The demand for “Bitcoin Request for Comment” (BRC-20) tokens, built using Ordinals and stored on the Bitcoin (CRYPTO: BTC) base chain, has surged dramatically, with their market value increasing by several hundred percent. Currently, the combined market capitalization of over 8,800 BRC-20 tokens stands at $137 million – a remarkable 682% increase from $17.5 million just a week ago, as per data monitored by Ordinals-builder Ordspace, Coindesk reported.
The BRC-20 token standard was developed in early March by an anonymous on-chain analyst named Domo.
The goal was to enable the issuance and transfer of fungible tokens on the Bitcoin blockchain.
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This innovative approach came shortly after the launch of the Ordinals Protocol, which permits users to embed digital art references within small transactions on the Bitcoin blockchain.
Dynamo DeFi, a pseudonymous analyst and yield farmer, commented in their weekly newsletter, “Ordinals on Bitcoin have had unintentional consequences. One of these is the invention of the BRC-20 fungible token standard. It’s now possible to create fungible tokens on Bitcoin. Since inception, BRC-20s have accounted for nearly 6% of all Bitcoin activity.”
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Although BRC-20 may sound similar to the popular ERC-20 standard, they are distinct, with the former lacking the ability to interact with smart contracts.
The ERC-20 is a technical standard for creating fungible tokens on the Ethereum (CRYPTO: ETH) blockchain, which is well-known for its smart contract capabilities.
Crypto exchange Binance clarified in an explainer, “This [BRC-20] is not a token standard like you’re accustomed to with EVM chains, which create smart contracts that manage the token standard and its various rules. Instead, it’s simply a way to store a script file in Bitcoin and use it to attribute tokens to satoshis and then allow them to be transferred between users.”
The majority of active BRC-20 tokens are classified as meme coins – cryptocurrencies derived from internet memes or humorous features. As of now, the top three coins created using the BRC-20 standard are ORDI, OG, and PEPE. According to Mark Jeffrey from Boolean Fund, the introduction of BRC-20 tokens has rendered crypto exchanges unnecessary.
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