The New Wave of Bitcoin Ecology: The Present and Future of BRC20

Original author: Peng Yong

Source: Block unicorn

The Bitcoin network has been limited by the network itself in terms of scaling. In addition, Bitcoin maximalists tend that Bitcoin should remain as it is, avoiding excessive modifications to ensure the security and stability of the Bitcoin network. They will usually trumpet Bitcoin, like Gold, as Blaji did, as Bitcoin is a digital gold, emphasizing its superiority as a store of value.

A single store of value cannot meet the diverse needs of the Bitcoin ecosystem, and compared with Ethereum and other blockchains, Bitcoin does have limited capabilities in terms of smart contracts and scaling. While Bitcoin focuses on security and decentralization, rather than pursuing fast transaction confirmations or the flexibility of smart contracts.

But the crypto industry is getting bigger, and different communities and factions have different visions and philosophies for the future of Bitcoin, and are no longer limited by the ideas of Bitcoin maximalists. The more radical Bitcoinism, contrary to Bitcoin fundamentalists, hopes to expand the Bitcoin ecosystem in more possible ways, so that Bitcoin has more application scenarios and is no longer limited to this, resulting in the Lightning Network (Bitcoin’s layer 2 network) that is easy to use for payments, and now BRC20.

What is BRC20?

In order to make it easy for more people to understand the BRC20 and facilitate everyone to understand this field in depth, let’s discuss the BRC20 in the most popular way and lead you into this exciting track.

In the blockchain space, the way we usually issue tokens is through the issuance of ERC20 tokens through smart contracts on the Ethereum network. But on the Bitcoin network, there are no smart contracts, and tokens can only be issued through other means, so @domo (the inventor of BRC20) invented a protocol that can issue tokens on the Bitcoin network, called BRC20:

1 bitcoin = 100 million satoshi / 1 Satoshi (the smallest unit of bitcoin, 1 satoshi / 1 Satoshi, composed of 1 million satoshi 1 bitcoin), through the BRC20 protocol to issue a token or 1 Satoshi (1 Satoshi) to issue a token or multiple tokens, NFTs, domain names, I will use popular examples and written language to explain the principle.

Every time we transfer money in Bitcoin or other blockchain networks, in addition to the transfer amount, you can also fill in the remarks (just like every time you place an order with Meituan, there will be a remarks box, and in the remarks box you can fill in the content you need).

BRC20 token issuance is also a similar principle, determine the total amount of BRC20 tokens that need to be issued, deployment, mint (Mint), and transfer, and enter the required information on the remarks box of each satoshi transferred out through the BRC20 protocol as a marker.

For example, if you use Unisat or OKX Wallet to issue BRC20 tokens, you must first set the token name, token amount, and issuance method. We set the token name to AAAA, the total number of tokens is 1000, and the issuance method is deployed. When users come to mint AAAA tokens, write in the remarks box: AAAA tokens, with a total issuance of 1,000 tokens, which will be issued in the form of deployment. After the user mints it, he gets the BRC20 token of AAAA, also known as the inscription. The identification information of these BRC20 tokens can only be identified by indexers, and protocols that support BRC20 will have their own indexers.

Current BRC20 Status

On March 8 of this year, anonymous developer Domo launched the BRC20 protocol, which is based on the Ordinals protocol. The BRC20 experiment was first launched in the Unisat wallet, setting off a speculative boom, PEPE, DOGE and other copy tokens rose wildly, and investors in the crypto community rushed for FOMO for fear of missing out on 100 million.

This sentiment lasted until May, when OKX, a large organization, issued a statement to enter this unknown and full of opportunities to build the foundation of BRC20 with everyone. When OKX joined the track, the market suddenly cooled, liquidity shrank, and users and builders rethought whether the track was sustainable. BRC20, once thought to be an innovation on Bitcoin, could not be sustained for too long without a value-backed MemeCoin, and came to an end.

People who saw the future first, not frustrated by market speculation and brokenness, continued to build the future, waiting for the wind to come. **

At the end of October and November, the speculative market was still a priority, which rekindled the BRC20 track, and after several months of construction of Unisat, OKX, Bitgate wallets or infrastructure, injected new vitality into BRC20, and users were no longer restricted by transactions in the BRC20 ecosystem, which stimulated the enthusiasm of investors and developers, and also rekindled the expectation for the future of BRC20. The new infrastructure upgrade not only improves the performance of the BRC20 protocol, but also introduces more real-world use cases and features, moving it away from the impression that it is just a speculative tool. DEVELOPERS ARE ACTIVELY EXPLORING NEW PROJECTS BUILT ON THE BRC20 FOUNDATION, AND INDUSTRY LEADER UNISAT HAS LAUNCHED THE AMM DEX OF THE BRC20 PROTOCOL, AS IF SEEING THE EARLY PROTOTYPE OF ETHEREUM DEFI.

There are no practical applications other than wallet applications, indexers, and the DEX infrastructure built by Unisat. BRC20 tokens, which rely on emotional speculation, are still dominating the market, which is also considered to be the scene of early Ethereum ICOs.

The Future of BRC20

In the beginning, we did see emotional hype, we didn’t see the actual value, and speculation didn’t always dominate the market, but it will always exist.

In April~May, when Unisat first appeared to serve this market, the entire market foundation was desolate, because users who want to trade BRC20 tokens need 20 points to buy and sell freely in the Unisat market (which means that users need to mint/mint more than 20 times to buy and sell freely), which restricts users’ transactions, and users can’t stay here for too long, on-chain products are difficult enough to use, and users in the crypto market will not tolerate products that restrict their free trading.

**It was precisely because of the lack of infrastructure in the BRC20 market that it was unable to maintain the prosperity of the ecology at that time, so the market was fleeting and was questioned. **

After months of setbacks and construction, the BRC20 has taken a turn for the better and is back on its feet to prove to the market that it hasn’t fallen. With this rise, we see that OKX wallets account for 70% of BRC20 trading volume, and there is no limit to user transactions, and the user experience is smooth. OKX Wallet announced that it would join the BRC20 ecosystem when BRC20 last cooled down, focusing on user experience, and getting the best results when the market bloomed.

Conclusion

BRC20, as a new wave of innovation in the Bitcoin network, has experienced a process of decline and rise. With the continuous improvement of the Unisat wallet and the addition of large institutions such as OKX and Bitgate, the construction of this ecosystem has been accelerated, and we will see more practical applications in the future - DEX/DEX aggregators, cross-chain aggregators, stablecoins, games, etc.

Finally, in this article, I haven’t talked too much about the BRC20 token and ecological projects. At this stage, it is mainly MemeCoin that dominates the market, and there is a lack of ecological project construction, there is a high risk, if you want to participate in this market, you can first learn how to mint tokens in Unisat and OKX wallets.

BRC20 will continue to attract more attention and participation, witnessing it thrive from concept to ecosystem.