Eager to start with crypto? Join Nexo – the trusted institution for digital assets to easily buy, earn, and exchange crypto.Sign Up
Imagine a world where Bitcoin could do more than just facilitate peer-to-peer transactions. Enter BRC-20 tokens, a new breed of fungible tokens that can represent anything from currencies to real estate and beyond.
Introduced in March 2023, BRC-20 is an experimental standard built upon the Bitcoin Ordinals protocol.
How does it work? The standard assigns unique identifiers, a mix of numbers, letters, and symbols, to each satoshi.
It's like giving each satoshi its own unique fingerprint.
This allows users to inscribe various forms of information, such as text, images, or videos, thereby creating unique tokens on the Bitcoin network.
The main pros of BRC-20 tokens include high security, ease of use, and an expanded utility of the Bitcoin network, including tokenization opportunities and bringing it closer to the world of DeFi.
However, there are two sides to every coin. The creation and transfer of BRC-20 tokens require more space on the blockchain, leading to higher transaction costs. Another challenge are the slower transaction speeds.
BRC-20 aims to expand the Bitcoin network’s capabilities beyond Satoshi’s original vision for a pure P2P transaction network.
However, BRC-20 tokens remain just a conceptual idea, and their future remains uncertain.
Hint: It enables the personalization and identification of satoshis.