Ordinals have breathed new life into Bitcoin. For the first time in a long time, I am having trouble following all the new developments, tools, markets, and apps developers are creating for the orange coin. There is something new to follow every day.
To my surprise last night, @domodata on Twitter, inspired by @sats_names and our very own Redphone, created the brc-20 standard for Bitcoin. The brc-20 standard, named after the well-known erc-20 standard, uses Ordinal Theory to create fungible tokens directly on Bitcoin. Unbeknownst to many, Lightning already supports token transfers with TARO, but that requires specialized node-brokers and maintaining Lightning channel liquidity. Brc-20 inscribes the tokens directly to a sat, much like a user inscribes Ordinals. From here, the token balance on the sat can be split to other sats and transferred. These are tokens directly on Bitcoin L1.
Before readers get too excited, this is all experimental, and this initial group of tokens will functionally be worthless. Don’t start buying random sats because they have tokens inscribed on them. There are areas for improvement with this standard, and readers should instead follow this to see how teams further develop this.
These are tokens directly on Bitcoin L1. Nonetheless, this is exciting. In my prior post, I shared my guess that Ordinal marketplaces will have to start incentivizing use to outcompete their competition. The brc-20 standard could be the first step in them using tokens for this. Ordswap, according to Domo, has already critiqued the brc-20 standard for Domo, which seems to suggest some interest.
Also, this standard could easily be expanded to forks of Bitcoin, for example, Dogecoin. Dogecoin seems rife for meme-tokens, and a drc-20 standard there could create some extensive speculative fever.