BRC-20 tokens gained popularity quickly, with meme coin-loving investors pouring millions into these newly minted, Bitcoin-native digital assets. Read on to learn what BRC-20 tokens are, how they work, and discover the most popular ones in today’s market.
What Is the BRC-20 Token Standard?
The BRC-20 Token Standard is an experimental fungible token standard created by a developer using the pseudonym Domo. This new token standard enables users to mint and transfer tokens on the Bitcoin blockchain.
BRC-20 tokens emerged as a thought experiment on whether fungible tokens could be created on Bitcoin after the emergence of Ordinals inscriptions in January 2023.
Under the BRC-20 standard, users can inscribe satoshis through Bitcoin Ordinals. The process produces BRC-20 tokens that resemble Ethereum’s ERC-20 smart contract tokens. However, unlike the latter, BRC-20 tokens are immutable, given that their direct inscription to a satoshi makes it impossible for anyone to modify them.
How Do BRC-20 Tokens Work?
BRC-20 tokens work by using JSON data inscribed on satoshis. Understanding the intricacies of how BRC-20 tokens work requires getting some insight into Bitcoin Ordinals. Under the ordinals protocol, Satoshis are numbered, and users can add extra data during the inscription process.
While Ordinal inscriptions predominantly mark satoshis to make them NFTs, BRC-20 tokens mint satoshis and inscribe them with JSON data on a whole collection of tokens. The process allows programmers to store script files in a satoshi, enabling the generation and transfer of fungible BRC-20 tokens on the Bitcoin base layer.
The Ordinal inscriptions are useful for BRC-20 tokens in contract deployment, minting, and transfers. Using the deploy function, you can create a BRC-20 token. The minting and transfer function help users mint and transfer BRC-20 tokens, as the names suggest.
Top 3 BRC-20 Tokens by Market Cap
Currently, the total value of the BRC-20 token market suggests that this new token standard may be more than just a fad, even if most BRC-20 tokens are meme coins.
Let’s look at the top three BRC-20 tokens by market capitalization (at the time of writing on June 23, 2023), according to data from Ordinals Wallet’s BRC-20 Token listings.
Ordinals Coin (ORDI) stands out as the first cryptocurrency developed under the BRC-20 standard format. Minted by BRC-20 creator Domo, ORDI emerged as the most popular BRC-20 token with a market cap of $161 million as of June 2023.
With an around $15 million market cap, VMPX is a meme coin created by Jack Levin, the founder of XEN Crypto. Levin has committed to equality and fairness by not taking any special token allocation. Currently, there is no clear information regarding the meme coin’s utility. VMPX has no predetermined token supply.
OXBT was launched by the pseudonym NFT creator BitGod, who inscribed on an uncommon Satoshi from 2014, referencing BitMEX’s inception date (BitGod reveres Arthur Hayes, BitMEX’s founder, as one of his idols). With no roadmap published, there is no clear indication of the token’s plans regarding the utility.
The OXBT token’s free minting option allowed first movers to mint tokens by only paying $10 in transaction fees. As of June 23, 2023, the BRC-20 has a market cap of $36 million.
Are BRC-20 Tokens Worth Investing In?
The debate on BRC-20 tokens has centered around slowing down the Bitcoin blockchain and increasing transaction fees. Additionally, the creator has remained adamant that the BRC-20 standard is an experiment with issues that need to be addressed, stating that BRC-20 tokens will likely be worthless.
BRC-20 tokens also face the challenge of a small ecosystem and limited adoption, given how brand new this token standard is. Moreover, a consistent trait of the top BRC-20 projects is the lack of a detailed roadmap. Remember that such projects carry high risks since there is no way of adequately assessing the potential future of these tokens.
Currently, most BRC-20 tokens are probably not worth investing in, especially if you intend to hold your assets for a lengthy period. While short-term gains could’ve made if you manage to get in and out of a BRC-20 token at the right time, the current state of the BRC-20 token market suggests that it is probably too early to start adding this new type of Bitcoin-native asset into your long-term crypto portfolio holdings.