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Bitcoinmagazine
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What are BRC-20 Tokens?
- BRC-20 tokens are an experimental token standard on the Bitcoin blockchain inspired by ERC-20 tokens on Ethereum.
- Introduced by Domo in March 2023, BRC-20 tokens utilize the Bitcoin Ordinals protocol to inscribe data onto satoshis.
- Unlike ERC-20 tokens, BRC-20 tokens do not use smart contracts, simplifying asset tokenization on the Bitcoin network.
- Token deployment involves inscribing token properties onto a satoshi, enabling minting and transfer through Bitcoin transactions.
- Pros of BRC-20 tokens include simplicity in creation and robust security leveraging Bitcoin's features.
- Cons include lack of smart contracts limiting functionality and higher fees during network congestion.
- Practical applications of BRC-20 tokens include decentralized application tokens, tokenized assets, loyalty points systems, and community tokens.
- BRC-20 tokens have faced issues with network congestion and limited interoperability outside the Bitcoin network.
- Runes Protocol, introduced as a newer and more efficient alternative, offers scalability and improved performance for token creation on the Bitcoin blockchain.
- Runes protocol, utilizing Bitcoin's UTXO model and OP_RETURN opcode, provides streamlined token creation and supports the Lightning Network.
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