"BRC-20 Token" Beginner Q&A: An Easy to Use Guide
#Basic Concepts
"BRC-20" is currently a hot topic in the cryptocurrency industry. This standard is not merely novel, but has attracted a great deal of attention because of its significant impact on the cryptocurrency industry as a whole, such as causing transaction fees to rise sharply. In this article, let's take a look at BRC-20 and review the basics.
Q. What is BRC-20?
BRC-20 is a standard that facilitates the issuance and transfer of tokens on the Bitcoin Blockchain. Its ability to easily issue tokens on the Bitcoin network has led to the creation of many tokens since its inception.
BRC-20 was invented by an engineer named Domo in March of this year. BRC stands for "Bitcoin Request for Comment.
Q. How does BRC-20 work?
BRC-20 uses a protocol called Ordinal, which was originally created to facilitate Bitcoin NFTs.
Bitcoins of the same value cannot become NFTs because they are not differentiated from other bitcoins of the same value. But, the protocol records images and text on blockchain, making this Bitcoin an NFT.
Although BRC-20 is based on a protocol originally intended to produce NFTs, it has now made it easier to create a variety of tokens (that are not NFTs).
Tokens created with BRC-20 do not use "smart contracts," which automatically execute the contracts, but allow trades between users by storing JSON files on the Bitcoin network. JSON is a file format for storing structured data. It is broadly used for crypto assets and blockchains, but cannot perform the complex operations necessary for smart contracts.
Q. How many tokens have been created on BRC-20?
Because BRC-20 is a technology that simplifies token creation on the Bitcoin Blockchain, a tremendous number of different types of tokens have been created.
According to BRC-20.io, over 14,000 different tokens were created as of May 13th. In total, these tokens represent a $530 million market cap. As of May 13th, these tokens' 24-hour trading volume was $200 million.
Q. What coins should we look out for on BRC-20?
The top-ranked token in terms of market cap and liquidity (24-hour trading volume) on BRC-20 is Ordinals (ORDI). According to BRC-20.io, ORDI had a $330 million market cap and a 24-hour trading volume of $200 million as of May 13th.
As of the 13th, ORDI accounted for most of the market capitalization and 24-hour trading volume of tokens created by BRC-20. A number of Meme coins originating from Internet Memes have been created on BRC-20, but they are far from having the same market cap and trading volume as ORDI. As exchanges become more compliant with BRC-20, other tokens will be listed and the situation is subject to change.
Q. What is the impact of BRC-20 on the overall cryptocurrency market?
The impact of BRC-20 is no longer limited to the tokens created on BRC-20.
Since BRC-20's launch, the number of BRC-20 transactions on the Bitcoin blockchain has exceeded regular BTC transactions on several occasions. BRC-20-generated tokens have crowded the Bitcoin network, and Bitcoin transfer fees are at their highest point in the past two years. BRC-20 has been a major problem for the Bitcoin network. Many people have seen the news that some exchanges have temporarily suspended Bitcoin transfers due to network overcrowding.
With the rise in transaction fees, there are many opinions on the issue. Higher fees provide an incentive for miners to protect Bitcoin's robust security, while other Bitcoin users have to bear the cost. In any case, the fee increase brought by BRC-20 has had a significant impact on the Bitcoin trading environment.
Q. What future developments can be expected?
BRC-21, the successor to BRC-20, is already in development. Once development is completed, tokens created on non-Bitcoin blockchains will be able to be issued on the Bitcoin blockchain as well.