
In
March 2023, a pseudo-anonymous developer by the name of Domo created BRC-20
(Bitcoin Request for Comment 20). Similar to ERC-20 tokens, BRC-20 tokens were
developed specifically for Bitcoin.Ā In
this article, we will guide you on how BRC-20 tokens were created, how they
work, their advantages and disadvantages, and how to buy and sell them.
How
Were BRC-20 Tokens Created?
In
January 2023, the Bitcoin Ordinals protocol was released, allowing non-fungible
tokens (NFTs) to be recorded on satoshis (sats). Since then, there has been an
increase in interest in the creation of fungible tokens on the Bitcoin network.
In March 2023, BRC-20 was created to enable the minting and utilization of
fungible tokens on the Bitcoin blockchain.
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The
initial BRC-20 token to be released was named "ordi," and Bitcoin
wallets promptly introduced tools to accommodate them. In the subsequent
months, a plethora of BRC-20 tokens emerged. By May 2023, some BRC-20 tokens
had encountered remarkable price surges, leading to substantial market
capitalization. Increased transaction costs and significant network congestion
were caused by the rise in demand for BRC-20 tokens.
How
BRC-20 Tokens Work
To
fully understand BRC-20 tokens, it is important to know how Bitcoin Ordinals
operate. A process known as "inscription" enables users to add
additional information to satoshis using the Ordinals protocol, which is a
method for numbering satoshis.
For
setting up token contracts, minting new tokens, and enabling token transfers,
BRC-20 tokens use Ordinals-encoded JSON (JavaScript Object Notation) data.
Presently, the deploy function can be used to create a BRC-20 token, the mint
function to mint an amount of BRC-20 tokens, and the transfer function to
transfer several BRC-20 tokens.
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What
Are the Advantages and Disadvantages of the BRC-20 Token Standard?
Despite
its pros, the deployment, minting, and transfer processes for BRC-20 tokens may
not be user-friendly due to the BRC-20 token standard's recent development.
Additionally, there are not many tools and support services readily available
for BRC-20 tokens.
Advantages
of the BRC-20 Token Standard
Compatibility:
The integration of Bitcoin Ordinals and BRC-20 tokens with the Bitcoin
blockchain is facilitated by their compatibility, allowing for smooth and
seamless interaction.
Simplicity:
The usage of the BRC-20 token standard is made simple by the use of a
streamlined tokenization mechanism.
Security:
The BRC-20 token standard offers excellent security, benefiting from the
inherent strength of the Bitcoin blockchain.
Growth
potential: With the increasing adoption of the BRC-20 standard by various
projects, there is great potential for innovation and the emergence of new use
cases.
Disadvantages
Of The BRC-20 Standard
Lack
of smart contract functionality: Smart contracts are not supported by the
BRC-20 standard, in contrast to other token standards like the ERC-20 standard
used by the Ethereum network.
Reliance
on the Bitcoin blockchain: The BRC-20 standard is subject to network
constraints because it depends on the Bitcoin blockchain for functionality.
Limited
interoperability: The BRC-20 token standard was specifically designed to
operate within the ecosystem of the Bitcoin blockchain.
Limited
utility: The BRC-20 standard is primarily intended for the tokenization of
fungible assets and is not suitable for tokenizing non-fungible assets or
implementing advanced token features like conditional transfer or tokenized
ownership rights.
Relatively
smaller developer community: Fewer developers are working with the BRC-20
standard compared to more widely used token standards like ERC-20.
How
to Buy and Sell BRC-20 Tokens
To
purchase BRC-20 tokens, it is essential to possess a Bitcoin Taproot-enabled
wallet like Ordinals Wallet or UniSat Wallet.
You
can follow these steps to buy and sell:
Step
1: Go to unisat.io and connect your wallet
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Step
2: Navigate to the āMarketplaceā tab and click āMy Inscriptionsā
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Step
3: Select āListā under āMy Inscriptionsā
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Step
4: Select āInscribe Transferā
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Step
5: Select an amount you would like to bundle together for listing and confirm.
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Step
6: Return to "My Inscriptions" after transactions have been
confirmed, and you will find the amount available for listing.
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Step
7: Choose and confirm the price!
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The
Future of the BRC-20 Token Standard
The constant progress within the blockchain technology industry, along with its growing community and expanding user base, has the potential to enhance the usefulness of the BRC-20 token standard. As with any technology that allows for ongoing development, the future of BRC-20 tokens is influenced by the fluctuations and trends of the blockchain industry and token economy. Nevertheless, driven by the current excitement and enthusiasm, the adoption of the BRC-20 standard is expected to increase in the foreseeable future.
DISCLOSURE
Comments here are not of the author's opinion. Users are responsible for their comments.