What is the Bitcoin motto (BRC-20)? What value does it generate?

What is the Bitcoin motto (BRC-20)? What value does it generate?

In the world of cryptocurrencies, the concept of Bitcoin Registry (BRC-20) has attracted a lot of attention recently. Not only because it represents a new standard, but also because it opens up a whole new set of possibilities for the Bitcoin blockchain.BRC-20 is a standard for Bitcoin-based tokens issued and managed through the Bitcoin blockchain, and while it's somewhat similar to ERC-20 on ethereum, the technology and application landscape behind it has a different character. In this article, we'll take a closer look at what the Bitcoin motto BRC-20 is and what value it can generate. What value can it generate? We'll also show you how this innovative technology will change the future of cryptocurrency.

What is the Bitcoin motto (BRC-20)?

The Bitcoin motto (BRC-20) is a Bitcoin blockchain-based token standard derived from the original design of Bitcoin. Similar to Ether's ERC-20 standard, BRC-20 enables Bitcoin to serve not only as a store of value, but also to host a wider variety of assets. In BRC-20, the creation, issuance, and transfer of tokens is backed by Bitcoin's blockchain, but unlike traditional smart contract platforms, BRC-20 does not rely on the direct execution of smart contracts, but instead writes and transfers data through Bitcoin's UTXO (Unspent Transaction Output).

The creation of BRC-20 means that Bitcoin is more than just digital currency; it can also serve as a platform to support decentralized applications (DApps) and custom tokens. This innovative standard was launched in 2023 by a developer named Domo and has quickly gained the attention of the crypto community.

How do BRC-20 tokens work?

BRC-20 tokens operate on the Bitcoin blockchain and do not rely on smart contracts. Specifically, BRC-20 utilizes Bitcoin's Ordinals protocol to create tokens by embedding additional data on the blockchain. This process involves writing specific information (e.g., the name of the token, the supply, the issuer, etc.) into each transaction on the Bitcoin blockchain.

Compared to Ether's ERC-20 standard, BRC-20 is simpler to implement and does not rely on complex smart contracts, so it has a relatively low operating and learning curve, but this also means that it is more limited in its functionality.BRC-20 token issuance does not require direct execution of contract code, but rather is accomplished through a series of transaction tags.

What is the value of BRC-20?

The greatest value of BRC-20 is that it gives the Bitcoin blockchain more flexibility and application scenarios.BRC-20 enables more digital assets and innovative applications to be issued based on the Bitcoin network, which not only expands the functionality of Bitcoin, but also transforms Bitcoin from a single value-storage tool into a more diversified platform. This is a significant opportunity for decentralized application developers who want to take advantage of the Bitcoin blockchain.

The issuance of BRC-20 tokens could bring more users and transaction volume to the Bitcoin blockchain, which could further enhance the network effect of Bitcoin. With the development of BRC-20, more decentralized financial (DeFi) applications, NFTs, and other monetized assets will be possible to be created based on Bitcoin, thus promoting the diversification of the Bitcoin ecosystem.

How does BRC-20 compare to other blockchain standards?

There are some significant differences between BRC-20 and Ether's ERC-20 standard that stem from the blockchain architecture and technical foundation they rely on. Most notably, BRC-20 is based on Bitcoin's transaction data structure rather than smart contracts. This means that token issuance and transactions in BRC-20 do not rely on the execution of complex smart contract code, which makes BRC-20 simpler to operate than ERC-20, but may have functional limitations.

The fact that BRC-20 operates on the Bitcoin blockchain gives it a higher level of security than ERC-20. Since Bitcoin's blockchain is considered one of the most secure and decentralized, this gives BRC-20 tokens the same level of trust and stability as Bitcoin itself, which is an important selling point for many users.

Future Outlook: Potential and Challenges of BRC-20

Although BRC-20 is still in the early stages of development, its potential should not be overlooked. As more and more developers begin to explore the application landscape of the Bitcoin blockchain, BRC-20 could become an influential token standard. It will not only help the Bitcoin ecosystem expand to more applications, but also promote the development of new fields such as decentralized finance (DeFi) and non-identical tokens (NFT).

BRC-20 also faces some challenges, particularly in terms of functional scalability and network congestion. Since its design does not rely on smart contracts, this makes BRC-20 relatively inflexible and may limit its future development in more complex applications. These challenges may affect whether BRC-20 can realize its full potential.

Frequently Asked Questions Q&A

1. What is the difference between BRC-20 and ERC-20?
BRC-20 is a token standard based on the Bitcoin blockchain, while ERC-20 is based on the Ether blockchain.BRC-20 does not rely on smart contracts, but rather implements token creation and management through Bitcoin's UTXO, which makes it simpler but more limited in functionality.

2. How to create a BRC-20 token?
The process of creating BRC-20 tokens is relatively simple, mainly utilizing Bitcoin's Ordinals protocol to write token data into the Bitcoin blockchain. Issuers of these tokens only need to embed the relevant information into the transaction data to complete the token creation.

3. What is the future of BRC-20?
The development of BRC-20 is promising, but still faces certain challenges. As the performance of the Bitcoin blockchain improves and more applications are introduced, BRC-20 is expected to become an influential standard, especially in the areas of decentralized finance and asset monetization.