Dive into the meaning of BRC-20, its definition in cryptocurrency, and all the essential details you need to know.
What Is BRC-20?
BRC-20 (Bitcoin Request for Comment) is a token standard inspired by the renowned ERC-20 standard. It enables the minting of fungible tokens on the Bitcoin network. Introduced in March 2023 by a Twitter user named domo (@domodata), BRC-20 leverages Bitcoin's blockchain for token creation.
The Origins of BRC-20
Initially, Bitcoin was solely used for peer-to-peer (P2P) transactions. However, the 2021 Bitcoin Taproot upgrade expanded its capabilities, further enhanced by the Ordinals Protocol in January 2023. This protocol introduced Bitcoin-based non-fungible tokens (NFTs) to the crypto world.
The Ordinals Protocol is a numbering system for satoshi (the smallest unit of BTC), allowing data to be inscribed directly onto the Bitcoin blockchain. These inscriptions facilitate the minting and transfer of fungible tokens.
How BRC-20 Works
BRC-20 uses JSON-based data inscriptions to mimic smart contract functionality on Bitcoin. Here’s an example of the first BRC-20 token, Ordinals (ORDI):
{
"p": "brc-20",
"op": "deploy",
"tick": "ordi",
"max": "21000000",
"lim": "1000"
}- "p": Specifies the token standard.
- "op": Indicates the operation (e.g., deploying ORDI).
- "tick": The token’s ticker symbol.
- "max": Total supply cap (21 million ORDI).
- "lim": Maximum tokens per transaction (1,000).
Since ORDI’s launch, thousands of BRC-20 tokens have emerged, many serving as memecoins like DFUK, OSHI, PEPE, and MEME.
ERC-20 vs. BRC-20: Key Differences
| Feature | ERC-20 (Ethereum) | BRC-20 (Bitcoin) |
|---|---|---|
| Consensus | Proof-of-Stake (PoS) | Proof-of-Work (PoW) |
| Smart Contracts | Yes | No (uses JSON inscriptions) |
| Functionality | Highly versatile | Limited to basic transfers |
| Maturity | Established since 2015 | Experimental (2023) |
👉 Explore Ethereum-based tokens for advanced DeFi applications.
Limitations of BRC-20 Tokens
Despite their popularity, BRC-20 tokens face significant challenges:
- Experimental Nature: Creator domo emphasizes this is a proof-of-concept, not a finalized standard.
- Semi-Fungibility: Tokens can only be traded in predefined amounts, making them semi-fungible.
- Ease of Minting: Low barriers to creation may lead to valueless tokens flooding the market.
FAQ Section
Q: Can BRC-20 tokens replace ERC-20?
A: No. ERC-20 remains superior for complex applications like DeFi due to smart contract support.
Q: Are BRC-20 tokens secure?
A: They inherit Bitcoin’s PoW security but lack the functionality of smart contracts.
Q: What’s the future of BRC-20?
A: Uncertain. While innovative, their utility beyond memecoins is unproven.
👉 Learn more about token standards and their evolving roles in crypto.
Final Thoughts
BRC-20 represents an exciting experiment in Bitcoin’s tokenization, but its long-term viability hinges on broader adoption and enhanced functionality. For now, it remains a niche tool for memecoins and simple asset transfers.