Using BRC-20 Tokens on Bitcoin

Dear Bankless Nation,

Last week, we highlighted the BRC-20 opportunity as one of the top Bitcoin buy signals right now. Today, we're diving into that ecosystem and showing you how to get involved with this experimental new effort.

- Bankless team

Bitcoin’s Brave New Frontier

Bankless Writer: William Peaster

While unlike Ethereum’s ERC-20 tokens in style, the BRC-20 method is a new way to release tokens on Bitcoin. Interestingly, this system is built on the Ordinals “Bitcoin NFT” protocol and has boomed in popularity in recent weeks. For today’s post, let’s get you up to speed on the basics of the BRC-20 ecosystem!

• Goal: Try BRC-20s on Bitcoin
• Skill: Intermediate
• Effort: 1 hour
• ROI: Tapping into the blossoming Bitcoin token scene

The experimental BRC-20 standard was first introduced by domo in March 2023.

BRC-20s are built atop the Ordinals protocol, an onchain NFT minting system that “inscribes” data onto individual satoshis – the smallest bitcoin (BTC) denomination. Ordinals mints have sparked a huge surge of NFT activity atop Bitcoin since first appearing in January 2023.

BRC-20s aren’t smart contract-based tokens like ERC-20s are, and they’re not completely fungible either. Roughly speaking and in Etherean terms, they’re sort of like a cross between a fungible DeFi token and a semi-fungible ERC-1155 Ethereum NFT, but on Bitcoin. This semi-fungibility dynamic stems from the way a BRC-20 is created by inscribing a snippet of JavaScript Object Notation (JSON) text into Bitcoin NFTs via the Ordinals protocol.

For all you onchain pioneers out there, though, note that the BRC-20 model is an unofficial and experimental standard. If you do decide to dive deeper into these tokens, please keep in mind that this is the edge of Bitcoin’s frontier right now so tread cautiously. Never trade with more money than you can afford to lose!

Where to Find BRC-20 Tokens 🔍

So now you understand the gist of BRC-20 tokens. But where to actually find and track these tokens?

As shown in the screenshot above, one straightforward platform for doing so right now is brc-20.io. According to the site, there are currently 190 BRC-20 tokens in existence that collectively account for a market cap of ~$146 million USD. Not bad for a brand new token ecosystem!

If you scroll down the homepage of brc-20.io, you can hone in on top tokens with the most volume, trending projects, and also new upstarts that have just hit the charts. Clicking onto specific tokens will show you marketplaces and specific trading pairs you can consider.

GOING BANKLESS WITH IMMUTABLE

Unlock the future of gaming with Immutable. Experience Immutable’s transformative power, where true digital ownership and web3 technology redefine gaming. Join a vibrant ecosystem backed by our leading web3 gaming platform, millions of players and a diverse lineup of 150+ games. Build, play and connect.

Discover More

Creating a BRC-20 Wallet 💳

Now that you have a sense for tracking BRC-20 tokens, it’s time to set up your first BRC-20 wallet.

Caution: any ol’ regular bitcoin wallet won’t be sufficient to trade BRC-20s. You’ll need a wallet that’s specially tailored to handle Ordinals NFTs and thus by extension BRC-20s.

For this, one of the most popular choices right now is UniSat.

Not only does UniSat have a full-fledged BRC-20 tracker and marketplace system of its own, but it also has one of the easiest-to-use Ordinals and BRC-20 wallets right now. The main avenue for this wallet is a browser extension, currently available on Chrome.

Once you’ve downloaded the extension, you can follow these steps to proceed:

1. Press the “Create new wallet” button
2. Create a password, which you will use to unlock your wallet going forward
3. Save your wallet recovery phrase in a secret + safe + secure location, then press “Continue”
4. Review the wallet info on the ensuing page and then press “Continue” to move on
5. Once that’s done, you’ll have a brand new Ordinals-friendly bitcoin address that you can start sending BTC to (e.g. from Coinbase, Kraken, Binance, etc.) in order to dive deeper!

How to Use BRC-20s 🔁

With the BRC-20 ecosystem being as early and rudimentary as it is right now, the main thing to do with BRC-20s today is to… you guessed it… trade ‘em.

Again, without sophisticated DeFi composability via smart contracts, buying and selling is the ticket with BRC-20s at the moment. The aforementioned UniSats Marketplace is a good starting place for seeing what’s on the market at any given time. Here you can sort through different popular BRC-20s and review current listings and buy orders.

Since BRC-20s aren’t completely fungible, they’re listed and sold in batches, e.g. lots of 100 each. For instance in the image above we can see listings of ORDI, currently the largest BRC-20 by market cap, in batches of 30, 100, 200, etc. The unit of account and exchange here are satoshis, or sats, and UniSats shows you how much bitcoin that amounts to in USD next to all listings and orders on the platform at any given time.

If you find a coin listing in an amount that suits you, you’d press the “Buy” button, connect your UniSat wallet when prompted, and then review the purchase details, which will be on an interface like so:

If you have the “Available Balance” needed to proceed, press “Confirm” and complete the transaction with your wallet. Once the trade transaction has confirmed you’ll be able to use the “My Inscriptions” tab in the UniSats Marketplace to review your current holdings. Later, to make listings for your BRC-20s, you’d go to the “My Orders” tab and pick from among your current tokens to create new orders as you please.

New frontiers around BRC-20 🌄

Something else to keep an eye on here? The arrival of Ordinals and BRC-20s has kicked off an incredible flurry of additional Bitcoin-based token experiments. These projects include:

• 🔸ORC-20 — An experimental standard via OrcDAO that attempts to extend the features of BRC-20s while also being backwards compatible with these tokens
• 🔸BRC-21 — An experimental standard via Interlay Labs for minting BRC-20s on Bitcoin to represent tokens originally minted elsewhere, e.g. on Ethereum
• 🔸BTC-20 — An experimental BRC-20 token via Omnisat that is pegged to the value of bitcoin
• 🔸BRC-30 — An experimental staking protocol via OKX that lets BRC-20 holders stake their tokens in order to receive new “BRC-30” tokens

That said, be sure to keep some of these additional experimental efforts on your radar as the newly resurgent Bitcoin token ecosystem continues to rapidly evolve!

Zooming out 🧠

The combined market cap of all BRC-20s in existence today is estimated to be around $140 million USD right now, which is just shy of 0.03% of BTC’s current market cap of $514 billion USD.

That gives you an idea of how small the BRC-20 ecosystem is at the moment, but nevertheless it’s growing fast. Mind you, this ecosystem didn’t even exist just three months ago!

Bitcoin has had various tokenization efforts come to the fore throughout multiple eras of its history, some more successful than others. For now it’s too early to project how BRC-20s will fare against these forerunners over time, but there’s no question they’re generating tons of intrigue currently and paving the way to new Bitcoin DeFi frontiers. Watch this space!

Action steps

• Try BRC-20s: get a UniSat wallet and review the marketplace 🟠
• Learn about recent Bitcoin catalysts: become a Premium Subscriber to see the full 10 Bitcoin Buy Signals primer