Bankless: In-depth discussion on BRC-20 ecology

Last week, we highlighted the BRC-20 opportunity as one of the most important Bitcoin buy signals right now. Today, we’re going to take a deep dive into that ecosystem and show you how you can get involved with this experimental new endeavor.

——Bankless team

While not the same style as Ethereum's ERC-20 tokens, the BRC-20 method is a new way to issue tokens on Bitcoin. Interestingly, this system is built on Ordinals’ “Bitcoin NFT” protocol, which has exploded in popularity in recent weeks. In today’s article, let us take you through the basics of the BRC-20 ecosystem quickly!

• Goal: Try BRC-20 on Bitcoin

• Skills: Intermediate

• Working time: 1 hour

• ROI: Enter the Booming Bitcoin Token Space

The experimental BRC-20 standard was first introduced by domo in March 2023.

BRC-20 is built on the Ordinals protocol, an on-chain NFT minting system that "inscribes" data onto individual satoshis (the smallest Bitcoin (BTC) denomination). Ordinals minting has sparked a surge in NFT activity on Bitcoin since first appearing in January 2023 .

BRC-20 are not smart contract based tokens like ERC-20, nor are they fully fungible. Roughly speaking, in Ethereum terms, they are a bit like a cross between fungible DeFi tokens and semi-fungible ERC-1155 Ethereum NFTs, but on Bitcoin. This semi-fungibility dynamic stems from the way BRC-20 was created by embedding snippets of JavaScript Object Notation (JSON) text into Bitcoin NFTs via the Ordinals protocol.

Note, however, that the BRC-20 model is an unofficial, experimental standard. If you decide to dig into these coins, remember that this is the fringe of the Bitcoin frontier right now, so proceed with caution. Never trade with more money than you can afford to lose!

Where to find BRC-20 tokens 🔍

Now you understand the gist of BRC-20 tokens. But where can these tokens be found and tracked?

As the screenshot above shows, brc-20.io is currently a straightforward platform for doing this. According to the website, there are currently 190 BRC-20 tokens in existence with a total market capitalization of approximately $146 million. Not bad for a brand new token ecosystem!

If you scroll down the homepage of brc-20.io, you can find the most popular tokens, popular projects, and upstarts that just hit the leaderboard. Clicking on a specific coin will display the markets and specific trading pairs you can consider.

Create a BRC-20 wallet 💳

Now that you know how to track BRC-20 tokens, it's time to set up your first BRC-20 wallet.

NOTE: Any normal Bitcoin wallet is not sufficient to trade BRC-20. You'll need a wallet tailored specifically to handle Ordinals NFTs, and by extension BRC-20.

For this, one of the most popular options right now is UniSat .

UniSat not only has its own mature BRC-20 tracker and market system, but now also has one of the easiest to use Ordinals and BRC-20 wallets. The main avenue of this wallet is a browser extension, currently available on Chrome.

Once you have downloaded the extension, you can continue by following these steps:

1. Press the "Create New Wallet" button

2. Create a password that you will use to unlock your wallet

3. Save your wallet recovery phrase in a secret + safe + secure location and press "Continue"

4. Check the wallet information on the subsequent page and press "Continue" to continue

5. Once that's done, you'll have a brand new Ordinals-friendly Bitcoin address to which you can start sending BTC(e.g. from Coinbase, Kraken, Binance, etc.) to dig deeper!

How to use BRC-20🔁

Since the BRC-20 ecosystem is still early and nascent at the moment, the main task of using BRC-20 today is to…you guessed it… trade them .

Likewise, without complex DeFi composability through smart contracts, BRC-20 is currently limited to buying and selling. The aforementioned UniSats Marketplace is a great place to start, and feel free to check out what's on the market. Here you can sort through the different popular BRC-20s and see current listings and buy orders.

Since BRC-20s are not fully fungible, they are marketed and sold in batches, for example 100 per batch. For example, in the picture above, we can see the list of ORDI, the BRC-20 with the largest market value at present, with batches of 30, 100, 200, etc. The unit of account and transaction here is satoshis or sats, while UniSats will show you the amount of bitcoin in dollars at any given time, next to all listings and orders on the platform.

If you find a coin that suits you, you can press the "Buy" button, connect your UniSat wallet when prompted, and view the purchase details, as shown below:

If you have "Available Balance" to proceed, press "Confirm" and use your wallet to complete the transaction. Once the trade is confirmed, you will be able to view your current holdings using the 'My Inscriptions' tab in the UniSats Marketplace. To list your BRC-20 later, you will go to the "My Orders" tab and choose to create a new order from your current tokens.

A new frontier for BRC-20 🌄

Is there anything else to watch out for here? The arrival of Ordinals and BRC-20 kicked off an incredible series of experiments with Bitcoin-based tokens. These items include:

🔸 ORC-20 — An experimental standard from OrcDAO that attempts to extend the capabilities of BRC-20 while also being backwards compatible with these tokens

🔸 BRC-21 - an experimental standard from Interlay Labs for minting BRC-20 on Bitcoin to represent tokens originally minted elsewhere, such as on Ethereum

🔸 BTC-20 - An experimental BRC-20 token launched by Omnisat , pegged to the value of Bitcoin

🔸 BRC-30 - an experimental staking protocol via OKX that allows BRC-20 holders to stake their tokens in order to earn new "BRC-30" tokens

That said, be sure to keep an eye out for these additional experimental efforts as the newly revived Bitcoin ecosystem continues to grow apace!

Focus 🧠

It is estimated that the total market capitalization of all BRC-20s is currently around $140 million, which is slightly less than 0.03% of Bitcoin’s current market capitalization of $514 billion.

This gives you an idea of ​​how small the BRC-20 ecosystem is currently, but it's growing fast. Mind you, just three months ago this ecosystem didn't even exist!

Bitcoin has had various tokenization efforts throughout multiple eras of its history, some more successful than others. It is too early to predict how BRC-20 will stack up against these pioneers, but there is no doubt that they are currently generating a lot of interest and paving the way for the new Bitcoin DeFi space. Follow this field!