Unveiling the BRC-20 Ecosystem: Navigating Bitcoin's Experimental Fungible Tokens🟧

BRC-20 Paves The Way For Fungible Tokens To Be Hosted On Bitcoin Blockchain

Remember 2021, when NFTs were all the craze? Everyone was introduced to the word Non-fungible. 

However, people quickly pointed out that there were no Non-fungible or fungible tokens on Bitcoin. That is until the Ordinals protocol in 2023. This allowed for the inscription of non-fungible tokens on satoshis; now, BRC-20 paves the way for fungible tokens to be hosted on Bitcoin Blockchain. 

What is BRC-20?

The BRC-20 Token came out of the Ordinals protocol, even though it was not what the protocol was intended for. A psuedoanonymous programmer named Domo created the first BRC-20 token called “Ordi” based on the developments of the Ordinals protocol. Ever since Ordi, hundreds of projects based on BRC-20 have popped up, from meme tokens to utility tokens.

 BRC-20 sets the foundational principles for creating and transferring fungible tokens on the Bitcoin blockchain. It is not one token but a standard for tokens to be created on the Bitcoin blockchain, just like the ERC-20 on Ethereum. However, unlike the ERC-20, it does not use Smart contracts but uses ordinal inscriptions to get the work done. 

The Ordinals Protocol: 

The underlying ordinals protocol needs to be understood to understand the mechanisms of the BRC-20 token. The protocol creates tokens using satoshi’s. Due to the lack of Smart Contracts, the ordinals creates a workaround by appending data on Staoshi’s through inscription. The appended data is JSON inscribed on top of Satoshi’s, making it possible to have more data on the Bitcoin blockchain and making BRC-20 possible. 

In contrast to token standards like ERC-20, TRC-20, and BEP-20, where smart contracts govern pivotal processes, the BRC-20 standard follows a distinctive operational approach. Unlike the versatility of smart contracts in various programming scenarios, ordinals are constrained to token minting and transfers. Smart contracts boast a broader range of applications beyond these basic functionalities. Due to this workaround approach, the security and scalability aspect of BRC-20 may become a problem; however, since Satoshi’s are such a small unit, they ought to be scalable enough. 

What’s the need for BRC-20: 

Even though Bitcoin has become synonymous with blockchain, it has been slow to adopt the cutting edge of blockchain technology; due to its widespread user base and use of old consensus algorithms, it could be better for various blockchain-based applications.

Despite its limitations, it is still the largest blockchain in the world. Still, because of its popularity,  there is a growing demand for the Bitcoin blockchain to evolve and become more scalable. The emergence of BRC-20 is a direct response to this demand, reflecting a collective desire for enhanced functionality within the Bitcoin ecosystem.

First Mover Projects in the BRC-20 ecosystem: 

The BRC-20 ecosystem, in just less than a year, has garnered a lot of positive sentiments. Over half a million tokens have been created on the BRC-20 standard up till now, with a combined market cap of more than $1.5 trillion.

Most notable projects include📍: 

• SATS Ordinals: This meme coin revolves around Bitcoin's smallest unit, the Satoshi. It experiences surges in tandem with positive Bitcoin sentiment. It is boasting an impressive 36,000 holders.

• RATS Ordinals: RATS stands out as an animal-themed BRC-20 token within the Bitcoin network. It underwent quick deployment via the efficient Ordinals protocol, introducing elements of scarcity and uniqueness. 

• Dovi(Ordinals): Dovi represents a community-driven Bitcoin Layer 2 solution designed to be EVM-compatible. With a strong focus on addressing scalability challenges, reducing fees, and establishing a secure consensus mechanism, Dovi aims to create a decentralised and efficient financial ecosystem within the blockchain space.

Conclusion: 

BRC-20 is not a new concept; fungible tokens on the blockchain have been around for half a decade, with standards like ERC-20 and BSC-20. Even though the other standards have very refined blockchains, BRC-20 has become a force in just a short amount of time. Many projects have popped up on the BRC-20 standards, and the number will likely grow, so it’s essential for DYOR to be armed with the best alpha on BRC-20.

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It’s important to note that this research was written for the sake of education and pure entertainment value! 

Please DYOR on every project, and remember, this is not investment advice🙏

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