Many of us have heard of the PEPE coin. It witnessed such explosive growth that some people even believe it will replace DOGE or Shiba Inu as the main meme token. What is less well known is that one of the big reasons for PEPE's growth is that it’s a token built on top of Bitcoin and not Ethereum. These tokens are part of a new standard called BRC-20 which enables the minting and transferring of fungible tokens on the Bitcoin blockchain. It is similar to Ethereum's ERC-20 standard (thus the name), but it is designed specifically for Bitcoin.
While it’s highly unlikely that BRC-20 can become as comprehensive as ERC-20, it can still be a viable standard for simple minting and trading of BRC-20s.
History of BRC-20
The standard itself is quite new and was created only in May 2023. True to Bitcoin’s nature the creator of the standard remains anonymous and is only known by his/her pseudonym ‘Domo’. Ordinals was the first protocol to take advantage of this standard and launched their project which allowed users to create NFTs on the Bitcoin network. Within a few months since the launch of BRC-20, the standard now has several dozen projects with over $1 billion in market cap.
Why is BRC-20 important?
BRC-20 opens up a new world of possibilities for Bitcoin. With this standard, Bitcoin can represent a wider variety of assets, like NFTs, Memecoins, and other new innovative products that could be introduced in the future. The standard and the resulting fee increase have also made it more economically viable to mine Bitcoin. There were questions about how sustainable Bitcoin mining could be, especially after the next halving. The emergence of BRC-20 and the subsequent increase in transaction fees has made that question irrelevant.
Inversely, BRC-20 could also end up choking the Bitcoin network due to the high volume of traffic. In recent weeks, the number of unconfirmed transactions reached a new all-time high in Bitcoin and this has led to a section of the community asking for hardfork to remove BRC-20s from the network.
BRC-20 could also help to make Bitcoin more accessible to a wider range of users. By making it easier to create and use tokens on Bitcoin, BRC-20 could help to attract new users to the Bitcoin ecosystem.
What role could BRC-20 play in shaping Bitcoin?
One of the positive effects of BRC-20 has been the increased adoption of the Bitcoin Lightning network. As the transaction time and congestion increased due to the BRC-20 tokens, many in the community are looking to the Lighting network to help solve the problem. Lightning Labs has also launched the updated Taproot Asset protocol aimed at doing exactly that.
The standard has also created division within the Bitcoin community, especially between those who see BRC-20 as a waste of time and those who feel it could add immense value to the Bitcoin network. How this division will play out will eventually shape BRC-20 and Bitcoin as a whole.
How to mint BRC-20
To mint BRC-20, you will need a Bitcoin wallet that supports it. Unisat wallet is the go-to place for this process. In order to create a BRC-20 token, a user must:
- Install the Unisat wallet extension.
- Create a new wallet.
- Visit the Unisat site and connect the wallet.
- Select the network.
- Click on the Inscribe tab.
- Enter the details for the mint.
- Enter the number of tokens to be minted.
- Enter the Bitcoin address to which the minted token will be sent.
- Click Mint and pay the transaction charges.
Once the BRC-20 token is created, it will automatically get transferred to the wallet address mentioned earlier.
Is BRC-20 safe?
This is an extremely new technology and as such it’s impossible to predict the safety issues that could crop up from this field. However, being based on the Bitcoin network offers a certain level of security that no other chain could provide.
How BRC-20 could change Bitcoin
BRC-20 has the potential to change Bitcoin in a number of ways. Here are a few of the ways that BRC-20 could change Bitcoin:
- As Bitcoin block rewards are halved every four years, there were concerns among certain sections about the viability of Bitcoin mining in the long run. BRC-20 could provide miners with an additional source of income making the mining operation far more profitable.
- The tokens could invigorate the Bitcoin community by bringing in new builders who could try to build interesting features on top of the Bitcoin network. Ethereum benefited greatly from the presence of such builders, Bitcoin could witness the same result.
- Make Bitcoin more useful. BRC-20 could make Bitcoin more useful by allowing it to be used to represent a wider variety of assets. This could make Bitcoin more attractive to businesses and other users who need to use a digital asset that is secure, decentralized, and scarce.
The future of BRC-20
BRC-20 has been a decisive issue among the Bitcoin community. It’s difficult to say how it will play out in the long run. However, it goes, there is no denying the fact that it has brought about a new wave of interest in how the Bitcoin network could be used. Currently, the bulk of the BRC-20 tokens are meme coins or NFTs but that could change in the future as more innovative minds enter the field and build on top of what has already been achieved. Love it or hate it but no one can ignore the BRC-20 standard.
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