The Web3 market is slowly resurging to where it was during 2021 after taking the wrath of a harsh crypto winter. Similar to how non-fungible tokens (NFTs) found themselves as the center of attraction the last time around, an innovation native to the Bitcoin network has taken the hot seat this time. We are talking about BRC-20 token development that has generated recent buzz in the Web3 space. While it is entirely normal for Web3 natives to pump hype on attractive tech, this one looks more promising than most others, making us wonder how these tokens will pan out amidst the competition, leading to this blog.
Table of Contents
- Bitcoin – The Powerhouse of the Crypto Market
- BRC-20 Token Development: What Is It All About?
- Terms to Know in the BRC-20 Ecosystem
- Why are BRC-20 Tokens Famous Right Now?
- How Does the Future of the Latest Bitcoin Token Standard Look Like?
- Blockchain App Factory – The One-stop Destination for Creating BRC-20 Tokens!
We all know how popular is Bitcoin ($BTC) in the Web3 space. In fact, it is the reason behind the whole Web3 space’s existence. Since its inception in 2009, the Bitcoin network has been prominently used for financial applications powered by BTC, as the network’s community did not think of making changes that could refine it.
Such a stance from the Bitcoin community led to breakthrough innovations like smart contracts that rule today’s Web3. We should note there have been changes and additions to the network, including Stacks (an L2 network), Ordinals, Inscriptions, and now BRC-20 tokens.
Coming to the latest innovation in the Bitcoin ecosystem, BRC-20 token development enables people to create fungible tokens on the Bitcoin blockchain other than BTC. This is a new take on the legendary network (in fact, it made the cut in March 2023), with most classifying it as an experiment.
BRC-20 is the abbreviation for Bitcoin Request Comment – 20 that took inspiration from Ethereum’s ERC-20 token standard. These tokens are minted using the Ordinals protocol that allows random data to be entered into Satoshis, the smallest units of BTC. One should note these tokens exist on-chain, as opposed to other networks like Ethereum, that utilize off-chain decentralized storage systems like IPFS to store data.
Creating a BRC-20 token is relatively easy, as a user should create the data object (like token name, symbol, decimals, total supply, and initial value) to be inscribed on the chain. Then, they can encode the object in an Ordinal address that will be sent to itself through a Bitcoin transaction. This results in the token getting minted.
Transacting BRC-20 tokens also needs the creation of a data object with information like the sender address, receiver address, and the number of tokens to be sent. This object will then be encoded in an Ordinal address and sent to itself, resulting in a successful token transfer.
- Ordinals Protocol – This protocol allows arbitrary data of various formats to be stored on the Bitcoin blockchain. Any data to be stored will be inscribed into Satoshis (SAT), 100,000,000 of which comprise 1 BTC.
- Inscriptions – Inscriptions are the metadata that will be entered into the Satoshis using the Ordinals Protocol. These enable data of various forms to exist on the public Bitcoin network, with a maximum data stored that cannot exceed 4 MegaBytes per Satoshi.
- Taproot Upgrade – The Taproot Upgrade performed on the Bitcoin network in 2021 is the basis for BRC-20 token development, as the standard utilizes a loophole that could ultimately result in being good. The core aim of this upgrade is to batch multiple signatures and transactions together for processing, making it easier and quicker to process transactions on the Bitcoin network.
While at foresight, the buzz around BRC-20 tokens seems like a budding hype bubble, things might be different when we change perspectives. Tokens like $BRCPEPE (similar to the Ethereum-native $PEPE), $MEME, and $PIZZA are trending at the moment, with a market cap racing toward US$1 billion. The buzz is such that popular exchanges like Crypto.com and Gate.io.
The Web3 community always supports ingenious innovations, and the BRC-20 token standard is seen as one. The standard brings more utility to the Bitcoin network, which has, until now, had financial applications. While the Ordinals Protocol brought NFT-like assets into the Bitcoin ecosystem, the BRC-20 standard hints at the possibility of Bitcoin-native crypto coins, which we will look at in the next section.
While the creator of the BRC-20 token standard calls it an experiment, it looks more than an experiment to us. So, we have put forth some points that could pave the way for these tokens in the long run.
- Just like how ERC-20 tokens became the ideal candidate for Initial Coin Offerings (ICOs), BRC-20 tokens could help projects to launch on the Bitcoin network.
- Native tokens for various businesses on the Bitcoin network could be possible using the standard. Even the current buzz is around meme coins that can draw parallels to native tokens.
- The rise of various tokens on the Bitcoin blokchian means they can be utilized for transactions on platforms such as Ordinals marketplaces or Bitcoin decentralized financial applications.
Note these will become a reality if further work on the network level is performed or a workaround system is put in place. This is because the Bitcoin blockchain does not have automated contract provisions to allow tokens to work efficiently across applications, and we can say change is around the corner to extend the funtionality on the network.
At Blockchain App Factory, we always foster innovative attempts in multiple ways. Coming to BRC-20 token development, our experts can create quality tokens on the Bitcoin blockchain network for your business to be prepared for the future. Our dedicated team of developers and researchers can work together to bring utility to your new BRC-20 tokens, making your venture truly an industrial game-changer. Schedule a 1-1 consultation with one of our professionals today by filling out the form below.