BRC-20 is a new and increasingly popular token standard for the Bitcoin blockchain. It was launched to compete with Ethereum’s ERC-20 and similar token standards to help boost the popularity and utility of Bitcoin’s blockchain. If you are looking to know more about the BRC-20 token standard or need professional BRC20 token development or marketing services, connect with SAG IPL token development company.
While Bitcoin’s was one of the very first blockchains out there, it has been long outweighed in terms of features and benefits by competitors like ERC-20 (Ethereum) and BEP-20 (Binance). The primary reason for Bitcoin’s diminishing popularity has been its outdated blockchain, which lacked advanced features like interoperability and decentralized app (dApp) development.
However, with the launch of the new BRC20 token standard, things have started shifting in favour of the Bitcoin blockchain, as an increasing number of token developers now seek to benefit from this next-gen blockchain for their fungible tokens.
What is the BRC-20 Token Standard and How is it Different?
The Bitcoin blockchain has been traditionally used for monetary transactions using Bitcoin as a form of digital currency that can be used for secure and low-cost cross-border transactions.
The new Bitcoin standard, BRC-20, takes things one step further and allows the creation of tokens through the Bitcoin blockchain to support tokenization and the creation of new digital assets on this legendary blockchain network. Let’s dive deep into the various capabilities and features of the BRC20 token standard.
What is the BRC-20 token standard?
BRC-20 is an experimental token standard based on ERC-20 of Ethereum and designed for the creation of fungible tokens on the Bitcoin blockchain.
Before BRC20, the Bitcoin blockchain only allowed users to make transactions through its decentralized distributed ledger network using its own Bitcoin. There was no way for users to create new tokens or other digital assets on the Bitcoin network. But, things have changed now.
Who created the BRC-20 token standard?
The BRC-20 token standard was developed and introduced by a famous blockchain influencer, called Domo (real identity unknown), with the vision to expand the utility of the Bitcoin blockchain and provide a cost-effective way to build fungible tokens.
How Does the BRC20 Token Development Work?
The BRC20 token standard makes use of the ordinals protocol to allow the creation of fungible tokens.
Ordinals were introduced by developer Casey Rodarmor on January 20, 2023 as a way to create non-fungible tokens (NFTs) on the Bitcoin network. They were originally meant for creating Bitcoin-based NFTs, but were later repurposed by Domo for use in the BRC-20 standard for building non-fungible tokens.
To learn how the BRC20 token development works, one must first know about the Ordinals protocol.
What are Ordinals?
The major difference between the working mechanisms of the BRC20 token standard and the ERC-20 standard is the ordinals protocol.
Unlike the ERC-20 token standard, which relies on smart contracts to facilitate and verify transactions on the Ethereum network, the BRC-20 standard uses ordinal inscriptions instead.
Ordinals are represented by satoshi tokens and allow users to inscribe data such as code, images and text onto tokens. Each satoshi (ordinal) is a 100-millionth fraction of 1 Bitcoin.
How the BRC20 standard works
The BRC-20 token standard introduces a fascinating approach to creating new fungible tokens by enabling users to embed various types of data onto satoshis, which are essentially fractional units of Bitcoin.
To fully understand the significance of the BRC20 standard, it’s essential to learn the concept of satoshis. A satoshi represents a fraction of a Bitcoin, and it takes 100 million satoshis to form a single Bitcoin. This unique connection between the BRC-20 standard and satoshis distinguishes it from other token standards like ERC-20, TRC-20, and BEP-20.
Unlike other token standards, where smart contracts govern transactions and processes, the BRC-20 standard operates under a different mechanism.
Instead of relying on smart contracts for functionality, it leverages JSON inscriptions to program satoshis. These programmed satoshis are commonly referred to as ordinals. These are non-fungible units and share characteristics similar to nonfungible tokens (NFTs), i.e. cannot be divided or exchanged.
Each ordinal as a non-fungible unit possesses distinct attributes, making it unique in the blockchain network. However, despite their uniqueness, ordinals have certain limitations compared to smart contracts and cannot be programmed to a similar extent.
Ordinals can primarily be used for token minting and transfers only, unlike smart contracts, which offer a broader range of use cases, including decentralized finance and more.
Nevertheless, the BRC20 token standard built on the ordinal protocol has, for the first time in history, enabled developers worldwide to create new fungible tokens on Bitcoin’s network.
In essence, the BRC-20 standard not only provides a way of minting new tokens on the Bitcoin blockchain by incorporating data into satoshis but also creates a unique path in the cryptocurrency landscape in contrast to established token standards.
Similar to ERC-20, BEP-20 tokens and other popular token types BRC-20 tokens are also fungible and can be seamlessly interchanged with other digital assets of equal values.
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BRC-20 Vs. ERC-20 Token Standards
One of the major differences between the BRC-20 standard and the ERC-20 standard of token creation is how they operate.
While the ERC-20 token standard employs the use of smart contracts to govern token creation and transactions on its network, the BRC-20 standard of Bitcoin devises a new way of token creation using ordinal inscriptions.
The BRC20 token standard doesn’t support smart contract functionality.
The BRC20 standard can be used only for token minting and transfer, unlike the ERC-20 standard (smart contracts) which have multiple use cases across industries. The Ethereum standard can be used for creating a variety of tokens such as stablecoins, utility tokens, and governance tokens.
Both BRC-20 and ERC-20 tokens are fungible.
BRC-20 tokens may inherit the Bitcoin network’s limitations, which include low scalability and slow transactions. ERC-20 transactions are faster.
BRC20 tokens can only operate within the Bitcoin blockchain ecosystem, while ERC-20 tokens allow interoperability between smart contracts and blockchains.
ERC-20 tokens use the proof-of-stake (PoS) consensus of the Ethereum blockchain, while BRC-20 tokens follow the proof-of-work (PoW) consensus of Bitcoin.
Advantages & Disadvantages of the BRC-20 Token Standard
As the new BRC-20 token standard enables the creation of fungible tokens on the Bitcoin blockchain network, here we talk about the common pros and cons of this Bitcoin standard.
Pros of the BRC-20 Token Standard:
1. Backed by the Bitcoin Blockchain: BRC20 tokens are built on the Bitcoin network and seamlessly integrate with the Bitcoin blockchain, leveraging its robustness and global acceptance, leading to rapid adoption within the Bitcoin community.
2. Easy to Use: The BRC20 token standard employs a straightforward tokenization process, avoiding complex smart contracts, which can be too difficult to understand or program for some. Users can mint and transfer BRC20 tokens without requiring any technical skills or expertise.
3. Very Secure: Thanks to the incredible security of the Bitcoin blockchain, the BRC-20 standard ensures that the tokens created using this standard inherit exceptional security through decentralization, cryptography, and a proof-of-work consensus mechanism.
4. Poised to Grow: Bitcoin is among the first and most popular blockchain networks out there. Its intense popularity and strong reputation ensure a good adoption rate for BRC20 tokens along with diverse use cases, attracting developers, investors, and users alike.
Cons of the BRC-20 Token Standard:
1. No Support for Smart Contracts: One of the biggest drawbacks of BRC20 tokens is the lack of support for the smart contract functionality, unlike most other standards, including BRC20 and ERC-20, which use smart contracts for automation, transparency, security, and asset management, among other things. It can significantly impact the adoption and popularity of the BRC20 standard.
2. Limitations of Bitcoin Blockchain: The BRC-20 standard built on the Bitcoin blockchain inherits all its features as well as some limitations, including low scalability and slow transaction speeds, which might impact the efficiency and cost-effectiveness of tokens created using this standard.
3. Limited Support for Interoperability: Designed specifically for the Bitcoin ecosystem, the BRC20 standard lacks support for interoperability with other blockchain systems, thereby limiting its tokens’ ability to be seamlessly traded or transferred across diverse networks.
4. Limited Use Cases: Primarily meant for the creation and minting of fungible tokens, BRC-20 has rare utility outside its native blockchain. Unlike ERC-20, it cannot be used for creating complex or specialized token features and might compel developers with advanced requirements to seek other feature-rich token standards.
5. Less Reach & Popularity: As compared to popular standards like ERC-20 and BEP-20, BRC-20 has a relatively smaller developer community because the project is still in the experimental phase. However, this might impact the future growth and progress of this standard.
How to Create/Mint BRC20 Tokens?
To create or mint BRC20 tokens using the BRC20 token standard of Bitcoin, one must find and use a compatible platform, i.e. a website that allows you to mint BRC20 tokens.
When creating a BRC20 token, you’ll have to mention the token attributes such as the token name, sticker, total supply, etc.
To create or mint BRC-20 tokens, one must follow this process:
1. Create a wallet account with a Taproot-enabled Bitcoin crypto wallet provider such as UniSat Wallet or Ordinals Wallet. This step is crucial when either creating or buying BRC20 tokens.
2. Load the wallet with BTC to pay transaction fees when minting or buying BRC-20 tokens.
3. Visit the platform that supports the creation of BRC20 tokens and link your wallet to the website.
5. Select the Bitcoin network fee depending on your requirements and click on “Inscribe” to create the token.
6. Once the transaction is verified and confirmed by the Bitcoin network, your new token will be added to your wallet. Please check your wallet.
In the same way, you can deploy or buy ERC-20 tokens using a compatible wallet and ERC-20 token platform. If you need professional help with creating your BRC-20 token on the Bitcoin blockchain, please contact SAG IPL to hire specialist BRC20 token development services.
How to buy BRC-20 tokens?
You can buy or trade existing BRC20 tokens via a compatible marketplace that supports BRC20 tokens. Before purchasing tokens, you must add Bitcoins to your Bitcoin Taproot-enabled wallet. Only Bitcoin can be used to buy BRC20 tokens.
Once you have Bitcoin in your wallet, link your wallet to the marketplace through which you want to buy BRC-20 tokens. Before purchasing tokens, make sure to check their live price on other websites as well.
Make the payment and purchase your tokens, which should be credited to your linked wallet once the Bitcoin network successfully verifies your payment.
Always buy tokens from a genuine and reliable platform to avoid getting scammed.
BRC20 Token Development & Marketing Services by SAG IPL
If you’re looking to build your crypto token on the BRC-20 token standard of the Bitcoin blockchain, you may need to have specific technical skills and knowledge of programming on the Bitcoin blockchain.
If you’re not already a programmer or want to skip the stress of learning a new programming language to create your BRC20 token, just call SAG IPL to hire expert BRC20 token developers at a competitive price.
Our specialist token developers have skills and experience in a variety of crypto token development and can handle all your BRC20 token development needs, from token deployment to minting and transferring. Contact us to know more.
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