Binance NFT Marketplace Launches Support for Bitcoin NFTs

TLDR;

• The BRC-20 token standard is a fungible token standard designed for the Bitcoin blockchain, created using the Ordinals protocol.
• Inscriptions are like NFTs created on Satoshis, allowing individuals to have identities and transfer them across transactions.
• BRC-20 tokens are not EVM compatible and do not support smart contracts, limiting the ecosystem and adoption, but provide first-class security through Bitcoin’s PoW mechanism.
• Over 14,000 BRC-20 tokens have been issued, with ORDI, PIZA, MEME and MOON being the most popular.

Origins of the BRC-20 Token Standard

BRC-20 is one to watch in the blockchain industry. The fungible token standard designed for the Bitcoin blockchain is the talk of the crypto space, along with the ongoing memecoin trend.

The BRC-20 token standard was created using Ordinals and Inscriptions, stored on the Bitcoin base chain. Therefore, the token standard originates from the creation of the Ordinals protocol, which allows users to enter any file on the chain of Bitcoin.

When Casey launched the Ordinals protocol in January 2023, he found a way to index each Satoshi and track it through the Bitcoin network. Satoshi is the smallest unit in Bitcoin. These Satoshi can be entered with arbitrary content, releasing native Bitcoin digital collectibles or Non-Fungible Tokens (NFT).

Simply put, inscriptions like NFTs are created on Satoshis, which are tracked and transferred using ordinal theory, giving individuals identities and allowing them to be shared across transactions. They are as durable, immutable, secure and decentralized as Bitcoin.

On the other hand, Home dataMarch 8, theorized to create a fungible token called BRC-20 with a similar mechanism on the Ordinals protocol. His theory stated that anyone could write JavaScript Object Notation (JSON) on Bitcoin using the Ordinals protocol to distribute token contracts to mint and transfer tokens. Now JSON can be written to Satoshis to create tokens that can be traded like other assets.

Is ERC-20 equal to BRC-20?

Now that you know BRC-20 tokens can be transferred on the blockchain, are they similar to Ethereum’s original token standard? The answer is no.

The BRC-20 token standard uses the Proof Of Work (PoW) mechanism, while the ERC-20 uses the Proof Of Stake (PoS) mechanism.

The significant difference between both networks is EVM compatibility. BRC-20 does not support smart contracts, which allows developers to create various programmable tokens and financial products. Despite this limitation, the blockchain recently crossed $6 billion in market capitalization a few months after launch.

According to BSC News’ recent article, over 14,000 BRC-20 tokens have been issued, with the most popular being ORDI, PIZA, MEME, and MOON. ORDI was the first BRC-20 token designed as a meme to reveal the token standard’s potential in the industry.

Advantages and limitations

The BRC-20 token standard has advantages and limitations. Some of the benefits include fungibility, security and compatibility. However, it is limited in the sense that it is not EVM compatible.

Although not EVM compliant, developers cannot access or build a few resources on the network. This can lead to a smaller ecosystem and limited adoption. Meanwhile, there is also a high chance of increased gas charges on the network because BRC-20 consumes valuable block space, including network congestion.

Even with these limitations, Bitcoin’s security is top notch. Its PoW mechanism makes it difficult for hackers to penetrate and ensures that users get the best experience of transferring tokens on the blockchain.

The Bitcoin blockchain is unique because it cannot be used to produce other tokens, unlike the Ethereum Network. The introduction of BRC-20 and Ordinals will eventually pave the way for more possibilities on the Layer-1 blockchain.

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