What Is BRC-20?
Also known as: BRC20, BRC-20 Token, BRC-20 Standard
In short
BRC-20 is an experimental token standard that uses the Ordinals protocol's inscription method to create and transfer fungible tokens on the Bitcoin blockchain. It was introduced in March 2023.
Bitcoin does not support general-purpose smart contracts like Ethereum does. BRC-20 gets around this limitation through the Ordinals protocol: token creation (deploy), minting (mint) and transfer operations are defined by short JSON texts added to satoshis as inscriptions. These texts are read not by the Bitcoin network itself but by indexer software running off-chain, and balances are calculated in these indexers.
The standard was published as an experimental project by a developer using the pseudonym domo and quickly drew great interest with tokens such as ORDI. This interest led to congestion in the Bitcoin mempool and noticeable increases in transaction fees. The Taproot upgrade and the fee discount SegWit gives to witness data are the technical groundwork that makes such inscriptions possible.
BRC-20 tokens are far more limited than ERC-20: transfers require multiple steps, they contain no smart contract logic, and correct balance calculation depends on the indexers working consistently. Some Bitcoin developers criticize this use as filling block space with unnecessary data. Alternative protocols such as Runes have proposed different and more efficient methods for a similar purpose.
Last updated: · This content is for information purposes only and is not investment advice.