is built using the Ordinals protocol, which recently gained popularity for bringing NFTs to Bitcoin.
A total of 24,677 different tokens have been minted using the BRC-20 standard, with the majority of these BRC-20 tokens being memecoins, such as PEPE and Memetic (MEME).
With the increasing number of BRC-20 transactions, transaction fees have seen a significant increase as a result of the heightened token activity. Since its introduction in late April, the Bitcoin network has generated an extra 109.7 BTC in transaction fees, benefiting miners.
Today, we’re diving into everything BRC-20; from bitcoin ordinals to basics of BRC-20, to the trending tokens and why Bitcoin Maximalists think that this token standard is not healthy for the Bitcoin network.
Let’s go!
Bitcoin Ordinals
With the arrival of Ordinals, a new protocol that can inscribe metadata over individual satoshis, the smallest BTC denomination is possible. As the new thing that took Bitcoin by storm, in April 2023 alone, the daily record for inscriptions using Ordinals was broken four times. Users flooded the network inscribing images, video games, and other digital content.
Ordinal Inscriptions are similar to NFTs. There are digital assets inscribed on a satoshi, the lowest denomination of a Bitcoin (BTC). This was made possible sequel to the Taproot upgrade launched on the Bitcoin network on November 14, 2021.
What Is the BRC-20 Token Standard?
BRC-20 is an experimental token standard on the Bitcoin blockchain modeled on Ethereum’s ERC-20. It allows programmers to create and send fungible tokens via the Ordinals protocol.
Launched as an experimental brainchild of Domo, a self-proclaimed “terminally on-chain Dune Wizard” on March 9, 2023. BRC-20 tokens use an experimental standard to create fungible tokens natively on Bitcoin.
Unlike EVM blockchains, the BRC-20 standard does not use smart contracts, rather it enables users to store a script file on Bitcoin and use that to attribute tokens to individual satoshis. The BRC-20 token standard utilizes Ordinal inscriptions of JSON data to deploy token contracts, mint tokens, and transfer tokens.
The first BRC-20 tokens created ($ordi) contained the following JSON data defining the token’s name, a limit of 1,000 tokens per mint, and a maximum number of 21 million tokens:
As can be seen above, there is not much to a BRC-20 inscription.“p”: the tokens are being issued under the BRC-20 token standard
“op”: the operation invoked in this transaction is to deploy or initialize the “ordi” tokens
“tick”: the ticker of the tokens will be “ordi.”
“max”: the maximum supply of “ordi” is 21,000,000 tokens
“lim”: the maximum amount of “ordi” that could (theoretically) be minted in one transaction was capped at 1,000
Trending Tokens
Over the weeks, these BRC-20 tokens have been trending: Ordi, Pepe And Meme.
‘Ordi’ is an abbreviation for ‘Ordinals,’ while ‘Pepe’ is named after the popular Pepe the Frog meme which has been associated with the Bitcoin community since as early as 2016. Finally, ‘Meme’ is a reference to the concept of internet memes.
Why Bitcoin Maximalists Think the BRC-20 Isn’t Healthy for the Bitcoin Network
Bitcoin Maximalists are decrying the BRC-20 craze as the root cause of congestion, and some observers have gone as far as to claim that BRC-20 adoption is akin to a DDoS attack on the Bitcoin network.
While it’s certainly unfortunate that Bitcoin fees have reached elevated levels limiting certain users’ ability to transact on-chain, this is the reality of publicly available, commoditized blockspace.
The hike in Bitcoin fees, as unfortunate as it may be, caused by BRC-20 transactions, and as meaningless as they may appear to some, are perfectly valid uses of Bitcoin blockspace.
In an exclusive interview with Cointelegraph, Jan3 CEO Samson Mow considers BRC-20 activities just as spam clogging the network and believes that mass adoption of Bitcoin will happen because of its use case as a saving technology and as a means of exchange, not because of “people minting JPGs and sticking them in the chain.”
“They will fade away after even months, let’s not talk about years here,” He affirms.
What are your thoughts about BRC-20; do you advocate for a push for adoption or think this should be trashed into the bin? Share in the comment session.
