An experimental token standard built on Bitcoin using Ordinals inscriptions that allows the creation, minting, and transfer of fungible tokens directly on the Bitcoin blockchain. Named as a nod to Ethereum's ERC-20 standard.
An experimental token standard built on Bitcoin using Ordinals inscriptions that allows the creation, minting, and transfer of fungible tokens directly on the Bitcoin blockchain. Named as a nod to Ethereum's ERC-20 standard.
BRC-20 is a fungible token standard for the Bitcoin blockchain, created in March 2023 by an anonymous developer known as "domo." It leverages the Ordinals protocol to inscribe JSON data onto satoshis, enabling the deployment, minting, and transfer of tokens directly on Bitcoin. The name is a deliberate reference to Ethereum's ERC-20 standard, though BRC-20 tokens are technically very different in how they function.
Unlike Ethereum's smart-contract-based tokens, BRC-20 tokens rely on an off-chain indexer to track token balances based on inscribed JSON operations. When someone deploys a BRC-20 token, they inscribe a JSON payload specifying the token name, maximum supply, and mint limit per transaction. Users mint tokens by inscribing mint operations, and transfers work similarly through inscriptions. This approach is simple but limited — there are no smart contracts governing BRC-20 tokens, which means no complex DeFi functionality.
BRC-20 tokens generated enormous activity and fees on the Bitcoin network during 2023, with some tokens reaching market capitalizations in the hundreds of millions of dollars. However, the standard is experimental, inefficient (each operation requires an on-chain inscription), and lacks the programmability of Ethereum-based tokens. Many in the Bitcoin community view BRC-20 as a speculative fad, while others see it as the beginning of a broader tokenization trend on Bitcoin. The standard continues to evolve, with proposals for more efficient successor standards.
BRC-20 tokens use Ordinals inscriptions to record JSON operations on the Bitcoin blockchain. A deploy inscription sets the token's parameters (name, supply, mint limit). A mint inscription creates new tokens. A transfer inscription moves tokens between addresses. An off-chain indexer reads these inscriptions and maintains a database of token balances, since Bitcoin's protocol itself has no native concept of custom tokens.
ERC-20 tokens live on Ethereum and are governed by smart contracts that enforce rules like total supply, transfers, and allowances programmatically. BRC-20 tokens are simply JSON text inscribed on Bitcoin — they have no smart contract logic and rely on off-chain indexers to interpret the inscriptions. ERC-20 tokens can interact with DeFi protocols natively, while BRC-20 tokens are currently limited to simple deploy, mint, and transfer operations.
BRC-20 tokens are highly experimental and speculative. While some early BRC-20 tokens appreciated dramatically, the standard is immature, inefficient, and lacks the programmability needed for serious financial applications. The vast majority of BRC-20 tokens have little or no utility beyond speculation. Investors should treat BRC-20 positions as very high-risk and size them accordingly, if they participate at all.