BRC-20, or “Bitcoin Request for Comment,” is a token standard for Ordinals. The standard allows for the issuance and transfer of fungible tokens on Bitcoin similar to the ERC-20 standard on Ethereum however BRC-20 tokens are not compatible with smart contracts. ^{[7] [6] [1]}

Creation

BRC-20 token standards were created and deployed on March 8, 2023 by a pseudonymous programmer named Domo as an experiment to make minting fungible tokens on Bitcoin possible. The first BRC-20 token deployed was called Ordi. ^{[6] [2]}

Overview

BRC-20 tokens utilize Ordinals inscriptions of JSON (JavaScript Object Notation) data to deploy token contracts, mint, and transfer tokens. ^[2] The BRC-20 token standard allows creating a BRC-20 token with the deploy function, minting an amount of BRC-20 tokens with the mint function, and transferring an amount of BRC-20 tokens via the transfer function. ^[2]

The BRC-20 token standard has gained some adoption as people experiment with its capabilities. BRC-20 tokens are fungible, meaning they are interchangeable and easily traded on exchanges3. BRC-20 tokens are built on the Bitcoin protocol, which secures Bitcoin, the world's largest and most valuable cryptocurrencies.

Differences from ERC-20

Despite the similarity in their names, there are significant differences between the two tokens. BRC-20 tokens exist on the Bitcoin network, while ERC-20 is a standard on the Ethereum network2. BRC-20 tokens don’t use smart contracts and, therefore, have much less functionality2. On the contrary, ERC-20 tokens can interact with other protocols and applications to enable a wide range of services, including borrowing and lending. The BRC-20 token standard is an experiment by programmers to facilitate fungibility on the Bitcoin blockchain and was only created in March 2023. Therefore it has had less testing than the ERC-20 standard which was created in 2015. ^[2]

Growth

In May of 2023, less than a month after the token standard was created, BRC-20 passed a market cap of $100 million reaching a high of $137 million on May 2, 2023. In April and May the standard continued to grow and on May 9, the total market capitalization of BRC-20 Bitcoin tokens briefly reached a high of over $1 billion, with a total trading volume of $207.7 million that day. Some of the most notable tokens making up that market cap included ORDI, NALS, VMPX, PEPE and MEME. ^{[4] [5]}

Criticism

The Bitcoin community’s opinion is divided on ordinals and BRC-20. Some have embraced this new experiment, while others believe they go against Satoshi Nakamoto’s original vision of Bitcoin. While BRC-20 usage has grown the token standard is much newer and less tested than token standards like ERC-20. Fewer developers, tools, and resources are available to build and manage BRC-20 tokens since Bitcoin is primarily known as a store of value rather than a platform for creating and managing tokens. ^[3