Bitcoin, which leads the encryption market , has ushered in its return of value in 2023. After its newborn Ordinals protocol successfully minted BTC NFT, the BRC -20 standard token has also been upgraded and minted . After the prices of a series of meme coins such as $PEPE and $Aidoge went to the moon , funds once again aimed at BRC -20 meme coins . This article will introduce the background , opportunities and risks of BRC -20 in detail, and objectively evaluate its future development.

* This article is only for research and discussion . There may be bias and errors in facts , data , and opinions . It does not constitute any investment advice and does not assume legal responsibility .

♦ BRC -20 is an experimental token standard designed for the Bitcoin blockchain , which only supports the deployment , minting and transfer of tokens , and the tokens do not have any token utility .

♦ BRC -20 has brought a new narrative to BTC , pushing the transaction fee of the Bitcoin blockchain to a peak in May and increasing the income of miners ; but its centralized indexer has security risks , and because the token has no utility , it belongs to a meme coin, so there is a great risk of speculation and hype.

♦ The problem that BRC-20 needs to solve urgently in the future is to successfully release a completely on-chain and trustless indexer. Both UniSat and ALEX are working on solutions in this regard. An effective indexer will further increase the legitimacy of BRC-20; in addition , the infrastructure surrounding BRC -20 has begun to be laid out , developer activities are becoming increasingly active , and the BTC ecosystem is ushering in vitality again .

BRC -20 is the latest innovation of Ordinals protocol . It is an experimental token standard designed for the Bitcoin blockchain . Its name is imitated from Ethereum’s token standard ERC -20, but it does not support the deployment of smart contracts , but only supports for deploying , minting and transferring tokens on the Bitcoin blockchain. BRC-20 was proposed by an anonymous Twitter user Domo @domodata in March 2023. He published a Gitbook article introducing BRC -20 and successfully deployed the first token ORDI based on the BRC-20 standard. One thing to note is that BRC -20 is an interesting experiment and cannot be considered a universal token standard for the Bitcoin blockchain . To put it simply , BRC -20 can be understood as a ledger , which states what coins are to be issued , the total amount of coins , how much can be minted each time , and brief information such as who is transferred to . At this time, a centralized bookkeeper ( or indexer ) needs to write down all the small ledgers, and keeps them updated dynamically. Compared with the realization of Ethereum’s smart contracts through programming , this method will be relatively simple , but at present BRC - 20 is still in a very early stage , and the technology will be further mature .

The market in recent years seems to have reached a consensus that Bitcoin is suitable as a value-stored asset , and Ethereum is suitable for developing various innovative ecosystems. But the emergence of Ordinals has shaken this consensus and injected new vitality into the Bitcoin ecosystem. Launched in January 2023, the Ordinals divides each bitcoin into 100 million satoshis ( sats ) , allowing each satoshi to be identified. Information (such as text, pictures , videos , etc. ) can be attached to a single satoshi to generate a Bitcoin NFT. Satoshis are numbered according to the order in which they were mined and transferred , and transfers are numbered according to the order of transaction inputs and outputs , hence the name "ordinals" (ordinals) . The sequence number of the first satoshi in the first block is 0, the sequence number of the second satoshi is 1, and so on. According to ordinal number theory, these ordinal numbers serve as stable identifiers for data attached to the sat.

BTC NFTs minted by the Ordinals protocol are fundamentally different from traditional NFTs on blockchains such as Ethereum , Solana , and BNB. In traditional NFTs, only Token ID information is stored on the chain . This string of integers will be mapped to the URL for retrieving the meta data of NFT, while NFT metadata is typically stored on IPFS ; in contrast , ordinals in the Ordinals protocol are inscribed directly on individual satoshis, which are then included in blocks on the Bitcoin blockchain. That is, the NFT information is completely on the chain . In this sense, BTC NFTs inherit the simplicity, invariance, security and durability of Bitcoin itself , but because all the information is on the chain , the size of the information contained in NFTs will be limited and cannot be modified , and the storage space of each block is only 4 MB . Blue-chip NFT projects on Ethereum such as Yuga Labs, Crypto Punks, and DeGods on Solana have issued corresponding NFTs in the BTC ecosystem. There are also native NFT projects on BTC such as Pixel Pepes, BTC Machine, JOMO Hippo, etc. As of June 6 , more than 10M of inscriptions have been minted.

If NFT can be generated on satoshi with inscription , then can a similar method be used to generate fungible tokens? BRC-20 provides a possible solution, which enables the inscription to inscript text data (Text) in a unified JSON (JavaScript Object Notation) format, and successfully generates fungible tokens . Domo also deployed the first BRC-20 token ORDI , with a total of 21,000,000 tokens , limited to minting 1,000 tokens each time, and was minted within 18 hours. Since then, various Bitcoin wallet projects (such as Unisat) have rapidly deployed relevant tools to support BRC -20 standard token transactions. A large number of BRC -20 standard tokens have been launched , but almost all of them are meme coins without any practical use. While Domo has made it clear against speculation using BRC -20, memecoin funds have poured into the Bitcoin ecosystem over the past month. According to data from brc-20.io , as of June 6 , there were 24,667 BRC - 20 tokens with a total market capitalization of $475,058,296, of which ORDI ranked first in market capitalization , but the price of ORDI tokens has fallen by more than 70% . It is self-correcting to find a stable balance .

The ERC-20 token standard is the most widely used token standard on Ethereum (it stands for Ethereum Draft No.20 ), and is the technical standard for all Ethereum-based assets. ERC-20 defines:

• Token balances: how the Ethereum network records and tracks wallet balances;

• Transfer function: how tokens are sent between wallet addresses, verifying that the sender has sufficient funds;

• Token supply: how many tokens exist and whether they can be minted or burned ;

• Token metadata: the name of the token, its logo and the number of decimal places displayed;

• Permission : parameters that allow certain wallet addresses to spend tokens on behalf of users;

• Events: Allow tokens to initiate events on the blockchain , which can be captured and used by other smart contracts or applications;

• Interface: A common interface for the token to standardize the interaction between contracts and applications.

  Compared with ERC -20 , the function of BRC-20 is very simple and rough:

• where p = protocol name, op = operation, tick = ticker/identifier, max = maximum supply, lim = minting limit, amt = amount .

3.1 Miners ' income increased

Transaction fees have always been the most discussed topic in Bitcoin . According to Bitcoin's model design , miners, as the guardians of network security , can get two types of incentives : block rewards and transaction fees . Block rewards are halved every four years until they return to zero , so transaction fees are particularly important for miners in the later stage , but before this year , Bitcoin can only be used for asset transfers , and miners can only get very limited income from transaction fees . However, according to the data provided by the block , the proportion of transaction fees in miners’ income reached its peak in May this year , and the previous peaks occurred at the end of 2017 and the first half of 2021 , both of which are bull markets . At present, the market is still in a bear market . This wave of peaks is largely due to the Ordinals protocol and BRC -20, which has rekindled the vitality of Bitcoin , built a large imagination space for participants , and released a large amount of market demand for Bitcoin. ; but at the same time , high transaction fees have also reduced the accessibility of the Bitcoin blockchain to a certain extent , and it remains to be seen whether the surge in fees will continue .

3.2.1 Security Risks BRC-20 was conceptualized only a few months ago , and the whole story is still in a very early stage , and the related infrastructure is extremely imperfect , such as the centralized indexer mentioned above. Because BRC-20 tokens cannot be query the relevant information of tokens by running the smart contract like ERC-20 , it needs to query off the chain by using the centralized server to retrieve the Bitcoin block, and record the deployment, minting and transfer of all BRC-20 tokens operation , so as to query the final balance of each user's BRC-20 token. In other words , although the ledger of BRC-20 is decentralized, the settlement process is centralized.

3.2.2 Speculation Risks Although tokens related to the BRC -20 standard, including ORDI, were not minted for hype at the beginning , the market needs hot spots, and funds will follow hot spots crazily. The price of the No. 1 ORDI token has plummeted . After the FOMO sentiment , the market has begun to return to rationality and re-find a balance point. After all, BRC-20, as a meme coin, has no real token utility and has poor liquidity . There is no market for the high price.

At present, there are many disputes about whether BRC-20 is benign for the development of the BTC ecosystem. Judging from the discussions on the Bitcoin Core Developers Forum, the biggest disagreement lies in how to use the BTC ledger space. The opposition believes that BTC, as a distributed decentralized ledger, can only be used for BTC transfers and value storage , while the Ordinals protocol and BRC-20 have caused serious network congestion and occupied the ledger space. Those who violate this law are infringing on the security and value of BTC; while those who support or do not oppose BTC -20 believe that this phenomenon meets the needs of users and endows BTC with new vitality and potential. For example , the NFT information on the Ordinals protocol is completely stored on the chain. Such storage method is more trustworthy than the centralized storage of traditional NFTs. This idea also brings new development directions and space for NFTs ; BRC -20 tokens can be traded on exchanges. With more liquidity, there is hope to add another touch to the narrative of BTC - Fi . Just as Satoshi Nakamoto answered the question of miners in 2010 -- what should I do if the mining output is very low in the future -- he said: " I'm sure that in 20 years, the transaction volume of Bitcoin will either be large or none. " Then BRC -20 is one of the solutions to change the status quo of the small transaction volume of Bitcoin . After all, the transaction scale of Bitcoin in recent years has not met its grand goal , but even if there is no BRC-20, as long as a few million people start using Bitcoin, transaction fees will also soar , so from another perspective , we can take this soaring fee and network congestion as a warning. If Bitcoin really wants to become a global P2P payment system for billions of people in the future , there is still a long way to go. .

As its founder domo said in the recent Twitter space, his first goal is to successfully release a fully on-chain and trustless indexer. Indexers are software that read the Bitcoin chain and compile all transactions to create and maintain an agreed-upon global state of equilibrium. Both UniSat and ALEX are working on solutions in this regard, and an effective indexer will be crucial to further increase the legitimacy of BRC-20. In addition , the infrastructure surrounding BRC -20 has already begun to lay out . According to the official announcement of the Bitcoin Frontier Fund , its accelerator program has launched 8 start-up companies, which are working on various solutions, from ordinal lending to Bitcoin Web3 games development kit, and then to the ordinal cross-chain bridge. Developer activity is a key indicator to measure ecosystem’s potential . We can see that even though the initial design of BRC -20 is relatively simple , it has successfully attracted more developers and aroused the enthusiasm of more developers . Although we are still highly cautious about BRC -20- related tokens at this stage from an investment point of view , its attempts and contributions to the prosperity of the BTC ecosystem deserve recognition and long-term attention .

Bitcoin, which leads the encryption market , has ushered in its return of value in 2023. After its newborn Ordinals protocol successfully minted BTC NFT, the BRC -20 standard token has also been upgraded and minted . After the prices of a series of meme coins such as $PEPE and $Aidoge went to the moon , funds once again aimed at BRC -20 meme coins . This article will introduce the background , opportunities and risks of BRC -20 in detail, and objectively evaluate its future development.

* This article is only for research and discussion . There may be bias and errors in facts , data , and opinions . It does not constitute any investment advice and does not assume legal responsibility .

♦ BRC -20 is an experimental token standard designed for the Bitcoin blockchain , which only supports the deployment , minting and transfer of tokens , and the tokens do not have any token utility .

♦ BRC -20 has brought a new narrative to BTC , pushing the transaction fee of the Bitcoin blockchain to a peak in May and increasing the income of miners ; but its centralized indexer has security risks , and because the token has no utility , it belongs to a meme coin, so there is a great risk of speculation and hype.

♦ The problem that BRC-20 needs to solve urgently in the future is to successfully release a completely on-chain and trustless indexer. Both UniSat and ALEX are working on solutions in this regard. An effective indexer will further increase the legitimacy of BRC-20; in addition , the infrastructure surrounding BRC -20 has begun to be laid out , developer activities are becoming increasingly active , and the BTC ecosystem is ushering in vitality again .

BRC -20 is the latest innovation of Ordinals protocol . It is an experimental token standard designed for the Bitcoin blockchain . Its name is imitated from Ethereum’s token standard ERC -20, but it does not support the deployment of smart contracts , but only supports for deploying , minting and transferring tokens on the Bitcoin blockchain. BRC-20 was proposed by an anonymous Twitter user Domo @domodata in March 2023. He published a Gitbook article introducing BRC -20 and successfully deployed the first token ORDI based on the BRC-20 standard. One thing to note is that BRC -20 is an interesting experiment and cannot be considered a universal token standard for the Bitcoin blockchain . To put it simply , BRC -20 can be understood as a ledger , which states what coins are to be issued , the total amount of coins , how much can be minted each time , and brief information such as who is transferred to . At this time, a centralized bookkeeper ( or indexer ) needs to write down all the small ledgers, and keeps them updated dynamically. Compared with the realization of Ethereum’s smart contracts through programming , this method will be relatively simple , but at present BRC - 20 is still in a very early stage , and the technology will be further mature .

The market in recent years seems to have reached a consensus that Bitcoin is suitable as a value-stored asset , and Ethereum is suitable for developing various innovative ecosystems. But the emergence of Ordinals has shaken this consensus and injected new vitality into the Bitcoin ecosystem. Launched in January 2023, the Ordinals divides each bitcoin into 100 million satoshis ( sats ) , allowing each satoshi to be identified. Information (such as text, pictures , videos , etc. ) can be attached to a single satoshi to generate a Bitcoin NFT. Satoshis are numbered according to the order in which they were mined and transferred , and transfers are numbered according to the order of transaction inputs and outputs , hence the name "ordinals" (ordinals) . The sequence number of the first satoshi in the first block is 0, the sequence number of the second satoshi is 1, and so on. According to ordinal number theory, these ordinal numbers serve as stable identifiers for data attached to the sat.

BTC NFTs minted by the Ordinals protocol are fundamentally different from traditional NFTs on blockchains such as Ethereum , Solana , and BNB. In traditional NFTs, only Token ID information is stored on the chain . This string of integers will be mapped to the URL for retrieving the meta data of NFT, while NFT metadata is typically stored on IPFS ; in contrast , ordinals in the Ordinals protocol are inscribed directly on individual satoshis, which are then included in blocks on the Bitcoin blockchain. That is, the NFT information is completely on the chain . In this sense, BTC NFTs inherit the simplicity, invariance, security and durability of Bitcoin itself , but because all the information is on the chain , the size of the information contained in NFTs will be limited and cannot be modified , and the storage space of each block is only 4 MB . Blue-chip NFT projects on Ethereum such as Yuga Labs, Crypto Punks, and DeGods on Solana have issued corresponding NFTs in the BTC ecosystem. There are also native NFT projects on BTC such as Pixel Pepes, BTC Machine, JOMO Hippo, etc. As of June 6 , more than 10M of inscriptions have been minted.

If NFT can be generated on satoshi with inscription , then can a similar method be used to generate fungible tokens? BRC-20 provides a possible solution, which enables the inscription to inscript text data (Text) in a unified JSON (JavaScript Object Notation) format, and successfully generates fungible tokens . Domo also deployed the first BRC-20 token ORDI , with a total of 21,000,000 tokens , limited to minting 1,000 tokens each time, and was minted within 18 hours. Since then, various Bitcoin wallet projects (such as Unisat) have rapidly deployed relevant tools to support BRC -20 standard token transactions. A large number of BRC -20 standard tokens have been launched , but almost all of them are meme coins without any practical use. While Domo has made it clear against speculation using BRC -20, memecoin funds have poured into the Bitcoin ecosystem over the past month. According to data from brc-20.io , as of June 6 , there were 24,667 BRC - 20 tokens with a total market capitalization of $475,058,296, of which ORDI ranked first in market capitalization , but the price of ORDI tokens has fallen by more than 70% . It is self-correcting to find a stable balance .

The ERC-20 token standard is the most widely used token standard on Ethereum (it stands for Ethereum Draft No.20 ), and is the technical standard for all Ethereum-based assets. ERC-20 defines:

• Token balances: how the Ethereum network records and tracks wallet balances;

• Transfer function: how tokens are sent between wallet addresses, verifying that the sender has sufficient funds;

• Token supply: how many tokens exist and whether they can be minted or burned ;

• Token metadata: the name of the token, its logo and the number of decimal places displayed;

• Permission : parameters that allow certain wallet addresses to spend tokens on behalf of users;

• Events: Allow tokens to initiate events on the blockchain , which can be captured and used by other smart contracts or applications;

• Interface: A common interface for the token to standardize the interaction between contracts and applications.

  Compared with ERC -20 , the function of BRC-20 is very simple and rough:

• where p = protocol name, op = operation, tick = ticker/identifier, max = maximum supply, lim = minting limit, amt = amount .

3.1 Miners ' income increased

Transaction fees have always been the most discussed topic in Bitcoin . According to Bitcoin's model design , miners, as the guardians of network security , can get two types of incentives : block rewards and transaction fees . Block rewards are halved every four years until they return to zero , so transaction fees are particularly important for miners in the later stage , but before this year , Bitcoin can only be used for asset transfers , and miners can only get very limited income from transaction fees . However, according to the data provided by the block , the proportion of transaction fees in miners’ income reached its peak in May this year , and the previous peaks occurred at the end of 2017 and the first half of 2021 , both of which are bull markets . At present, the market is still in a bear market . This wave of peaks is largely due to the Ordinals protocol and BRC -20, which has rekindled the vitality of Bitcoin , built a large imagination space for participants , and released a large amount of market demand for Bitcoin. ; but at the same time , high transaction fees have also reduced the accessibility of the Bitcoin blockchain to a certain extent , and it remains to be seen whether the surge in fees will continue .

3.2.1 Security Risks BRC-20 was conceptualized only a few months ago , and the whole story is still in a very early stage , and the related infrastructure is extremely imperfect , such as the centralized indexer mentioned above. Because BRC-20 tokens cannot be query the relevant information of tokens by running the smart contract like ERC-20 , it needs to query off the chain by using the centralized server to retrieve the Bitcoin block, and record the deployment, minting and transfer of all BRC-20 tokens operation , so as to query the final balance of each user's BRC-20 token. In other words , although the ledger of BRC-20 is decentralized, the settlement process is centralized.

3.2.2 Speculation Risks Although tokens related to the BRC -20 standard, including ORDI, were not minted for hype at the beginning , the market needs hot spots, and funds will follow hot spots crazily. The price of the No. 1 ORDI token has plummeted . After the FOMO sentiment , the market has begun to return to rationality and re-find a balance point. After all, BRC-20, as a meme coin, has no real token utility and has poor liquidity . There is no market for the high price.

At present, there are many disputes about whether BRC-20 is benign for the development of the BTC ecosystem. Judging from the discussions on the Bitcoin Core Developers Forum, the biggest disagreement lies in how to use the BTC ledger space. The opposition believes that BTC, as a distributed decentralized ledger, can only be used for BTC transfers and value storage , while the Ordinals protocol and BRC-20 have caused serious network congestion and occupied the ledger space. Those who violate this law are infringing on the security and value of BTC; while those who support or do not oppose BTC -20 believe that this phenomenon meets the needs of users and endows BTC with new vitality and potential. For example , the NFT information on the Ordinals protocol is completely stored on the chain. Such storage method is more trustworthy than the centralized storage of traditional NFTs. This idea also brings new development directions and space for NFTs ; BRC -20 tokens can be traded on exchanges. With more liquidity, there is hope to add another touch to the narrative of BTC - Fi . Just as Satoshi Nakamoto answered the question of miners in 2010 -- what should I do if the mining output is very low in the future -- he said: " I'm sure that in 20 years, the transaction volume of Bitcoin will either be large or none. " Then BRC -20 is one of the solutions to change the status quo of the small transaction volume of Bitcoin . After all, the transaction scale of Bitcoin in recent years has not met its grand goal , but even if there is no BRC-20, as long as a few million people start using Bitcoin, transaction fees will also soar , so from another perspective , we can take this soaring fee and network congestion as a warning. If Bitcoin really wants to become a global P2P payment system for billions of people in the future , there is still a long way to go. .

As its founder domo said in the recent Twitter space, his first goal is to successfully release a fully on-chain and trustless indexer. Indexers are software that read the Bitcoin chain and compile all transactions to create and maintain an agreed-upon global state of equilibrium. Both UniSat and ALEX are working on solutions in this regard, and an effective indexer will be crucial to further increase the legitimacy of BRC-20. In addition , the infrastructure surrounding BRC -20 has already begun to lay out . According to the official announcement of the Bitcoin Frontier Fund , its accelerator program has launched 8 start-up companies, which are working on various solutions, from ordinal lending to Bitcoin Web3 games development kit, and then to the ordinal cross-chain bridge. Developer activity is a key indicator to measure ecosystem’s potential . We can see that even though the initial design of BRC -20 is relatively simple , it has successfully attracted more developers and aroused the enthusiasm of more developers . Although we are still highly cautious about BRC -20- related tokens at this stage from an investment point of view , its attempts and contributions to the prosperity of the BTC ecosystem deserve recognition and long-term attention .