What are BRC-20 tokens?
BRC-20 Tokens are a novel standard on the Bitcoin blockchain, BRC-20 tokens were inspired by Ethereum's ERC-20. Like Ethereum ERC-20 strands for ether Request for Comment, BRC-20 is also blocked for Bitcoin Request for Comment.
BRC-20 tokens enable the creation, minting, trading and transfer of fungible tokens or assets on the Bitcoin blockchain via the Ordinals Protocol. The Bitcoin Protocol ordinals is a numbering system that allows users to attach additional data to satoshis, the smallest unit of Bitcoin.
The process of attaching additional data to Satoshis is called inscription. BRC-20 tokens do not require smart contracts to execute transactions like ERC-20 tokens do, their transactions are processed through them JSON inscriptions on Satoshis through Bitcoin Ordinals.
Differences and comparison between BRC-20 and ERC-20
Ethereum's ERC-20 may have inspired the development of BRC-20 on the Bitcoin blockchain, but make no mistake, they are not the same and we will explore that in this section of this article.
Operation: One of the key differences between BRC-20 and ERC-20 is that BRC-20 tokens find their home on the Bitcoin blockchain, while ERC-20 runs on the Ethereum blockchain.
Implementation: BRC-20 and ERC-20 are both implemented differently; However, BRC-20 is experimental, meaning it has not been subjected to the BIP process. It only implements changes in the Bitcoin protocol, while ERC-20 has gone through the EIP process, which was approved by the Ethereum community after extensive review before implementation.
Security: They are both secure as they are both protected by the two leading blockchains in the crypto space, but BRC-20 is secured by the Bitcoin blockchain and ERC-20 is secured by the Ethereum blockchain.
High gas fee or transaction fees: Both incur high gas fees when trading on decentralized exchanges (DEXs).
Purses: Your wallets are different. You can store your BRC-20 token on wallets that support the Bitcoin Taproot upgrade such as Unisat, Xverse, CoinW and Alex. While ERC-20 tokens are stored on Ethereum supported wallets such as Metamask, Exodus, Trust Wallet, Atomic, MyEtherWallet and all compressible EVM wallets
Smart contract functionality: BRC-20 tokens do not rely on smart contracts to execute transactions, but ERC-20 tokens do.
Token Value Drive: BRC-20 tokens are token values determined by inscriptions, and ERC-20 token values are determined by utilities and speculation.
Fungibility: BRC-20 tokens are semi-fungible as they are only exchanged in set increments. For example, BRC-20 tokens are sold in sets, so you won't be able to buy 1003 xBRC-20 tokens (x is the token) if the only sellers decide to sell in sets of 250, 500, 750 and 1000 of them, how many tokens you want to sell. ERC-20 tokens are now completely fungible as they can be exchanged in any quantity.
Features: The BRC-20 token standard is currently primarily used to create meme tokens, while the ERC-20 token standard is used for a large number of fungible tokens on Ethereum, including stablecoins, governance tokens, wrapped tokens and utility -Tokens.
Benefits of the BRC-20 token standard
The fact that BRC-20 tokens are based on the most secure blockchain in the Bitcoin crypto space should help you understand that these tokens will benefit from the security that the Bitcoin blockchain offers.
Interoperability with the Bitcoin network is one of the main advantages of the BRC-20 tokens, as they enjoy and leverage the wide acceptance of Bitcoin as the most successful cryptocurrency, which has contributed to the overall success of the BRC-20 token. Additionally, this compatibility with Bitcoin allows the BRC-20 standard to access the existing infrastructure of the Bitcoin network, including its wallets and exchanges.
The BRC-20 standard is still in its early stages, so there is huge potential for growth in the future as more people adopt and invest in BRC-20 tokens
Disadvantages of the BRC-20 token standard
Because the BRC-20 token standard leverages the advantages of the Bitcoin network, it will still be affected in the areas where Bitcoin lags behind. This is because Bitcoin is not as scalable as some other blockchains such as Ethereum. As BRC-20 tokens become more popular and well-known, there are concerns about congestion, which could potentially lead to higher gas or transaction fee issues.
Another consideration is that BRC-20 tokens run on the Ordinal Protocol, a protocol that is still in the early stages of development, meaning there is a possibility that it will be vulnerable or experience glitches as the technology evolves.
The Bitcoin Request for Comment (BRC-20) token standard is still in the early stages of development, so it is safe to say that it is still semi-fungible compared to the ERC-20 token standard. There are some limitations: for example, it can be sold and bought in sets, you are limited to what is available on the DEX marketplace, and you cannot buy any quantity you want, either large or small.
BRC-20 tokens DEX exchanges
This article describes how to trade Bitcoin Request for Comment (BRC-20) tokens UniSat, the most widely used decentralized exchange (DEX) for trading BRC-20 tokens. You can also look at other DEXs Xverse And Alex.
How to install and set up UniSat Wallet
To trade on a decentralized exchange (DEX), you need a wallet. Go to your Chrome browser and search UniSat Wallet extension Click as shown below “Add to Chrome” to download the UniSat Wallet extension and add it to your Chrome browser.
Press that “Create new wallet” Click the button to create your UniSat wallet.
Create your password, use a password that you can remember as you will need your password for transfers and click the “Continue” button. The Secret Recover Phrase page appears. Write down your secret phrase and keep it in a safe place because anyone who has access to your secret phrase has access to your wallet. Then click “Keep going”.
Assume you are a crypto genius. I would advise you to leave the “Step 2” page as it is. Just click “Keep going”. The“Compatibility Tips” A popup will appear, check the boxes and click “OK”
You have now successfully created your UniSat wallet where you can receive, send and buy cryptocurrencies.
When you click “Receive” You'll receive a QR code that you can scan on your phone, as well as the ability to manually copy your wallet address.
When you click “Send”, you will see where you have to enter the recipient address where you want to send your Bitcoin, and below that you can enter the amount of Bitcoin you want to send. You can choose the desired transfer speed. However, keep in mind that the faster the transfer, the higher your gas or transaction fee will be.
I would not recommend you to use the “Buy” feature as it is too expensive. It is better to buy your Bitcoins on a centralized exchange and send them to your UniSat wallet.
How to buy, sell and trade on UniSat
To buy, sell and trade BRC-20 tokens, you need Bitcoin in your wallet for the gas fees and Bitcoin to purchase the BRC-20 token. So go to a central exchange of your choice like Binance, OKX or ByBit to buy your Bitcoins, copy your UniSat wallet, paste it into the central exchange's receiving address and send the Bitcoins.
Now that your wallet is loaded, it's time to take action. Go to UniSat websiteand click “Connect”.
Click on “UniSat Wallet”and connect your UniSat Wallet.
Once your UniSat Wallet is connected, click “brc-20”, As shown below, you can find the full list of BRC-20 tokens you can trade UniSat.
Click on any of the BRC-20 tokens you would like to purchase. For example, I clicked on the “Memes” Tokens below. There are buttons circled in red at the top right of the screenshot “View” And “Trade”.
When you click View, it will get you there OKLINK where you can see the inscription of the BRC-20 meme with all the details, Total offer, Limit per mint, owner, Minted tokensAnd Price.
When you click tradeit takes you to UniSat Marketplacewhere you will see all the items listed Meme tokens Inscriptions you can buy.
Click on one of the sellers that has the exact number of meme inscriptions you want to buy or one of the sellers that is close to the number of meme inscriptions you want to buy. After you select a seller, the purchase page will appear below with the “Buy now” The button appears.
Click on “Buy now” and the confirmation page confirming your order will appear. click on “Confirm” and you have purchased the BRC-20 token.
After you have purchased your BRC-20 and want to sell it, go to the Marketplace and click “my BRC-20”click on the inscription you want to sell, and then click on the list.
Click on that Plus buttonenter the exact number you want to sell and click “Next”.
Click “Next” again.
“Sign and pay”And “Completed”, your inscriptions are listed. When your order is picked up, your inscription will be sold and the money will be transferred to your wallet.
Use CoinW to track the price of your BRC-20 tokens
CoinW is a centralized crypto exchange where you can track your BRC-20 and use the charts to make informed decisions about the token you want to buy.
To search for BRC-20 tokens, click “Market”click on “Hot”, and then click “BRC-20”, As shown below.
For example, I clicked on ORDI, as you can see in the table below.
Here is another example using RATS, another BRC-20 token on the list.
Diploma
In conclusion, BRC-20 tokens provide a novel way to tokenize within the Bitcoin blockchain, extending their utility beyond traditional cryptocurrency transactions. They offer seamless integration of additional data into Satoshis, enabling a wider range of use cases and applications.
With BRC-20 tokens, the Bitcoin ecosystem receives improved functionality and opens up opportunities for innovative decentralized finance (DeFi) solutions. By leveraging the Ordinals protocol, BRC-20 tokens contribute to the growing diversity and maturity of the blockchain industry as a whole.
Featured image from IQ.wiki
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