BRC-20 tokens are a type of fungible token created on the Bitcoin blockchain. The BRC-20 token standard was created in March 2023 by an anonymous user named “Domo” and is based on the Bitcoin blockchain, inspired by Ethereum’s ERC-20 standard.
BRC-20 tokens allow users to trade fungible assets via the Ordinals protocol, which inscribes token information into the witness data of statistics. Unlike ERC-20 tokens, BRC-20 tokens do not use smart contracts and require a Bitcoin wallet to mint and trade tokens.
The popularity of BRC-20 tokens has been attributed to the hype amassed by Pepe Coin (PEPE), a Meme Coin based on a popular internet meme. However, BRC-20 tokens offer no profits, no dividends, and are a negative-sum game.
The market cap of BRC-20 tokens has been increasing, with a total of 14,079 different tokens minted using the BRC-20 standard, pushing the market cap close to $1 billion. However, the mixing of user-generated tokens with Bitcoin is worrisome from a regulatory standpoint, and the liquidity token being used is called WBTC, but is not the popular Ethereum token WBTC.
How do BRC-20 tokens differ from ERC-20 tokens
BRC-20 tokens and ERC-20 tokens are both token standards, but they differ in several ways. BRC-20 tokens are built on the Bitcoin blockchain, whereas ERC-20 tokens are built on the Ethereum blockchain.
BRC-20 tokens don’t make use of smart contracts, unlike ERC-20 tokens. To mint and trade BRC-20 tokens, users need a Bitcoin wallet, whereas an Ethereum wallet is required for ERC-20 tokens.
Additionally, BRC-20 tokens have little functionality when compared to similar tokens on the Ethereum network, and they offer no profits, no dividends, and a lot of risk. ERC-20 tokens, on the other hand, are the most popular and used token standard of all time, and most of the tokens on CoinMarketCap.com are ERC-20 tokens built on the Ethereum network.
ERC-20 is also one of the oldest and most trusted standards for creating tokens. The BEP-20 token standard was created as an extension of the ERC-20 and inherits all the ERC-20 features.
What are the advantages of using BRC-20 tokens over ERC-20 tokens
There is no clear advantage of using BRC-20 tokens over ERC-20 tokens. BRC-20 tokens are built on the Bitcoin blockchain, while ERC-20 tokens are built on the Ethereum blockchain. Although BRC-20 tokens are modeled after ERC-20 tokens, there are some fundamental differences.
BRC-20 tokens don’t make use of smart contracts, unlike ERC-20 tokens, and they require a Bitcoin wallet to mint and trade these tokens. ERC-20 tokens are the most popular token standard, and they are used to represent assets such as cryptocurrencies, utility tokens, and security tokens.
ERC-20 tokens are fungible, meaning that they are interchangeable with other tokens of the same type and value. ERC-20 transactions are fast, efficient, and globalized, thanks to the power of the Ethereum network.
Some examples of BRC-20 tokens in the market
There are several examples of BRC-20 tokens in the market. According to the search results, over 10,000 BRC-20 tokens already exist, and naming conventions mean millions more pop up.
The majority of these BRC-20 tokens are Meme Coins, such as PEPE and MEME.
A total of 8,500 different tokens have been minted using the BRC-20 standard. BRC-20 tokens approach $1 billion market cap, with 14,079 different tokens minted on the Bitcoin blockchain. However, BRC-20 tokens have little functionality when compared to similar tokens on the Ethereum network, and they offer no profits, no dividends, and a lot of risk.
