BRC-20 Tokens: A Beginner's Guide
BRC-20 is an experimental standard for issuing and transferring fungible tokens on Bitcoin. It operates through Ordinals inscriptions and does not rely on smart contracts. Its mechanism is relatively simple, but it remains limited by Bitcoin network performance, interoperability, and functional scope.
What Is BRC-20?
BRC-20 is an experimental standard for fungible tokens on the Bitcoin blockchain. Fungibility means that every unit of a token has the same function and value and can be exchanged for another unit. The standard lets the Bitcoin network explore new uses involving issuance and circulation of tokenized assets in addition to transferring bitcoin.
Technology and Operation
The Taproot upgrade expanded Bitcoin blocks' data-carrying capacity and provided a foundation for the Ordinals protocol and BRC-20. Through Ordinals, BRC-20 inscribes JSON-formatted token information on an individual satoshi and uses it to record token creation, minting, and transfer without deploying a smart contract.
Main Advantages
BRC-20 uses a simplified mechanism and eliminates the need to write complex smart contracts, making issuance and transfer of fungible tokens easier to approach. Related records are processed on the Bitcoin blockchain and can use its decentralization, proof of work, and established network-security mechanisms.
Limitations and Learning Priorities
BRC-20 remains experimental, does not support smart contracts, and has limited suitability for complex functions and non-fungible assets. It is also affected by Bitcoin transaction speed, scalability, and fees and may worsen network congestion. Compatibility across blockchains and wallets also remains a problem to solve.
Original Tutorial
https://www.binance.com/zh-CN/academy/articles/what-are-brc-20-tokens
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