What Are BRC-20 Tokens? Explaining the Bitcoin Memecoin Hype

Memecoins on Bitcoin is probably not
what Satoshi Nakamoto envisioned When he released
the Bitcoin whitepaper in 2008, But it just might be the mass adoption
that Bitcoin deserves. Hey there, my name is Trevor here with CMC
and today we'll be discussing beers, 20 Tokens and the storm that they've caused
in the Bitcoin community and beyond. Let's get started. So what exactly are BRC tokens
and how do they work? Well, you may recall Bitcoin Ordinals or Bitcoin NFTs, which a few weeks ago Caused a bit of an uproar on the otherwise
reserved Bitcoin community. So let's remember how bitcoin Ordinals
work. Imagine two $1 bills. Both are completely fungible,
but have a serial code Which allows us to identify
each dollar bill as unique. But if one bill was signed by Muhammad Ali And George Foreman,
it becomes a dollar and a fee of sorts. You could still spend it
as a regular dollar, But the signature is make the bills value
skyrocket. Ordinals work in the same manner. They take advantage of the fact
that each individual Satoshi can be Uniquely identified
by its equivalent of a serial code. With the recent meme coin craze Which caused a tsunami of meme coin
attention on crypto Twitter. One thing led to another. Someone had the idea to create a new token Standard on bitcoin and BRC- 20
tokens were born. BRC-20 tokens built upon the concept
of making single Satoshis As seen in Bitcoin Ordinals,
while Ordinals tag individual satoshis To serve as NFTs, BRC-20 tokens
involved minting satoshis So that they hold information
about a whole collection of tokens. So for example, if you wanted to create
a collection of 100 hypothetical $Trevor, BRC-20 tokens, you to mint the collection
by inscribing one set with the relevant JSON data. JSON data can be used to define the token
name, symbol, supply

And other properties. Users can also use the JSON data
to mint new tokens or transfer Existing tokens to other addresses
or to use the dollar stats metaphor again. You mark $1 bill with information
about 20 $Trevor stickers, Which are not dollar bills. You always need a dollar bill
to transfer stickers, But the bill does not back the stickers
themselves, nor can they do anything. If this sounds complicated
and not intuitive, That's because it is. Bitcoin was not created
for this workaround, As many on crypto Twitter
have pointed out. So how did BRC 20 tokens start? Well, the most likely explanation is
opportunity makes a thief. Taproot upgrade
allows for these workarounds To be implemented on Bitcoin and meme coin
season Just happened to come around,
so one thing led to another. Eric Wall explained in detail
how the idea of BRC 20 tokens Is an imitation of Xen tokens on Ethereum. In other words, the Taproot upgrade
made it possible to add an amount of data To the blocks based on Bitcoin That allows for minting tokens,
even though those tokens that Do not have the same properties
as ERC 20 tokens on Ethereum. This hunger for block space
surprised the Bitcoin community And the effect on Bitcoin transaction
fees has been significant. Let's talk about that in further detail. Just when Ordinals were going back
to being a niche phenomenon, BRC- 20 tokens started rocking the transaction
count boat and Rock they did! BRC-20 transactions currently make up
a majority of all Bitcoin transactions. Transaction fees surged to previously
unthinkable levels and incredibly, Transaction fees Made up a higher share of miner revenue
than the block subsidy for some blocks. This is music to the ears of those
who never doubted That adoption would save the Bitcoin
security model. However, not everyone was amused by the
surprising spike in activity on Bitcoin.

So let's talk about the fallout of BRC
20 tokens in the Bitcoin community. For one BRC 20 tokens
caused centralized exchanges to launch Their trading markets and nifty developers
to start liquidity pools for them. But it has also caused a new round
of infighting between different Factions of the Bitcoin community. Eric Wall and Udi Wertheimer
both support these second order effects Of the unexpected appetite for Bitcoin
block space. The Lightning Network
may have finally stumbled On a source of significant demand. However, the surge in fees Doesn't sit well with those who were comfy
with the low fee Bitcoin. This sentiment was shared by Anita Posch,
a Bitcoin educator focused On bringing Bitcoin to financially
underdeveloped regions in the world. Again, it may not be the adoption
Bitcoiners wanted, But it's the one they deserve. Or so Ethereum people would argue. Nick Carter Outlined in the past that Bitcoin is more
akin to Fed wire than to visa. It isn't meant to be a high speed
settlement layer, But he got quite a bit of flack himself
from the community For suggesting
Ethereum's burn fee was a smart move And applying bitcoin may want to consider
something else. Cue the reply section. Some members of the community Realize BRC- 20 tokens
could provide a much needed impulse For the community to work only necessary
infrastructure improvements. Now let's talk about the
future outlook for Bitcoin. As with order
nodes, the question is whether this is A sustainable new asset class
or merely a flash in the pan That will subside when the meme coin train
inevitably derails. Regardless,
the BRC 20 hyper pointed out weaknesses, The community will have to address, such
as the lack of Layer two infrastructure And diverging views over how much and
what kind of adoption is desirable now. Who said Bitcoin is boring?

Coinbase
OUR TAKE

Coinbase is a popular cryptocurrency exchange. It makes it easy to buy, sell, and exchange cryptocurrencies like Bitcoin. Coinbase also has a brokerage service that makes it easy to buy Bitcoin as easily as buying stocks through an online broker. However, Coinbase can be expensive due to the fees it charges and its poor customer service.

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