BRC-20

BRC-20 is an experimental standard for creating fungible tokens on the Bitcoin network. It uses the Ordinals protocol to inscribe small text files, written in a data format called JSON, into Bitcoin transactions. Each inscription declares an action: deploying a new token with a name and supply, minting units of it, or transferring units to another holder. Bitcoin itself does not understand these instructions; off-chain software called indexers reads every inscription in order and calculates who owns how many tokens.

The standard was created in March 2023 by a pseudonymous developer known as "domo", who described it as an experiment. Despite this, BRC-20 tokens quickly attracted heavy speculation, and in May 2023 the rush to mint them drove Bitcoin transaction fees to their highest levels in about two years. The name echoes Ethereum's ERC-20 standard, but BRC-20 works very differently, because Bitcoin has no smart contracts of the kind Ethereum uses. It is part of the wider movement of Bitcoin NFTs and other assets built on Ordinals.

Imagine a public noticeboard where anyone can pin a note. One person pins "I am creating a coupon called PIZZA, there will be 21 million of them, and anyone can claim up to 1,000 at a time." Others then pin notes saying "I claim 1,000 PIZZA." Later someone pins "I send 500 PIZZA to Sam." The board itself does not count anything, but bookkeepers who read every note in order can work out who owns which coupons.

BRC-20 uses Bitcoin as that noticeboard. Each note is an inscription in a Bitcoin transaction, and indexers act as the bookkeepers. The approach is simple and works on Bitcoin without any changes to its rules, but everything depends on the bookkeepers reading the notes the same way.

Each BRC-20 action is an inscription with a short JSON message. The three core operations are:

1. Deploy. An inscription sets a four-letter ticker (later standards allowed other lengths), the maximum supply and the maximum amount per mint. The first valid deploy of a ticker wins.
2. Mint. Anyone can inscribe a mint message to claim up to the per-mint limit until the maximum supply is reached. Minting costs only Bitcoin fees, so it was often open to anyone on a first-come basis.
3. Transfer. To send tokens, a holder first inscribes a transfer message for a given amount, then sends that inscription, held in an unspent transaction output, to the recipient.

Indexers apply a fixed set of rules to decide which inscriptions are valid, such as rejecting mints beyond the supply. Wallets and marketplaces rely on these indexers to display balances.

The first BRC-20 token, ORDI, was deployed in March 2023. Within weeks, thousands of tokens had been deployed, many with joke or meme tickers, and some traded at high valuations on specialised marketplaces and later on major exchanges. The surge in inscriptions pushed up transaction fees and filled the mempool, causing delays for ordinary Bitcoin users. Debate over whether this was a healthy new source of miner revenue or spam on the network split the Bitcoin community. In April 2024, the Runes protocol, designed by Ordinals creator Casey Rodarmor as a more efficient alternative that avoids extra inscription transactions, launched at the halving and drew much of the attention away from BRC-20.

ERC-20 tokens are managed by smart contracts that enforce balances and transfers on-chain, so the Ethereum network itself guarantees the rules. BRC-20 tokens have no such contract: the rules exist only in indexer software, and two indexers could, in principle, disagree. Transfers on BRC-20 require at least two transactions and use more block space, making them slower and more expensive. On the other hand, BRC-20 inherits Bitcoin's security for recording the inscriptions themselves and needs no changes to Bitcoin. These trade-offs are part of the wider discussion of Bitcoin DApps.

BRC-20 tokens carry several risks:

• Indexer dependence. Balances depend on indexer software and its maintainers; bugs or rule changes can affect what holders see.
• Wallet errors. Spending the wrong output from an ordinary wallet can destroy a transfer inscription or tokens.
• High fees. Busy periods make minting and transferring costly, sometimes more than the tokens are worth.
• Speculation. Most BRC-20 tokens have no use beyond trading, prices are extremely volatile, and many have fallen to near zero.
• Scams. Fake tickers and copycat tokens are common, and thin markets are easy to manipulate.

The standard's creator repeatedly described it as an experiment, and holders should treat BRC-20 tokens as highly speculative. The underlying network is covered in Bitcoin Blockchain.

• Ordinals documentation