BRC-20 tokens are an experimental token standard on the Bitcoin blockchain. This standard allows the creation of tokens on the Bitcoin network using the Ordinals protocol.

Unlike traditional token standards such as ERC-20 on the Ethereum network, BRC-20 does not require smart contracts to function. Instead, special script files (scripts) are used, inscribed in the blocks of the Bitcoin network, which allow transactions between users.

The script file is written in the attributes of satoshi (sat), the smallest fractional unit of bitcoin.

The experimental format, however, does not prevent developers from developing it. Moreover, within a couple of months, BRC-20 tokens have become extremely popular.

Advantages of BRC-20 tokens

  • Interchangeability.BRC-20 tokens are fungible and similar to ERC-20 tokens on the Ethereum network.
  • Safety. Due to the fact that the tokens are located in the most secure Bitcoin network, the reliability of the assets is unusually high.
  • Compatibility. The standard is designed to work on the bitcoin network, which makes it easy to integrate tokens into exchanges and other centralized and decentralized services.

Despite the obvious advantages (for example, tokens contribute to the spread of bitcoin) and great popularity, the crypto community is in no hurry to rejoice at the emergence of new tokens. Many believe that the concept of new tokens goes against the original vision of the creator of bitcoin, Satoshi Nakamoto.

The ecosystem of BRC-20 tokens in the Bitcoin network is significantly inferior to the Ethereum network and the ERC-20 standard. For the active development of the ecosystem of developers, there is still a critically small amount, and it is growing at a high speed. In addition, BRC-20 tokens create a huge load on the network of the first cryptocurrency. This increases the fees on the network, to the point that they can reach the fees of the Ethereum network, or even higher.

The most famous BRC-20 token is PEPE, which capitalization reached $1 billion in April 2023.

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