What are BRC-20 Tokens on Bitcoin? An Overview of the Fungible Token Standard

What are BRC-20 Tokens

Bitcoin has long been known as a store of value and a decentralized currency. However, with the rise of Ethereum and other smart contract platforms, the possibilities for Bitcoin have expanded beyond just transactions. The creation of BRC-20 tokens is one such example of Bitcoin’s expanding capabilities.

What are BRC-20 Tokens?

What are BRC-20 Tokens

BRC-20 tokens are an experimental fungible token standard for Bitcoin created by Twitter user, @domodata on March 8th, 2023. This token standard allows for the deployment, minting, and transfer of tokens on the Bitcoin blockchain using Ordinal inscriptions of JSON data.

The name “BRC-20” is a play on Ethereum’s ERC-20 token standard, but it is much simpler and is constrained due to the limitations of the Bitcoin blockchain. Despite its limitations, the BRC-20 token standard has garnered significant interest from the Bitcoin community.

The First BRC-20 Token: “Ordi”

The first token contract deployed using the BRC-20 standard was for the “ordi” token. The contract had a limit of 1,000 tokens per mint and a total supply of 21,000,000 tokens. Within 18 hours, all 21,000,000 ordi tokens had been minted, with pending mints for an additional 1,500,000 ordi tokens that were not within the limit.

Ordinal wallets such as Unisat were quick to deploy tooling for the BRC-20 standard, and this led to the deployment of other BRC-20 tokens, with names like “meme,” “punk,” and “doge.” The excitement around BRC-20 led to over 30,000 Ordinal inscriptions in a single day, a record number. However, it also caused a massive increase in Bitcoin transaction fees.

Tips for Minting BRC-20 Tokens

If you are interested in minting BRC-20 tokens, there are a few things to keep in mind. First, choose your inscription service wisely. The token standard specifies that whichever address receives the inscription first holds the tokens. So if you use an inscription service that mints to itself before sending the inscription to you, the inscription service will be the rightful owner of the tokens.

We recommend using Unisat, which has a full guide available. You must use the transfer function to transfer tokens. You cannot transfer tokens by transferring the inscription. You can see specific examples of how to use the transfer functionality from the BRC-20 creator.

Make sure there are tokens left before you mint. In every token deployment, a “max” value and a “limit” value (token limit per inscription) is specified. Once that max value is reached, you cannot mint any more tokens. You can track the number of tokens minted for any ticker at brc-20.io, which updates once per minute.

What’s Next for BRC-20?

The creator of BRC-20 has noted that it’s just an experiment and the tokens are not intended to be worth anything. However, the community seems to be running with the BRC-20 standard, and we are likely to see more tooling to index and manage BRC-20 tokens.

There have been discussions on Twitter about a better fungible token standard on Bitcoin that would not consume as much block space as JSON. The creator of BRC-20 has expressed interest in developing such a standard, so we may see these things come to fruition.

Conclusion

The BRC-20 token standard is an exciting experiment in creating a fungible token standard for Bitcoin. While there are some flaws, there is significant interest and potential for the future of BRC-20 tokens. If you are interested in minting or using BRC-20 tokens, make sure to choose your inscription service wisely, use the transfer function to transfer tokens, and ensure there are tokens left before you mint.

As the Ordinals space is evolving rapidly, it’s important to stay informed about the latest developments and updates. We will do our best to update this article as things change.

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