Crypto enthusiasts and Bitcoin believers are actively searching for the next big thing in crypto. With innumerable crypto in the market, why is BRC-20 causing a stir? Is it the next big thing? Can BRC-20 change the crypto game significantly? What are the most popular BRC-20 tokens? Let us find out!
What are BRC-20 Tokens?
Are you familiar with ERC-20? These are developed with the Ethereum network as its backbone. Inspired by the ERC-20 token, BRC-20 tokens were created to build and trade fungible tokens using Ordinals and stored on the Bitcoin base chain. The developers rely on ordinals and inscriptions to mint, transfer tokens and deploy contracts.
A stunning fact about BRC-20 tokens is that they are based on Bitcoin, flexible, and easy to use. Bitcoin is one of the most well-known and secured blockchains. Despite drawing its inspiration from ERC-20, BRC-20 has some striking differences. Firstly, BRC-20 tokens do not rely on smart contracts, which are the basis of all Ethereum-based projects and tokens. Instead, they rely on ordinals and inscriptions.
Ordinals are NFTs built on Bitcoin. Secondly, all Bitcoin users and enthusiasts will love this because BRC-20 tokens require a Bitcoin wallet for minting and trading, giving Bitcoin users an edge. Surprisingly, BRC-20 has been used to mint over 8,500 tokens, most of which are meme coins.
Public Review of BRC-20 Tokens
Crypto users and enthusiasts see BRC-20 tokens as an interesting way to use tokens on the Bitcoin blockchain, even though they are still considered experimental. BRC-20 tokens are being referred to as an answer to one of Bitcoin’s biggest problems: its inability to make smart contracts.
The restriction made it impossible for the Bitcoin system to make fungible tokens. However, by offering a standard protocol for tokens, BRC-20 tokens make it possible to make fungible tokens that can be traded and moved on the Bitcoin blockchain just like any other asset. It’s important to remember that, as with any new technology, using BRC-20 tokens still comes with challenges and risks.
Challenges/Risks Associated with BRC-20
The Bitcoin community does not stand in unity regarding thoughts and opinions on this new development of BRC-20 and its merits. Twitter has been exploding with views, with some users calling it an innovative improvement to the existing technology. On the other hand, others call it a contradictory move from Satoshi Nakamoto’s vision for Bitcoin. Here are a few risks associated with BRC-20:
Restricted ecosystem: BRC-20 has been gaining popularity by the day. However, it is still relatively new compared to ecosystems like ERC-20. BRC-20 does not have many developers, managers, tools, and resources on board for development.
Potential high transaction fees: Rising token activity in BRC-20 has led to higher transaction fees on Bitcoin. This is due to the basic law of economics. Despite the growth in BRC-20 transactions, the increase in transaction fees is a big concern.
Potential Opportunity for BRC-20
BRC-20 is still running in its infant year. However, people are excited to explore its potential and change the crypto game again. Here are a few potential opportunities for BRC-20:
Compatibility: BRC-20 tokens are developed with the Bitcoin network as its foundation, making it compatible and easier to integrate into the BTC ecosystem.
Security: Bitcoin network follows a high-security protocol, which BRC-20 tokens will experience as a byproduct of relying on the network. Bitcoin follows the Proof-of- Work (PoW) consensus, which involves many miners to secure the network.
Alternative to BTC: BRC-20 tokens are highly fungible, meaning they can be easily traded on venues, providing a simple alternative to Bitcoin trading.
Should you invest in BRC-20 tokens?
With the BRC-20 fever soaring, it is only fair to ask this question. However, the BRC- 20 tokens are still in their debut phase with enormous passion from its community. However, only time will reveal BRC-20’s potential and impact on the existing Bitcoin network. Disregarding the popular opinion of being a stagnant cryptocurrency, Bitcoin has taken the plunge to innovate and evolve beyond its initial defined purpose. Despite the acceptance and innovation, it is currently unfair to regard BRC- 20 as the standard protocol for Bitcoin-based tokens. BRC-20’s cause and execution still need to be cautiously verified and not get caught in the hype. With that being said, there is no denying that BRC-20 is showing immense growth potential and is set to play a huge role in the future of blockchain technology.
Ordinal technology is yet to stand the test of time. Until then, we can only hope and prepare for the likelihood of BRC-20 tokens working and matching the hype. Otherwise, the asset’s value may significantly drop once the hype diminishes. Additionally, one must not base their decisions on the past performance of Bitcoin. While it is being guessed that BRC-20 tokens may have the same potential impact
as other tokens built on ERC-20. However, it is too soon to comment or promise. The value of cryptocurrency and virtual digital assets fluctuates rampantly and can lead to huge losses. It is essential to perform your research before making any investment.