Introduction
The BRC-20 token are a standard of experimental and inefficient token designed for the creation of fungible tokens on the bitcoin blockchain. Inspired by Ethereum’s ERC-20 tokens, the BRC-20 tokens exploit the protocol of the ordinal Bitcoin to register data on individual Satoshis, making them transferable and negotiable.
Origins of Token BRC-20
The BRC-20 standard was introduced by a pseudonym developer named Domo in March 2023. This development came shortly after the launch of the Bitcoin Ordinals protocol in January 2023 from Casey Rodarmor, which allowed users to register the data on Setoshis individuals, enabling NFT’s creation on Bitcoin Blockchain. The first token BRC-20 sided was “Orti”, which quickly gained popularity and led to the creation of numerous other BRC-20 token.
The introduction of Token BRC-20 was aimed at bringing the flexibility of the fungible tokens to the Bitcoin network, similar to how the ERC-20 tokens have expanded the Ethereum ecosystem. However, the BRC-20 token differ significantly from their Ethereum counterparts in terms of functionality and implementation.
How the BRC-20 token token work
The BRC-20 token use the protocol of the ordinals to register the Json data on Satoshis. These data define the properties and functions of the token, such as distribution, minute and transfer. Unlike the ERC-20 token on Ethereum, the BRC-20 tokens do not use intelligent contracts, making their functionality more limited. However, their simplicity allows a simpler tokens of resources on the Bitcoin network.
Distribution and minting: The process begins with the distribution of a token by registering its properties on a Satoshi. Once distributed, tokens can be coined in specified quantities and transferred between users through Bitcoin transactions. Json data include details such as the name of the token, maximum supply and mining conditions.
Transfers of token: The transfer of Token BRC-20 involves the creation of a new registration that specifies the transfer details. This inscription is therefore included in a bitcoin transaction, making the transfer unchangeable and verifiable on the blockchain.
Pros and cons
Professionals:
- Simplicity: The absence of intelligent contracts simplifies the creation and transfer of token, making it accessible to a wider range of users.
- Safety: Exploiting Bitcoin’s robust security features guarantees a high level of trust and immutability.
Against:
- Lack of intelligent contracts: The inability to use intelligent contracts limits the functionality and potential cases of use of the BRC-20 token.
- Dependence of the network: The BRC-20 token are subject to the definition of the safety and decentralization bitcoin priority compared to the speed of transactions, which can result in higher commissions during high demand periods.
- Network congestion: The popularity and poor design of these tokens have led to an increase in transaction commissions and the congestion of the network, in particular at the time of launch since promotion and popularity are at peak levels. As popularity decreased, even congestion.
- Limited interoperability: Being customized specifically for the Bitcoin network, the BRC-20 token are unable to interact with other blockchain ecosystems.
Practical applications and examples
Decentralized application token: A developer creates a new token for a decentralized application (DAP). Attacking the details of the token in a Bitcoin transaction using the ordinal protocol, the developer can manage the token directly on the bitcoin blockchain without the need for additional levels or complex intelligent contracts. This token can therefore be used within the DAP for various functions, such as access control, prizes or governance.
Tokenized assets: If a company wants to tokenize its activities, such as shares or properties, on the Bitcoin Blockchain, with BRC-20 token, the company can register tokens that represent these activities, allowing a safe and transparent transfer of ownership. This can simplify the process of purchasing, sale or transfer of ownership of these activities while exploiting Bitcoin’s solid security.
Loyalty Points System: A company could implement a loyalty points system using BRC-20 token. By creating and managing loyalty points such as token, customers can earn, transfer and redeem the points directly to the bitcoin blockchain. This guarantees transparency and safety, reducing the risk of fraud and increasing customer trust.
Community token: A community group can decide to create your own token to facilitate various activities and prizes within the community. Using the BRC-20 token, the group can register tokens that members can use for participation in events, vote on community decisions or rewarding contributions. This promotes a sense of ownership and involvement between community members.
BRC-20 tokens are often marketed as solutions for a series of applications as described above, from decentralized apps to tokenized activities, but in practice often attract speculative trading and gambling. While using Bitcoin’s safe network, their main use quickly became creation and negotiation of memes and low -value digital resources and resources. This reflects a wider trend in the world of cryptocurrencies, in which the promise to solve the problems of the real world is often obscured by a focus on short -term earnings and speculative investments. The true value of Bitcoin lies in its safety, decentralization and role of solid money, which is often neglected in the haste to exploit the latest token trends.
Runes protocol: a newer and more efficient solution
The Runes protocol, introduced by Casey Rodamor, has a more efficient and scalable alternative to the BRC-20 token. Using the UTXO model of Bitcoin and the optional OP_Return code, they manage to avoid the creation of Utxos not insignificant, thus reducing the congestion of the network and improving performance. Unlike BRC-20, which is based on Json registrations that can inflate the network, the runes offer a simplified process for the creation and transfer of token, perfectly integrating with the Lightning network and supporting a variety of types of wallets. This makes runes a higher choice for developers who wish to create and manage tokens on the Bitcoin blockchain with greater efficiency and flexibility.