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Analysis of the principles and characteristics of BRC-20 tokens, as well as opportunities for ordinary users to participate.

23-05-08 15:04

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Original Title: "Is there still a chance to participate in BRC20 Token offering? A detailed explanation of BRC20 principles, features, and participation methods."

Original Source: ChainCatcher

Today, the news of "BRC20 Token Ordi breaking through $10 and market capitalization exceeding $200 million" is circulating in various communities. This token was launched and issued on March 9th, and was initially free for users who only needed to pay the on-chain minting gas fee to obtain a large amount of Ordi tokens. Assuming a user minted 1000 Ordi tokens at the beginning of the issuance, it is now worth nearly $10 million USD.

Compared to airdrops, the myth of getting rich through BRC20 tokens is easier. Users do not need to participate in on-chain operations or worry about meeting strict conditions. They only need to mint the tokens at the time of issuance, and even in the early days of the Bitcoin chain when there was no congestion, the on-chain GAS cost was only a few U to participate.

With the continuous surge in cryptocurrency prices and the catalysis of wealth stories created by the minting of BRC20 tokens, BRC20 has now become a new narrative in the cryptocurrency market, attracting a large number of users.

On May 5th, the encryption KOL Plan B posted a poll about BRC20 on Twitter; Wang Feng, founder of the NFT market Element, stated on social media that Element will develop BRC20 engraved tokens and NFT trading markets that support Bitcoin Ordinals for community users. Today, Huobi announced that BRC20 Token ordi won first place in the fifth round of the voting activity with a total of 23.91 million votes. Once the relevant standards receive industry consensus, ordi spot trading will be opened as soon as possible, and the second place is PEPE of BRC20. Subsequently, OKX tweeted that they are working hard to analyze BRC20 and promote wallet support for trading ordi.

It can be seen that BRC20 is becoming a new track for users, project parties, and CEX to compete for layout. So, what exactly is BRC20? As ordinary users, how can we participate in this new wealth password? And what risks will we face?

BRC20 is what? How to mint BRC20 Tokens?

BRC20 is an experimental format standard for issuing homogenized tokens on the Bitcoin network. It was created by Twitter user @domodata on March 8, 2023, based on the Ordinal protocol. Similar to Ethereum's ERC20 standard, it specifies the name, issuance, transfer, and other functions of tokens issued on Ethereum. All token contracts developed on Ethereum comply with this standard.

The main difference between BRC20 and ERC20 is that the Bitcoin network does not support smart contracts. Instead, BRC20 deploys token contracts, mints and transfers tokens by utilizing the Ordinal protocol to set inscriptions as JSON data format. This means that developers can create and issue homogeneous tokens through the Ordinal protocol.

What is Ordinal?

Ordinal was proposed in January of this year as a system for numbering the smallest unit of Bitcoin, satoshis (sats).

1BTC=1 hundred million sats. Originally, each unit of satoshi was the same, meaning that 1 BTC held by Xiao Ming is the same as 1 BTC held by Xiao Lan.

Through Ordinals, these sats can be arranged in a certain order and assigned a specific ordinal number, which means that the Ordinals protocol assigns a unique identifier to each sat. This gives each sat its uniqueness, and this identifier will support users in tracking every sat on the blockchain. When users attach specific information to this sat, such as pictures, text, code, etc., each sat becomes unique, which is what is known as a Bitcoin NFT. The attached information is called "inscriptions," and the process of attaching information to the sat is called "inscribing," which means to inscribe the "inscription" on the sat.

The user @domodata believes that the Ordinals protocol can be used not only to issue NFTs, but also to issue fungible tokens. When additional information (inscriptions) is attached according to a unified protocol standard (JSON data format), it can become a fungible token BRC20. Simply put, BRC20 can be understood as a mutated Ordinals NFT, where the inscriptions on the NFT are images, and the inscriptions on the BRC20 are uniform text data (Text) in JSON format. In the BRC20, inscriptions also serve as the ledger for BRC20 tokens, which can be used to track every transfer of the token.

BRC20 provides three standards for issuing tokens on the Bitcoin network, including deployment of BRC20 tokens, minting, and transfer. Developers can create and issue BRC20 tokens by following these standards.

Along with the release of the BRC20 standard, @domodata launched the first BRC20 experimental Token ordi with a total issuance of 21 million. Early users only need to pay the on-chain GAS fee to mint. Now, users can only purchase it on the secondary market, with a current price of $10 and a market value of $210 million. However, @domodata also reminds users that this is just an implementation standard and has no investment value.

Take ORDI Token creation as an example, users only need to input the code below the picture to create the Token.

This figure represents the JSON data text input for deploying ordi Token, with a total issuance of 21 million and a maximum coinage limit of 1000 per minting. Users can change the field after "op" to represent the operation they want to execute, with "Deploy" representing the deployment of the Token, "Mint" representing the minting of the Token, and "Transfer" representing the transfer of the Token. "Tick" represents which Token name is being executed, and users can input the name of the Token they want to execute.

BRC20 Three Contract Standards

Currently, anyone can deploy a BRC20 Token. It should be noted that the name of the deployed BRC20 Token can only be entered with 4 characters (English punctuation, English, numbers), and it is not case-sensitive (DOGE=doge). It is first come, first served, so if a Token with this name has already been deployed, it cannot be deployed again.

Now users can use third-party tools to deploy, trade, and perform other operations with tokens. Currently, these activities are mainly carried out through the Unisat wallet.

How to issue a BRC20 Token?

Users need to install the Unisat wallet (https://unisat.io/) and select the "m/86'/0'/0'/0/0" format when setting up the wallet. The wallet supports receiving NFT and BRC20 tokens. To extract BTC from a CEX to a Unisat address, the address must start with "bc1p". Click "inscribe" to mint the token, select BRC20, then select "Deploy" and enter the desired token name, issuance quantity, and coinage limit. Submit and pay the gas fee to complete the process.

How to purchase a BRC20?

Purchasing BRC20 Token can be divided into two situations: including newly minted coins that have not yet been minted, and already minted Tokens.

About the new coin that has not been minted yet, users do not need to purchase it, they only need to pay the on-chain GAS fee to mint it.

Specific execution steps: Users use Unisat to click on "inscribe", select BRC20, choose "Mint", enter the token name, select the number of Mints to submit, and pay the on-chain GAS fee.

Please note that when paying GAS fees on the Mint Token chain, during peak periods, users often need to pay higher than the displayed GAS fee, otherwise the Gas fee may be paid but the Mint may not be successful. This is because Bitcoin network miners sort transactions based on the level of GAS fees, and transactions with higher GAS fees are more likely to be selected and packaged.

Specific Gas fees can be referred to at: https://mempool.space/

For tokens that have already been minted, if the user chooses to continue with the minting function, the resulting tokens will be invalid tokens.

Users currently need to purchase the corresponding Token through peer-to-peer OTC transactions. There are mainly two ways: one is to privately find a third-party guarantee transaction, which is easy to encounter scammers such as not sending the coins after receiving the money, or sending fake coins; the other is to go to a specialized trading platform to place an order for trading, such as UniSat's Marketplace. This trading market is similar to NFT trading platforms. Sellers will place orders on the platform for the number and price of BRC20 Tokens they want to sell. If buyers want to purchase, they need to buy all the Tokens in the order placed by the seller at once, and cannot choose the quantity they want to trade on their own.

However, the first use of Unisat's trading market requires a threshold, either as an early OG user of Unisat or having 20 Unisat points.

How to get 20 Unisat points? You need to use Unisat's Mint function (also known as forging inscriptions), which mints one point per inscription and requires 20 mints. Based on the current Bitcoin network GAS fee, it will cost approximately $160 to mint 20 inscriptions. In other words, users need to pay about 160 US dollars in sats before entering the Unisat trading market without doing anything, which is why some users are restricted from using BRC20 Tokens.

In addition, on the Unisat website, users can also view the deployment time, mint completion rate, number of holding wallet addresses, and completed transaction volume of the BRC20 Token. The more holding wallet addresses there are, the more users have purchased it.

BRC20 Token represents

Ordi - the first BRC20 Token issued by @domodata, was launched on March 9th. The total issuance is 21 million, with a current price of $10. There are 5,261 holders and 62,936 transactions.

Nals - derived from a meme, Nals combined with Ordi forms the full name of the protocol, which is Ordinals. The token was launched on March 10th and was only fully minted on May 1st, with a total issuance of 21 million. It is currently priced at $0.9 and has 1385 holding addresses and 39546 transaction counts.

PIZA - circulation of 21 million, priced at $0.43.

Meme - circulation of 99999, currently priced at $91.

PEPE - A Token meme coin derived from ERC20, currently priced at $0.68 with a total circulation of 42.096 million.

BRC20 related tools, what are they?

Third-party BRC20 Token Minting Platform - Idclub; Looksordina; Unisat, etc. The only difference between the three is the transaction fee.

BRC-20_io - A data platform for viewing BRC-20 token prices and market values.

Unisat - A wallet and trading market collection for BRC-20.

Ordiscan - ordinal browser can view BRC20 transaction status, view Inscriptions and Collections addresses.

Ordspace - BRC-20 and ordinal NFT data statistics platform, which allows you to view BRC20 market capitalization and prices, among other things.

BRC20 tokens are mostly meme coins, be cautious when purchasing

According to the BRC20.io website, as of May 6th, there have been 13,083 BRC20 Tokens issued with a total market value of $280 million USD. The trading volume in the past 24 hours was approximately $4.27 million USD.

Additionally, based on the existing BRC20 Tokens, except for the first ordi Token, the top market cap Tokens are mainly Meme coins, such as MEME, PEPE, PIZA, etc. These Tokens are mainly speculative in nature and do not have real underlying value. Looking at the number of players holding these Tokens, the largest market cap ordi Token has only 5261 holders, which means that the current BRC20 player base is very niche and Token liquidity is relatively poor, with most Tokens having value but no market.

BRC20 is highly sought after by users because the issuance of BRC20 tokens is fair and impartial. All minting users are treated equally, and the project party cannot reserve or increase issuance. Even the issuer must start minting like ordinary users to obtain BRC20 tokens, truly achieving equal participation of everyone in the ecosystem.

However, it should be noted that currently BRC20 Token is just a token, and where it will ultimately go and what applications it will have are still unknown.

Because most BRC20 projects and tokens in China currently have no value or practical use cases, they have faced opposition from the original users of the Bitcoin community. They believe that this approach only adds to the congestion of the Bitcoin network and does not benefit Bitcoin in any way.

However, some users believe that this has added new use cases for the Bitcoin network, attracting a new wave of enthusiastic users and developers to join the Bitcoin community, increasing the demand for BTC, which is beneficial for the rise of BTC prices, as users need to use satoshis to purchase any BRC20 Token on the chain.

From the current results, the emergence of BRC20 is the biggest benefit to miners, bringing them huge income. According to Block data, the transaction volume of the Bitcoin blockchain has jumped from $499.34 in February to $689.68 in March. Bitcoin miners' income in March was at least $718 million, reaching a new high since May 2022.

除了 BRC20，还诞生了 ORC20、LTC20 Token。

Translation:

In addition to BRC20, ORC20 and LTC20 Tokens have also been created.

ORC20 - an upgraded version of BRC20 that allows for changes to the initial supply and maximum coin minting limit. There is no fixed limit on the number of characters for token naming (BRC20 tokens only support 4 characters). Users are also allowed to cancel transactions. In addition, ORC20 tokens have a mandatory tax, meaning that holding or trading ORC20 tokens requires payment of a tax, similar to NFTs.

LTC20 - is a trial standard for LTC-20 Tokens proposed by the Litecoin community, following the example of BRC20. This standard was developed on top of the Litecoin Ordinals protocol.

However, from the current level of community attention, the popularity of ORC20 and LTC20 only stayed at the initial launch stage, and their tokens did not break out like BRC20 tokens.