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BRC-20 Meaning

BRC-20 is an experimental fungible token standard built on the Bitcoin blockchain using the Ordinals protocol. Unlike Ethereum-based token standards, BRC-20 does not rely on smart contracts. Instead, it uses JSON-formatted data inscribed directly onto individual satoshis to define, mint, and transfer tokens.

The Ordinals protocol, introduced by Casey Rodarmor, assigns each satoshi a unique serial number based on the order in which it was mined. This enables satoshis to carry additional data, effectively transforming them into identifiable digital artifacts. BRC-20 leverages this system to represent fungible token balances and transfers through inscription metadata rather than executable code.

Because BRC-20 tokens exist directly on Bitcoin, they inherit Bitcoin’s proof-of-work security model, benefiting from the network’s extensive mining power and long-standing resilience. However, the absence of smart contracts limits programmability and makes token management less flexible compared to Ethereum or other smart contract platforms.

BRC-20 sparked significant interest by demonstrating that token standards and experimental DeFi-like activity could emerge on Bitcoin without altering its base protocol. This led to increased transaction volume, higher fees, and debates around Bitcoin’s intended use as a monetary network versus a broader data layer.

While still early and controversial, BRC-20 highlights a growing trend of extending Bitcoin’s utility beyond simple value transfer. It represents a tradeoff between security and expressiveness, opening new design spaces while challenging Bitcoin’s conservative ethos.

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