Bitcoin token standards are groundbreaking innovations in the ever-evolving world of crypto, spearheaded by the emergence of BRC-20 tokens. And now, in comes the ORC-20 token standard to address BRC-20 limitations and add new features for tokenization on the Bitcoin blockchain.
This guide looks at the ORC-20 token standard, how it improves on BRC-20, and the pros and cons of the tokens.
What Is the ORC-20 Token Standard?
ORC-20 is an open token standard for Ordinals on the Bitcoin blockchain created by OrcDAO to overcome BRC-20 constraints and add new functionalities.
ORC-20 token standard maintains backward compatibility with BRC-20 to improve scalability, security, and adaptability. What’s more, it leverages the Unspent Transaction Output (UTXO) model to remove the likelihood of double-spending, an issue experienced by certain BRC-20 tokens.
However, ORC-20 is at its experimental stage, and although the tokens created with this standard hold a lot of promise, there is no guarantee they will last long enough to hold any value or utility.
How Does the ORC-20 Token Standard Improve BRC-20?
The ORC-20 protocol is designed to address the limitations of BRC-20 and facilitate the wider adoption of ordinals. Let’s look at how ORC-20 token standards improve on BRC-20.
Improved Scalability, Security, and Flexibility
Let’s look at how ORC-20 token standards improve on BRC-20.
BRC-20 heavily relies on external centralized indexers for bookkeeping and inscribe transfers. On the other hand, ORC-20 leverages the UTXO transaction model to prevent repeat consumption in transactions, a challenge some tokens face.
UTXO is essential in maintaining security and improving the scalability of the Bitcoin blockchain. It ensures each token can only be spent once, and miners can process different transactions simultaneously. In every transfer, the sender specifies the amount the recipient will receive and whatever balance will be sent back to the sender.
Moreover, the ORC-20 protocol can deploy, mint, send, and upgrade new ORC-20 tokens. It can also migrate existing BRC-20 tokens through a wrapper ordinal. A wrapper ordinal allows you to convert BRC-20 to ORC-20. Senders can also cancel partial transactions up until the final step of the operation.
Wider Range Data Format Support
BRC-20 token standard is limited in several ways, including restricted naming space at four digits, which hinders token branding and identification. ORC-20 has no limit for names and namespaces and has flexible keys. Also, ORC-20 supports a wider range of data formats in JSON format, and all ORC-20 data are case-insensitive.
Whereas BRC-20 has maximum mint values after initial deployment and an immutable supply, ORC-20 protocol allows changing initial and maximum mint values issued.
BRC-20 transfer inscriptions take up too much space and are costly in terms of fees and gas. ORC-20 uses reusable mint and send inscriptions to save space and gas, making transactions faster.
Pros & Cons of ORC-20 Tokens
ORC-20 tokens offer a range of benefits but also have some shortcomings. Here are some ORC-20 pros and cons.
- ORC-20s allow changing initial and maximum mint values
- ORC-20s send transactions that can transfer to multiple receivers
- Use reusable mints and send inscriptions
- All data is case insensitive
- Ability to wrap existing BRC-20 into ORC-20
- Transactions use the UTXO model to prevent double-spending
- Allows canceling partial transactions
- Flexible naming space and incorporates identifiers that can recognize specific tokens
- Migrating from ORC-20 to BRC-20 is immutable and irreversible
- Lacks programmability for smart contract support
- Complicated and centralized standard
- Experimental project with no guarantee for value or utility
The Bottom Line
The ORC-20 token standard introduces key improvements to BRC-20. It opens up new possibilities for the future of Ordinals on the Bitcoin blockchain. However, ORC-20 is an experimental project that may address the limitations of BRC-20 but fails to tackle the biggest limitation of Ordinals, centralized dependence. There is also a lot of criticism of the complexity of ORC-20 and its limited advantages over other ordinal standards.
As an experimental project, many unknowns are attached to ORC-20, with no guarantee of value or utility topping the list. Ultimately, users should do their research on the standard before interacting with the tokens and make informed decisions.