What are BRC-20 Tokens and Ordinals?
Bitcoin is going through a major shakeup as BRC-20 and Ordinals pave the way for meme coins and NFTs onto its blockchain for the first time ever.
New Possibilities for the World’s Largest Blockchain
A single Bitcoin can be divided into 100 million individual “satoshis”. Like pennies to a dollar, satoshis are the smallest unit a Bitcoin can be broken down into, and are most frequently used to pay for transfer and exchange fees on the network. Through a new form of inscription introduced by Twitter user Domo, individual satoshi’s are now being ‘tagged’ with additional data in the form of text, images, etc.
After just recently being introduced in January of this year, over 1.05 million of these new inscriptions have already been logged on chain. This has enabled NFT trading on the Bitcoin network for the first time ever, giving users the ability to transfer and trade these newly tagged satoshis from one digital wallet to another, and even buy and sell them on Bitcoin NFT marketplaces like MagicEden. Some have even utilized the Ordinals protocol to inscribe new meme coins on the network, tagging individual satoshis with a new token name and specific amount of that token fixed to it.
These inscriptions, or ‘Ordinals’ as they are often called, have generated both excitement and controversy within the crypto community, and for good reason. While the novel concept of trading new kinds of assets on the Bitcoin network has attracted new users in droves, the added transaction volume that’s come along with it has nearly brought the network to its knees.
The influx of these new assets has presented significant challenges for Bitcoin. Surges in traffic have at times overwhelmed the network, resulting in congestion and delays in transaction processing. On one particularly high volume day the network amassed over 400,000 unconfirmed transactions as it struggled to approve the seemingly endless stream of NFT and meme coin trades flooding in.
With Bitcoin’s total daily transactions usually resting somewhere between 250-300 thousand, the recent spike up to nearly 700 thousand transactions per day has certainly highlighted some clear challenges for Bitcoin in its quest for mainstream adoption. If these recent spikes are any indicator of how Bitcoin would function as a major real-world currency, it’s looking like the blockchain may not be as well prepped for mass adoption as many of us may have thought.
This situation has prompted discussions around the scalability and efficiency of the Bitcoin network, as well as what a “necessary” transaction looks like.
Differing Views in the Bitcoin Community
The Bitcoin community has rarely, if ever, been more divided on a topic than they are on this. Critics of the newly inscribed satoshis (often called “BRC-20 tokens” in reference to Ethereum’s ERC-20 tokens, or “Ordinals” in the case of NFT-like data inscriptions), argue that the inscriptions add no real value to the Bitcoin ecosystem, and do little more than clutter up the network with meaningless trades and transfers.
Supporters, on the other hand, have been quick to rebuttal that the dramatic rise in adoption is a good thing for Bitcoin, regardless of how much bandwidth the new users soak up. Despite already having a strong core of die-hard fans, Bitcoin has struggled to draw the attention of some subsets of the crypto community who find their niche in the world of DeFi or NFTs. While many Bitcoin purist continue to fight the new wave, it’s difficult to tell whether their efforts will result in any kind of meaningful change.
Consensus and Bitcoin’s Resistance to Change
As the debate surrounding the integration of meme coins and NFTs on the Bitcoin network continues, the future remains uncertain. While the Bitcoin network operates in a decentralized manner, where no single entity holds ownership, Bitcoin token holders possess the power to influence its future development. However, making changes to the network is a complex process that requires a “rough consensus” among the community of holders.
To enact any modification to the network, a substantial level of agreement must be achieved. Typically, this entails garnering support from nearly 95% of users who need to vote in favor of a specific proposal for it to be implemented. This high threshold reflects the commitment to maintaining the integrity and stability of the Bitcoin network. Consequently, polarizing issues such as the inclusion of BRC-20 and Ordinals tokens are unlikely to be resolved swiftly due to the considerable consensus required.
How to get BRC-20 Tokens and Ordinals
If you happen to lean towards the new wave of NFT and meme coin traders, it can be difficult to know where to start when looking to get into new protocols like Ordinals. Many new wallets like “Xverse”, “Unisat”, or Hiro” provide an easy way to hold and manage your ordinals and BRC-20 tokens once you’re acquired ownership, but getting your hands on these assets can be quite the challenge for less experienced crypto fans.
Buying, selling, trading, and listing your ordinals and BRC-20 tokens on marketplaces require users to pay gas fees just like any other blockchain network, but with few exceptions like Ethereum, Bitcoin fees are often significantly higher.
The easiest path for getting into Bitcoin ordinals seems to be loading up one of the aforementioned crypto wallets with a few hundred dollars in Bitcoin from an exchange like Coinbase or Binance, heading over to a popular marketplace like MagicEden, and then tightly clenching your fists in preparation for the pain of spending $50-$100 on fees.
Be careful though! Even once you’ve got your assets safely secured in your wallet you’ll need more Bitcoin on hand for gas fees if you ever want to list them on another marketplace to try and turn a profit. It’s a tough road to walk, but the returns you can see on some of these meme coins and hype NFTs make it more than worth it for successful traders.
Navigating the Future of Bitcoin
In conclusion, the emergence of meme coins (BRC-20 tokens) and NFTs (Ordinals) on the Bitcoin network have shook up the crypto community in a way that hasn’t been seen in quite some time. The ongoing debate surrounding their integration reflects the pivotal crossroads at which Bitcoin and it’s community finds itself: Welcome innovation and accept the negative side-effects that so often come with it, or cling to the old ways and avoid the potential pitfalls of venturing into the unknown.