BRC 20 is a token standard that was created by an anonymous Twitter user called “@domodata” on March 8, 2023. 

Updated the gitbook to address common questions and my intentions for the experiment going forward.https://t.co/h6fksQ1oAe

— domo (@domodata) March 10, 2023

In the crypto market, token standards specify how and where a coin can be used. There are different standards for crypto tokens on different blockchains. These include ERC-20 for Ethereum network, BEP-20 for Binance smart chain , TRC-20 Tron network, and now BRC-20.

“The idea of BRC-20 is to create fungible tokens via the ordinals protocol. However it doesnt use smart contract, it only requires a bitcoin wallet to mint and trade tokens. There are 14,079 tokens fast approaching $1Bn market cap”

What is BRC20

BRC-20 is an experimental token standard inspired by the Ethereum ecosystem’s ERC-20 tokens. BRC-20 enables developers to quickly create and trade fungible tokens on the Ordinals platform. These tokens are produced with the aid of Ordinals and Inscriptions and kept on the Bitcoin base chain. Programmers employ ordinal inscriptions of JSON data to deploy token contracts, mint tokens, and transfer them.

Developers and investors prefer the BRC-20 standard’s simplicity and versatility. Its basis on Bitcoin, one of the most secure blockchains, seems to have increased its attractiveness. BRC-20 differs from Ethereum’s ERC-20 while being inspired by it. BRC-20 coins are not smart contract-based like ERC-20. Ordinals and Inscriptions power them. BRC-20 tokens are easier for Bitcoin users to manufacture and exchange since they require a Bitcoin wallet.

Why BRC20

In simple terms, BRC20 is the latest trend in the cryptocurrency ecosystem. Bitcoin maximalist are excited about what can be done with the bitcoin base chain, starting with Ordinals & Inscriptions and now BRC20

In the voice of the creator “This is just a fun experimental standard demonstrating that you can create off-chain balance states with inscriptions. It by no means should be considered THE standard for fungibility on bitcoin with ordinals, as I believe there are almost certainly better design choices and optimization improvements to be made. Consequently, this is an extremely dynamic experiment, and I strongly discourage any financial decisions to be made on the basis of it’s design. I do, however, encourage the bitcoin community to tinker with standard designs and optimizations until a general consensus on best practices is met (or to decide that this is a bad idea altogether!).” source: https://domo-2.gitbook.io/brc-20-experiment/

The first BRC20 Token – “ordi” token

The “ordi” token contract was the first to be launched, with a maximum of 1,000 tokens per mint and 21,000,000 tokens in circulation. 

Ordinal wallets like Unisat were quick to implement BRC-20 standardization tools, and all 21,000,000 ordi tokens were minted in just 18 hours, with mints for an extra 1,500,000 ordi tokens that were over the limit still waiting.

What next for BRC20

The community–and builders like Unisat–seem to be running with the BRC-20 standard even though the creator has pointed out repeatedly that it’s just an experiment, it has issues, and the tokens may not be worth anything.

So while there’s room for improvement and a better standard, it’s likely that we’ll see tooling to index and manage BRC-20 tokens better as well as more degenerate speculation from users. Users will ascribe value to BRC-20 tokens even if a better standard is deployed.

Conclusion

BRC-20 is an interesting experiment in creating a fungible token standard for Bitcoin–with a bunch of flaws. Still, we are likely to see a lot of tooling pop up to deploy, mint, send, and receive BRC-20 tokens.