Opportunities of BRC-20: Making Bitcoin Play the Game of Smart Contracts
The article titled "Data: BRC-20 token Ordi broke through $10 in a short-term, and its market value exceeded $200 million" has been circulating in various communities, as if everyone is celebrating the success story of this BRC-20 token. However, upon closer examination of liquidity and transaction records, it is not difficult to notice that these token holders are only wealthy on the blockchain, and creating a myth is not that easy. Let's set aside the dream of getting rich for now and take a look at what opportunities BRC-20 has brought to the Bitcoin network.
Often referred to as “digital gold”, Bitcoin has a unique and irreplaceable position in the cryptocurrency market. However, with the introduction of Ethereum’s ERC-20 protocol, which allowed anyone to create tokens, and the global phenomenon of non-fungible tokens (NFTs), the Bitcoin network started to seem somewhat outdated. In reality, Bitcoin's innovation has been progressing slowly but steadily, as seen in the introduction of layers such as the Lightning Network, Stacks, and the Ordinals protocol. With the two upgrades SegWit and Taproot, Bitcoin has finally achieved the ability to record arbitrary data on the blockchain.
BRC-20 is an experimental standard for issuing fungible tokens on the Bitcoin network, created by Twitter user @domodata on March 8th of this year using the Ordinals protocol. Bitcoin can finally have its own token standard, just like Ethereum!
However, due to the lack of support for smart contracts on the Bitcoin network, BRC-20 can only utilize the Ordinals protocol for token contracts, minting, and transfers. Nevertheless, a method has been found to enable Bitcoin to play with fungible tokens, marking a new milestone on the Bitcoin network.
Recently, the daily transaction volume on the Bitcoin chain has reached new heights, with nearly 670,000 transactions in a single day, and over 60% of these transactions linked to the Ordinals protocol. Transaction fees and block rewards have also skyrocketed, making miners the biggest beneficiaries of this innovation.
Although many opportunities have been created by the recent BRC-20 hype, I’m still more concerned about the regulatory risks this entails. It should be noted that the reason Bitcoin has not attracted the attention of the SEC is due to its "inherent limitations," and BRC-20 attempts to remove said limitations. Technically, it has not yet surpassed Ethereum, but it could potentially become an unregistered securities market in the eyes of the SEC, just like Ethereum, which could be a blessing or a curse that cannot be avoided.
Without a doubt, BRC-20 adds some fun to the Bitcoin network, but the associated risks should not be ignored. Investors should not blindly follow the trend due to FOMO (fear of missing out) and always remember to DYOR (do your own research). After all, in the world of cryptocurrency, opportunities and risks always go hand in hand.