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BRC-20

What Is BRC-20?

BRC-20 is a fungible token issuance standard on the Bitcoin network (similar to ERC-20 on Ethereum). It defines functions for issuing tokens on Bitcoin, including name, total supply, and transfer capabilities. It was created by community enthusiast @domodata on March 8, 2023.

Currently popular BRC-20 tokens include ordi, pepe, punk, bayc, domo, and other Memecoins. Over-the-counter trading is active, and due to speculative value and the wealth effect, a large number of users have downloaded BTC wallets and entered the BTC ecosystem.

How BRC-20 Works

Before explaining the principles, let us first discuss two concepts: Ordinals and Inscriptions.

The smallest unit of Bitcoin is the satoshi (sat), and 1 bitcoin equals 100 million satoshis. The Ordinals protocol was launched on January 21, 2023, by Bitcoin developer Casey Rodarmor. It is a protocol used to number sats, assigning each sat a unique serial number.

Inscriptions can be understood as using the Ordinals protocol to engrave information onto each sat, such as text, images, audio, and video, thereby creating inscriptions.

BRC-20 protocol founder Domo believed that the Ordinals protocol could be used not just for issuing NFTs, but also for issuing fungible tokens. When inscriptions are minted according to a unified protocol standard (JSON data format), fungible tokens can be generated. This method of issuing tokens on the Bitcoin blockchain is called BRC-20.

BRC-20 can be understood as a special type of Ordinals NFT that, by setting inscriptions to a unified JSON data format (text), defines token information including name, symbol, total supply, decimal places, and more. Developers can complete fungible token issuance by following the standard.

JSON (JavaScript Object Notation) is an open standard file format for sharing data that uses human-readable text to store and transmit data.

Therefore, Bitcoin NFT inscriptions engrave different types of information, while BRC-20 token inscriptions under the standard are all unified JSON-formatted text data (Text).

In BRC-20, developers can create and issue tokens on the blockchain through the Ordinal protocol. Inscriptions also serve as the accounting ledger for BRC-20 tokens, used to track every token transfer.