2023 has brought quite a few unique surprises to the Bitcoin blockchain. Earlier this year, we witnessed the emergence of Bitcoin NFTs. It appears that an entry ordinal inscriptions It paved the way for further experiments on the Bitcoin blockchain. In fact, the term “experiment” was used by the creator of the BRC-20 token (@domodata on Twitter) himself:
gm. I’m glad some people liked the experience. Some additional notes.
1. This would be worthless. Please do not waste collective money.
2. Due to how some engravers are set up, the “credit” may be minted on the intermediate address used at https://t.co/mja39YGIow…
– domo (domodata) March 9, 2023
While it is a fun experience, there are currently 14,300 BRC-20 tokens created, with a total market cap of $777 million at the time of writing.
While some individuals are reaping profits from the early minting of BRC-20 tokens, others are less than happy, as the appearance of these tokens has created a huge congestion in the blockchain. The congestion was so severe that Binance had to pause BTC transfers due to a large number of pending transactions:
Just in: Binance pauses all # Bitcoin Withdrawals, citing “network congestion problems”.
– Watcher.Guru (WatcherGuru) May 7, 2023
Putting those concerns aside for now, let’s first examine what BRC-20 is. The rapidly evolving landscape of BRC-20 tokens and Ordinals presents both opportunities and challenges. Staying well informed will be crucial to navigating this emerging trend.
What should you know about BRC-20?
To understand the BRC-20, it is important to understand how Ordinals NFTs operate on the Bitcoin network. If you are not familiar with the concept, feel free to explore it This article It delves into ordinal inscriptions.
In essence, BRC-20 is JSON text inserted inside an ordinal. The text shows some direct variables and functions:
- The bar that can be claimed by the first person to post it
- Width max
- Code limit per mint
- Posting, minting and transferring jobs
BRC-20 tokens can be seen as a mix between an NFT and a meme token, with more focus on community and ideology rather than a specific benefit. While the bitcoin network token standard looks similar to ERC-20 which is a widely used token standard on Ethereum, both standards have little in common. ERC-20 is a smart contract that sets a set of rules for creating and managing tokens. On the other hand, the BRC-20 is not fundamentally different from the Ordinals, except that it can have a larger supply. Because BRC-20 lacks smart contract functionality, the tokens are much less flexible than ERC-20 tokens, and cannot offer meaningful use cases. On the plus side, this also means that there is no risk of developers being ‘manipulated’ or manipulating the project by changing functionality, as can happen with Ethereum smart contracts. Such issues are impossible with BRC-20 tokens.
How to buy a BRC-20 token?
In the early days, buying Ordinals NFTs was a difficult process because the decentralized infrastructure and applications to do so were not developed yet. However, the developers have since been able to create a reasonably easy-to-use experience for Bitcoin Tokens.
The go-to solution is UniSat Wallet, which is similar to well-known cryptocurrency wallets like MetaMask. To use it, you will need to create a password and securely store the provided seed phrase. Additionally, you will need some BTC for gas fees in order to perform any actions within the wallet.
Creating your token is as easy as visiting UniSat, selecting “Inscribe”, then selecting “BRC-20”. then:
• Select Publish
• Enter a tag name (maximum of 4 unique words)
• Enter the total width and maximum mint
• Click Next (x2)
• Click on Sumbit & Pay
• Pay using the UniSat wallet
Congratulations! Your token is now forever on the Bitcoin blockchain.
Buying or selling is also relatively easy. You can do this on the UniSat marketplace. The main difference from other more popular crypto markets is that you must have 20 Unisat points to access the market, although demo-only mode is available for browsing Bitcoin tokens. To earn these UniSat points, you need to participate in platform activities.
As mentioned earlier, the emergence of the BRC-20 tokens caused a huge upheaval in the crypto space, splitting Bitcoin enthusiasts into two camps. One group supports the Ordinals and BRC-20 tokens, while the other would prefer the Bitcoin network to remain a store of value, as it was before.
The battle for the future of Bitcoin
While the current utility of these tokens is primarily about representing the value of the communities associated with them, BRC-20 proponents argue that there is potential for future utility and growth as the ecosystem evolves.
At this point, there are no smart contracts on the Bitcoin blockchain, which means there is limited benefit. The only function possible on Bitcoin is value transfer – you can buy a token and exchange it for something else.
However, this may change, and it may even be possible to link BRC-20 tokens to Ethereum, opening up DeFi possibilities. Jack Levin, founder of the Fair Crypto Foundation, recently launched the BRC-20 token VMPX which is currently a token but comes with the promise of future utility. Jack Levine and his team are already working on it. The solution will include a cumulative offering, allowing native BRC-20 tokens to be used within a smart contract-enabled ecosystem, with Bitcoin acting as the settlement layer.
Other BRC-20 proponents also argue that Layer 2 solutions on Bitcoin are inevitable, and the current situation, despite the current challenges, serves as a useful stress test for scaling up and preparing for future challenges when Bitcoin and cryptocurrency enthusiasts skip Web 3 onto the block. adoption.
On the flip side, Bitcoin maxis prefer Bitcoin to remain only as a digital store of value solution. They argue that BRC-20 tokens carry significant risks, as most tokens are designed to make creators rich and carry a lot of risk for investors. Moreover, this diverts capital that would otherwise have remained within Bitcoin itself. The most obvious argument against BRC-20 tokens is, of course, the network congestion and the high gas fees required for the transactions to take place.
The problem has become so severe that Bitcoin’s core developers are taking action against BRC-20 tokens and ordinal numbers:
Bitcoin-core developers want to eliminate tokens and BRC-20
Miners will likely want to double their ordinal count and BRC-20 to increase the fees and value of private memory pools
Ordinals and BRC-20 holders want the right to exist and pursue growth
Civil war https://t.co/QeoAHJpPN4
– Ryan Berckmans ryanb.eth🦇🔊 (@ryanberckmans) May 9, 2023
So what exactly happened? A developer using the alias “Supertestnet” initiated a transaction with no input or output, causing the transaction to be considered an error. Fixed a bug by having the Ordinals protocol ignore the pattern that would change the pattern numbers.
According to Danny Diekroeger, founder of the Bitcoin platform Lightning Deezy, the bug poses no danger to the Ordinals protocol itself. He noted that he believed the writing numbers were already broken early on anyway.
At this point, there is no immediate danger to the protocol, though the long-term consequences remain uncertain. In the short term, those who run indexing software need to handle the bug.
Is it worth following the evolution of the BRC-20 tokens?
The appearance of BRC-20 tokens on the Bitcoin blockchain has sparked excitement and controversy within the crypto community. As the Bitcoin ecosystem continues to evolve, the long-term implications of the BRC-20 tokens and their place in the broader crypto landscape remain uncertain. However, one thing is clear: staying informed and adapting to these emerging trends will be essential for anyone looking to navigate the ever-changing world of cryptocurrency.