BRC20 Token
BRC20 is an experimental token standard that leverages the Ordinal protocol on the Bitcoin blockchain to create and send fungible tokens.
The creator of BRC20 is an anonymous on-chain analyst called Domo. BRC20 is designed to imitate the ERC-20 standard on Ethereum, but there are some essential differences from ERC-20, let’s talk about it next.
What are the characteristics of BRC20? I will propose a simple model to help you understand:
The essence of the blockchain is the storage and interaction of information, and the storage medium is called the carrier. Therefore, a new standard or rule is to solve the three core problems of "what is used as a carrier, how to carry information, and how to transmit information".
Based on the above logic, let's understand the characteristics of brc20:
BRC20 tokens are inscribed directly on Bitcoin's smallest unit, the satoshi, rather than through smart contracts or sidechains. This ensures that BRC20 tokens enjoy the simplicity, immutability, security and durability of Bitcoin itself.
BRC20 tokens can use the Bitcoin blockchain to store and broadcast large amounts of data, such as pictures, videos, music, games, etc. This exploits a vulnerability in the 2021 Taproot upgrade that allows extra data to be added to Bitcoin transactions.
BRC20 tokens can be created, minted and transferred through some basic functions provided by the Ordinal protocol. These functions include deploy, mint, transfer, etc. BRC20 tokens can also be traded and collected on platforms that support the Ordinal protocol.
What are the advantages of BRC20?
BRC20 has the following advantages:
BRC20 tokens can create a new use case for Bitcoin, which is the minting and trading of NFTs (non-fungible tokens). NFT is a unique digital asset that can represent various forms of artwork, collectibles, game props, etc. NFT is already very popular on other blockchains, and BRC20 can allow Bitcoin to participate in this field as well. (this has economic benefits)
BRC20 tokens can use the Bitcoin blockchain to store and broadcast a large amount of data, which can provide more value and functionality for Bitcoin. For example, BRC20 tokens can be used to store and share important information, documents, certificates, etc., or BRC20 tokens can be used to create and play various interesting games.
BRC20 tokens can take advantage of the security and stability of the Bitcoin blockchain, avoiding problems such as attacks, failures, and congestion that may exist on other blockchains. At the same time, BRC20 tokens can also enjoy the decentralization and openness of the Bitcoin blockchain, without the control or intervention of any third-party organization or individual.
What are the disadvantages of BRC20?
BRC20 also has the following disadvantages:
BRC20 tokens are an experimental standard that is not yet widely recognized and supported. Currently, only a few platforms and wallets support BRC20 tokens, and there are still some technical and legal uncertainties and risks. (There is an unknown risk in the immaturity of the standard.)
BRC20 tokens need to consume space and fees on the Bitcoin blockchain, which may affect the efficiency and cost of Bitcoin transactions. If BRC20 tokens occupy too many resources on the Bitcoin blockchain, it may lead to problems such as transaction congestion, rising fees, and network splits.
BRC20 tokens are likely to cause controversy and division in the Bitcoin community, as some see BRC20 tokens as a departure and destruction of Bitcoin’s original design, while others see BRC20 tokens as a push towards innovation and development of Bitcoin and contribute. (Interest issue) My thoughts: I think the advantage of BRC20 tokens is that it can take advantage of the security and stability of the Bitcoin blockchain, as well as the value and influence of Bitcoin itself, to provide users with more choices and experience. However, I also think the downside of BRC20 tokens is that it is an experimental standard that is not yet widely recognized and supported. It means that pits may exist and there are many, and of course there are more opportunities.
