BRC-20 Token Complete Guide: A Comprehensive Overview from Understanding to Investment

The Rise and Evolution of the BRC Coin Ecosystem

In early 2023, despite severe challenges in the crypto market, token standards based on the Bitcoin blockchain emerged as a new force. The appearance of BRC-20 tokens marked a significant breakthrough in the Bitcoin ecosystem, not only expanding Bitcoin’s application potential beyond traditional payments but also sparking a new wave across the entire crypto space. This innovative standard transplanting the Ethereum ERC-20 concept onto the Bitcoin network demonstrates the limitless possibilities of cross-chain protocols.

In-Depth Understanding of BRC-20: The Token Revolution on Bitcoin

BRC-20 tokens are a type of digital asset adhering to specific standards, deployed on the Bitcoin blockchain. Similar to Ethereum’s ERC-20 tokens, the BRC-20 standard defines the basic attributes and interaction methods of tokens, but its core advantage lies in inheriting the security and decentralization features of the Bitcoin network. These BRC coins (BRC tokens) can represent interchangeable assets and support seamless integration with smart contracts and decentralized applications (dApps).

According to 2023 data, the BRC-20 ecosystem has created over 55,000 different tokens, fully demonstrating the robustness of this standard. In the peak market month of May, the Bitcoin network processed nearly 400,000 BRC token transactions, with total transactions exceeding 40 million since the standard’s launch. As of now, the total market cap of BRC-20 tokens has surpassed $450 million, with a trading volume over $145 million, reflecting strong market demand.

Bitcoin Ordinals and NFTs: Two Pillars of Token Innovation

Although BRC-20 tokens and Bitcoin Ordinals differ technically, both represent significant expansions of the Bitcoin ecosystem into DeFi, digital collectibles, and asset tokenization. Ordinals create non-fungible assets on Bitcoin by assigning unique serial numbers to each satoshi, thus giving rise to Bitcoin NFTs. As of the latest data, over 45 million Ordinal inscriptions have been minted, showing the community’s enthusiastic embrace of this innovative form.

The growth momentum of the Bitcoin NFT market is equally impressive. Within just three months of launch, trading volume exceeded $200 million, becoming a major force in the digital collectibles field. Whether digital art enthusiasts or investors, all are exploring asset ownership on the Bitcoin network through this new approach.

Practical Applications of BRC-20 Tokens

The versatility of BRC coins opens up imagination across various industries:

Tokenization of Real Assets: Real estate, artworks, commodities, and other tangible assets can be digitized via BRC-20 tokens, enabling efficient on-chain trading and settlement.

Decentralized Finance (DeFi): BRC-20 tokens are an important part of the DeFi ecosystem, allowing users to engage in lending, liquidity mining, and other financial activities on Bitcoin-based platforms, while enjoying the security of the Bitcoin network.

Gaming and Virtual Assets: Game developers utilize the BRC-20 standard to create in-game assets and equipment, enabling players to buy, sell, and trade virtual items securely.

Identity Verification and Credentials: Digital identities and certificates represented by BRC-20 tokens provide secure, verifiable interactions for online services.

Corporate Rewards Programs: Brands can issue BRC coins for customer loyalty programs, creating transparent and trustworthy reward mechanisms.

Governance and Voting Rights: Decentralized organizations (DAOs) distribute voting rights via BRC-20 tokens to facilitate on-chain democratic decision-making.

Blockchain Interoperability: BRC-20 tokens act as bridges between Bitcoin and other public chains, promoting interconnected cross-chain ecosystems.

Innovative Financial Products: Developers can create stablecoins, derivatives, and other complex financial instruments based on the BRC-20 standard, enriching the financial layer of the Bitcoin ecosystem.

Practical Guide to Buying BRC-20 Tokens

Purchase via Centralized Exchanges (CEX)

Many mainstream trading platforms now support BRC-20 token trading. For example, tokens like Ordinals(ORDI), SATS, and Rats(RATS) are supported by multiple exchanges. The typical purchase process includes:

Account Setup: Register an account on the chosen exchange, complete KYC verification, and deposit stablecoins (like USDT) or other base cryptocurrencies.

Trading Pair Selection: Access the spot trading section, search for BRC token trading pairs (e.g., ORDI/USDT, SATS/USDT), and check real-time prices.

Order Execution: Choose market orders for immediate execution based on current prices or set limit orders for the best price. For example, ORDI is currently around $4.17.

Asset Management: After successful purchase, tokens can be stored in the exchange account or withdrawn to a self-custody wallet for enhanced security.

Decentralized Trading via Web3 Platforms

For BRC-20 tokens not yet listed on major exchanges, trading can be done through compatible Web3 platforms:

Platform Selection: Evaluate the reliability, security, and user experience of Web3 platforms supporting BRC-20 trading, and choose those with reasonable fee structures.

Wallet Setup: Prepare digital wallets supporting the BRC-20 standard (such as Ordinals Wallet, Unisat, Xverse, or Sparrow Wallet), ensuring full compatibility with the Bitcoin network.

Bitcoin Acquisition: Purchase BTC on CEXs, with Bitcoin currently priced around $88.83K. BTC will be used for trading BRC tokens on Web3 platforms and paying network transaction fees.

Fund Transfer: Send the purchased BTC to your self-custody wallet. This step is crucial, as BTC is needed both for trading and paying on-chain transaction fees.

Platform Connection: Log into the Web3 trading platform, connect your wallet following its instructions, and grant necessary permissions.

Token Trading: Locate the target BRC coin, input the desired purchase amount, and confirm the order. The specific process varies by platform, so follow platform instructions.

Secure Storage: After trading, ensure proper safekeeping of BRC-20 tokens. Besides storing in compatible wallets, large assets should be transferred to hardware wallets for cold storage.

Ongoing Management: Regularly monitor market trends and token updates, adjust investment strategies timely, and evaluate the long-term value of BRC coins.

Important Considerations for Investing in BRC-20 Tokens

Before entering the BRC-20 token market, investors should fully understand the risk characteristics of these assets:

The BRC-20 market is still in early exploration, with significant price volatility and liquidity gaps compared to mature markets. Token project quality varies, requiring investors to have basic project evaluation skills. Transaction fees on the Bitcoin network may spike sharply during congestion, increasing trading costs.

It is recommended to conduct thorough market research and risk assessment before investing, and consult financial professionals if necessary. Diversify investments to control risk exposure.

Outlook: The Future of the BRC-20 Ecosystem

The rise of BRC-20 tokens, Bitcoin NFTs, and Ordinals marks an important watershed in the crypto asset space. These innovative standards are redefining the boundaries of Bitcoin usage, providing developers, investors, and collectors with new ways to participate.

As the ecosystem matures, the application scope of BRC coins will further expand. However, market participants should remain rational, pursue new opportunities prudently, and not forget to guard against risks. Deep understanding of the underlying technology, accurate project valuation, and cautious investment strategies are the right ways to seize opportunities in this wave of innovation.