The BRC-20 token standard is an experimental framework for creating fungible tokens on the Bitcoin blockchain using the Ordinals protocol. Unlike Ethereum's ERC-20 standard, which relies on smart contracts, BRC-20 uses JSON inscriptions written directly onto satoshis (the smallest unit of Bitcoin) to define and manage token metadata and supply.
BRC-20 tokens are deployed, minted, and transferred by inscribing specific JSON files into Bitcoin transactions. These tokens operate without smart contract functionality, instead leveraging the Ordinals system introduced in early 2023. The BRC-20 token standard has gained attention for enabling token-like behavior on a blockchain historically limited to simple currency transfers.
BRC-20 relies entirely on the capabilities of Ordinals and inscriptions to represent and manage token operations. The process differs significantly from smart contract-based tokens on Ethereum or other chains.
The BRC-20 token standard uses simple JSON inscriptions attached to individual satoshis to define token details and actions. Each inscription includes metadata that specifies whether the action is to deploy a token, mint new units, or transfer existing ones. These inscriptions are added to Bitcoin transactions and stored permanently on the blockchain. Specialized indexing tools scan these inscriptions to reconstruct token balances and histories. This method enables token creation without the use of smart contracts.
The BRC-20 token standard does not support smart contracts or virtual machines. Instead, all logic is handled by clients and indexers that parse the Bitcoin blockchain to interpret inscriptions. This architecture means that token balances and ownership are not stored on-chain in a programmable way but are instead tracked off-chain by BRC-20-compatible indexers.
Each step is registered as a unique inscription, which must be interpreted in sequence to maintain consistency across users and applications.
Although both standards create fungible tokens, the underlying technologies differ significantly. This section highlights structural and functional contrasts.
ERC-20 operates on Ethereum, using smart contracts and the Ethereum Virtual Machine (EVM) to manage balances and state changes. BRC-20 functions on Bitcoin, using the Ordinals protocol and satoshi inscriptions without an execution layer. The lack of a virtual machine in Bitcoin means BRC-20 relies on third-party infrastructure to interpret token activity, whereas ERC-20 functions natively within Ethereum’s architecture.
ERC-20 tokens support a range of complex operations, including staking, yield farming, and governance. These features are possible because Ethereum allows programmable contracts that execute logic on-chain. BRC-20 tokens are limited to basic actions: deploy, mint, and transfer. They cannot support conditional logic or direct interaction with other decentralized applications.
ERC-20 contracts store balances within the smart contract's state. BRC-20 balances are calculated by scanning the blockchain for relevant inscriptions and reconstructing balances based on these actions. This model increases reliance on indexers and introduces fragmentation when different clients interpret inscriptions differently.
Despite its limitations, the BRC-20 token standard has sparked interest and speculative activity. Several tokens have seen rapid adoption.
The ORDI token was one of the first BRC-20 tokens deployed and has become a symbol of the standard’s viability. As of mid-2023, ORDI remained the most traded BRC-20 token by volume. Trading of ORDI began on platforms like UniSat and later expanded to centralized exchanges as interest in BRC-20 tokens grew.
Platforms like UniSat, OKX Wallet, and Magic Eden have added BRC-20 support, including minting, transfers, and token indexing. These marketplaces enable users to manage inscriptions more easily and provide user interfaces for discovering and trading BRC-20 tokens.
Several Ordinals-compatible wallets have added BRC-20 features. These include:
They enable users to view, transfer, and manage BRC-20 tokens without needing technical knowledge of JSON or inscription mechanics.
The experimental nature of the BRC-20 token standard has led to several technical and operational criticisms.
The use of Bitcoin block space for token inscriptions has resulted in network congestion and increased transaction fees. During peaks in BRC-20 activity, mempool usage surged, and average confirmation times increased. Critics argue that BRC-20 inscriptions compete with traditional Bitcoin transactions for limited block space.
Since BRC-20 has no built-in state or contract logic, it relies on indexers to track balances. This introduces inconsistencies when different indexers interpret inscriptions differently or experience outages. Token holders must trust that the indexer used by their wallet or marketplace correctly processes all relevant inscription data.
Without smart contracts or native validation rules, BRC-20 transactions can be vulnerable to misinterpreted transfers or duplicate mints. Indexer logic must handle edge cases to prevent incorrect balances. This introduces complexity for developers and increases the risk of bugs or exploits.
The BRC-20 token standard is still evolving. Its emergence reflects a growing interest in expanding Bitcoin’s use cases beyond payments.
Developers are exploring improved indexer synchronization, inscription compression, and layer-2 scaling solutions. Discussions around dedicated BRC-20 standards for better performance and user experience continue on GitHub and community forums.
Whether BRC-20 becomes a lasting part of the Bitcoin ecosystem depends on how developers and users address current technical constraints and build supporting infrastructure.
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