In January 2023 Bitcoin Ordinals protocol has launched, enabling the creation of NFTs on the Bitcoin network. The protocol also has allowed running an experimental token standard BRC-20 created by a Twitter anonymous user. In a few months since its creation, the total market capitalization of BRC-20 tokens surpassed $1 billion, and the sparkling interest has caused congestion in the Bitcoin network. What are BRC-20 tokens, and how do they work?
To understand BRC-20 token standard, we need to roll back and describe the principles of the Ordinals protocol.
Each Bitcoin is divided into 100,000,000 satoshis, the smallest denomination of the cryptocurrency. The protocol operates with satoshi assigning it an individual number, allowing the creation of unique non-fungible tokens (NFT).
Satoshis are assigned a number based on their order of mining and transfer. While Ethereum NFTs and tokens use smart contracts, ordinals are directly inscribed onto satoshis, ensuring security and inalterability.
As an experiment, the mentioned anonymous creator decided to launch a standard similar to ERC-20 through ordinals and run fungible tokens on the Bitcoin network.
Following the Bitcoin network, BRC-20 tokens ensure the network's security provided by decentralization and PoW consensus mechanism. The tokens are compatible with the Bitcoin blockchain making them easily integrated into the ecosystem. On the other hand, currently, the ecosystem is smaller compared to ERC-20 and Ethereum, and existing solutions need to be more user-friendly. However, enthusiasts believe the new token standard will be a game-changer, and the ecosystem will immediately develop in response to growing interest.
There is a concern about the increase in network fees associated with BRC-20 tokens. They dropped the network at the beginning of May 2023 because of sparkled interest in meme coins. The network average transaction fee increased to $20 from the previous week's average of $1.2.
The first BRC-20 token was created on March 9, 2023, by the anonymous creator we mentioned. ORDI has a supply of 21,000,000 tokens and, by writing, has gained a market capitalization of over $220 million, according to brc-20.io. ORDI picked its all-time high on May 10 at $63.27 after listing on an exchange with over 12 million users. According to Ord.io, there are currently 10,253 wallets holding the token. The token was launched as an experiment, and its creator states on Twitter that mass minting is worthless. At the same time, some consider ORDI "a black swan."
The token also succeeded after listing and shows a market capitalization of over $16.4 million. VMPX reached its all-time high just after the launch at $21.59. VMPX and ORDI are considered the most bullish BRC-20 tokens. VMPX is held in 9,267 wallets.
The meme coin is dedicated to Bitcoin pizza day, the most famous meme story in the crypto era. The token’s market capitalization gained over $10 million with 1,401 holders. The all-time high hit $21.59 while the meme tokens spike.
The meme token is based on the Pepe frog meme. It is the fourth BRC-20 token with over $7.5 million in market capitalization. The token hit its all-time high while meme coins spike at $0.62. PEPE token is held in 4,315 wallets.
The token was launched in April 2023 and reached its highest value of $864 while meme coins surged. MEME token shows a market capitalization of over $7 million and is held in 4,689 wallets.
The token reached a market capitalization of over $8.1 million and hit its all-time high at $1.52. NALS token is held in 2,236 wallets.
Since the BRC-20 token standard is pretty new and the crypto market has yet to explore all opportunities, possibilities and threats, we consider them risky investments. At the same time, we are excited and will keep an eye on their development.
We offer only trustworthy and valued cryptocurrencies and encourage you to do your own research while considering investing.