Binance Research Report: BRC-20 – Principles, Status, and Future

Binance Research Report: BRC-20 - Overview and Future

Original title: BRC-20 Tokens – A Primer

Original author: Shivam Sharma

Original source: Binance Research

Translation: Lynn, MarsBit

Table of Contents

Key Points



What are ordinals and inscriptions?

What fields are BRC-20 tokens applicable to?

What does the BRC-20 market look like?

How does using BRC-20 tokens compare to using other standard tokens?

The Impact of BRC-20 on the Bitcoin Market

Fungibility vs. non-fungibility


Transaction fees

Community Responses

“Pro-fee” camp

“Low-fee” camp


Risks and Challenges

  1. Limited infrastructure

  2. No practical utility

  3. High risk of fraud

Future Outlook

Bitcoin Layer 2


Innovations in token design



About Binance Research

——————– 1. Key Points

❖ BRC-20 tokens are the latest innovation from the Ordinals Protocol and have taken over Crypto Twitter timelines in recent weeks.

❖ BRC-20 is an experimental token standard that enables the deployment, minting, and transfer of non-fungible tokens on the Bitcoin blockchain. While the total market cap of these tokens has reached as high as $1 billion, the tokens themselves are relatively simple, with no smart contract functionality, unlike ERC-20 or BEP-20 tokens.

❖ Due to the minting frenzy in early May, the Bitcoin mempool became severely congested, causing network transaction fees to soar.

❖ Considering the importance of supplementing miner income as block rewards decrease over time, many in the ecosystem have welcomed higher fees. However, others have been more critical in discussing the drawbacks of pricing out users in more price-sensitive regions.

❖ At this early market stage, BRC-20 tokens bring significant risks and require more infrastructure support. As the founder said, this is an experiment and potential risks should be strictly reviewed.

❖ Ordinal, Inscription, and BRC-20 tokens help demonstrate a clear organic demand for Bitcoin block space beyond traditional currency use cases. This may be a key factor in the long-term sustainability of the Bitcoin security model.

❖ The development of Bitcoin Layer 2, infrastructure support for BRC-20, and further token design innovation may be the next step in this legend.

2. Introduction

Since the Ordinals Protocol first went live earlier this year and Inscriptions (i.e. Bitcoin NFTs) began to proliferate, innovation in the Bitcoin ecosystem has surged again. BRC-20 tokens are the latest result of this ordinal-driven innovation and have been all the rage in the past few weeks.

BRC-20 was first conceptualized in March 2023, as an experimental token standard that supports the deployment, minting, and transfer of non-fungible tokens on the Bitcoin blockchain . This latest innovation means that both fungible and non-fungible tokens (inscriptions) have become part of the wider Bitcoin ecosystem. The total market value (“market cap”) of these tokens has been on the rise and even exceeded $1 billion in early May. In addition, the leading BRC-20 token $ORDI has been listed on multiple exchanges.

While many are excited about the increase in internal Bitcoin activity and the apparent new energy resonating in the community, others feel that this deviates from Bitcoin’s “design purpose” and are not satisfied with the impact of these innovations on Bitcoin transaction fees.

In this report, we explore the origins of BRC-20, its current market outlook, its comparison to ERC-20 tokens, its impact on Bitcoin metrics, community divisions, potential risks, and our outlook for the future.

Disclaimer : BRC-20 tokens are highly risky and are in the early stages of price discovery. This material is not intended as a prediction or investment advice, nor a recommendation, offer, or solicitation to buy or sell any securities, cryptocurrencies, or adopt any investment strategy (please refer to the general disclosures on page 26). The creator of the BRC-20 token standard, an anonymous Crypto Twitter user named domo, named the GitBook of this token standard “brc-20 experiment” and started the page with the following content:

When learning about the latest market developments through the Binance Research Institute report, please keep in mind this point.

3. Background What are Ordinals and Inscriptions?

ORD is an open-source software that can run on any Bitcoin full node[1], it can track individual Satoshi according to the “Ordinal Theory” by its founder Casey Rodarmor. Satoshis (sats) are the smallest unit of the Bitcoin network, 1 Bitcoin = 100,000,000 sats. **Ordinal Theory assigns a unique identifier to everyone on Bitcoin.** Additionally, these individual sats can be “inscribed” with arbitrary content (e.g. text, image, video) to create “inscriptions” (i.e. Bitcoin-native digital artifacts)[2], also known as NFTs.

…individual sats can be “inscribed” with arbitrary content (e.g. text, image, video) to create “inscriptions” (i.e. Bitcoin-native digital artifacts), also known as NFTs.

To learn more about Ordinals and Inscriptions, including their history, technical background, specifications and compare them with other NFTs, as well as their impact on the market, please refer to our recent report: “A New Era of Bitcoin?”

What are BRC-20 tokens used for?

Given that Inscriptions allow non-fungible tokens (“NFTs”) to be used on Bitcoin, a natural question is, “What about fungible tokens?” This is where BRC-20 comes into play.

On March 9th, an anonymous Crypto Twitter user named domo tweeted out an idea for a theoretical method called BRC-20 that would create a fungible token standard on top of the Ordinals Protocol. **The idea was to inscribe JSON[3] data onto individual sats through Ordinals in order to deploy, mint, and transfer fungible BRC-20 tokens.** JSON is essentially a text-based data format, so in essence, the method writes text into sats to create fungible tokens. The initial design allows for only three different operations: deploying tokens, minting tokens, and transferring tokens (we will explore this and other limitations later in this report).

**The first token contract to be deployed is the $ORDI token, with each minting factory limited to 1K tokens and a maximum supply of 21 million (a nod to Bitcoin’s max supply).** This release caused some excitement in a subfield of the Bitcoin community, and within less than a day, all 21 million ORDI tokens were minted. Soon after, other tokens emerged, such as $MEME, $PEPE (not the one that was uploaded like crazy and flew on Ethereum), and $PUNK.

Figure 1: Humble beginnings of BRC-20 tokens (domo’s first post on the topic)

Source: Twitter (@domodata)

Figure 2: Three possible initial operations for BRC-20 tokens (p=protocol name, op=operation, tick=ticker code/identifier, max=max supply, lim=minting limit, amt=quantity)

Source: *, Binance Research*

What does the BRC-20 market look like?

BRC-20 was conceptualized only a few months ago – and the history of ordinal and inscription is less than six months old – so it’s fair to say that this market is still in its infancy. Nevertheless, developers and enthusiasts have been experimenting day and night. As of May 16, 2023, there are over 18,000 BRC-20 tokens with a total market cap of $500 million. This market cap was close to $1 billion in the days leading up to May, but as expected with any such frenzy, the market is self-correcting to find a more stable equilibrium point.

Figure 3: Top five BRC-20 tokens by market cap at present

Source:, as of May 16, 2023

The ordinal ($ORDI) token was the first BRC-20 token and remains the market leader to this day. This is evident in both market cap and trading volume, and recent listings on several different exchanges may contribute to this.

How does using BRC-20 tokens compare to using tokens on other standards?

While the name “BRC-20” is an imitation of the Ethereum “ERC-20” token standard, there are significant differences between them.

Different Blockchains

BRC-20 tokens exist on the Bitcoin blockchain, while ERC-20 exists on the Ethereum blockchain, and BEP-20 exists on the BNB smart chain, etc. Therefore, BRC-20 tokens rely on various characteristics of the Bitcoin chain, which are quite different from ERC-20 or BEP-20, such as transaction speed and fees, to name just two critical factors. This means that your experience using BRC-20 may be quite different from your experience trading on other chains.

Lack of Smart Contract Functionality

ERC-20 and BEP-20 tokens are created using smart contracts on the Ethereum and BNB smart chain blockchains, respectively. As a result, they have a great deal of programmable functionality and the ability to perform various operations and rules. This is quite different from the relatively simple BRC-20 tokens, which are not based on smart contracts and have limited functionality (as shown in Figure 2).

Market Infrastructure

ERC-20 and BEP-20 tokens are much more mature than BRC-20 tokens. While the former have been around for years and have led to the establishment of various types of infrastructure (such as DEXs, compatibility with centralized exchanges, fiat on-ramps, cross-chain capabilities, etc.), the same is not true for BRC-20 tokens. Of course, BRC-20 tokens have only been around for a few months, so we cannot expect them to have a similar level of infrastructure. Nevertheless, this fact is worth keeping in mind, as it illustrates the significant difference in risk status between them and more mature standards such as ERC-20 and BEP-20.

4. BRC-20’s Impact on the Bitcoin Market Homogeneity and Non-Homogeneity

First, let’s quickly review how the entire inscription market has changed since the appearance of BRC-20 tokens. Remember, BRC-20 tokens were first conceptualized on March 9th, 2023, while inscriptions have been available since December 2022. As we can see, in February, images were the primary inscription type used in the market. This was when the ordinal craze began, and Bitcoin NFT series began to emerge. Even from February to early April, while text inscriptions became more common, there were still days when images were the most widely used inscription medium.

Now, if we look at the period from mid-April to May, we can see a significant change. Text-based inscriptions (mostly related to BRC-20 tokens) have been dominating, basically crowding out any other media type. In addition, the daily number of inscriptions (represented by the height of the bar chart) is several times the number we saw from January to early April. This demonstrates the enormous popularity and momentum that BRC-20 tokens have been able to generate since the concept was born.

Figure 4: Daily inscriptions increase dramatically, with most of them being text-based

Source: Dune Analytics (@dgtl_assets), as of May 16, 2023

In our report – **”A New Era for Bitcoin?”**, we provide a chart of the types of inscriptions engraved as of March 30. We can compare these numbers with the composition of the current inscriptions market to see how BRC-20 tokens are dominating the entire market. As we can see below, text-based inscriptions’ advantage has more than doubled in just six weeks, while image-based inscriptions have declined by more than five times. In terms of the total number of inscriptions, they have increased from about 650,000 on March 30 to over 6.1 million by May 13 – an increase of nearly 10 times.

Figure 5: Text-based inscriptions have dominated the market in recent weeks

Source: Dune Analytics (@dgtl_assets), Binance Research, as of May 13, 2023


As a reminder, the mempool is essentially a waiting room for unconfirmed transactions that have not yet been placed in a block. These are sorted by attached fees, and a more crowded mempool means more competition to get your transaction into the next available block.

**So far in 2023, the total number of unconfirmed transactions on the Bitcoin network – i.e., the number of mempool transactions – has been on the rise**. Recently, the interest generated by inscriptions and BRC-20 tokens has meant a significant increase in mempool transactions (relative to last year). This, in turn, has affected the cost of executing transactions on the Bitcoin blockchain (which we’ll explore further below).

Figure 6: The number of transactions in Bitcoin’s memory pool has been steadily increasing this year, at least in part due to the help of SegWit, Schnorr signatures, and BRC-20

Source:, Binance Research, as of May 14, 2023

Transaction Fees

As possibly the most discussed metric in the Bitcoin community, fees have been a focal point of contention dating back to the block size wars from 2015-2017 [4].

As a brief overview of the situation, let us recall that Bitcoin’s model incentivizes miners to secure the network through two economic measures: block rewards and transaction fees . Block rewards are halved approximately every four years and will eventually decrease to zero in the long term. Thus, eventually, Bitcoin’s transaction fees will be the only compensation for miners , i.e. the security budget of the chain. Given that Bitcoin’s use cases have been relatively limited until this year (primarily asset transfer), these fees have historically only constituted a small portion of miner revenue and have been a concern for many within the Bitcoin community.

Figure 7: Bitcoin’s annual security budget (block rewards + transaction fees) is primarily composed of block rewards, which halve every four years and eventually go to zero

Source: Dune Analytics (@niftytable), Binance Research, as of May 16, 2023

However, upon closer inspection of the latest data from last year, we can see that transaction fees increased from 1-2% of total miner rewards to 2-3% at the start of the year and surged to over 20% in May . While we cannot attribute this solely to SegWit and BRC-20, we have relatively strong reasons to believe that a large part of this move is due to these innovations within Bitcoin.

Figure 8: The percentage of miner revenue from transaction fees is approaching a historic high (note that the previous peak occurred in December 2017, when Bitcoin was in the midst of a historic bull run)

Source: The Block Data, Binance Research, as of May 14, 2023

Of course, not everyone is pleased with the ever-increasing transaction fees on the Bitcoin blockchain. Another effect of this is that the fees required to send Bitcoin to another party correspondingly increase (something many people consider to be Bitcoin’s “true” utility–more on this later).

**Bitcoin transaction fees have spiked before, particularly in December 2017 and April 2021. However, both of these were during strong bull markets in Bitcoin and crypto.** This is the first time fees have significantly spiked during what many consider to be a mid-cycle bear market.

Figure 9: Recent surge in average fees for transactions on Bitcoin

Source: The Block Data, Binance Research, as of May 14, 2023

However, it’s worth remembering that **Bitcoin transaction fees have spiked before**; this is not a unique or extreme event. The recent spike could even be seen as a kind of warning that Bitcoin needs to innovate and prepare for further upward movement in the future.

**Ultimately, NFTs, tokens with unique identifiers, and BRC-20 tokens have helped unleash a massive demand for the Bitcoin blockchain.** They have created a demand for block space that Bitcoin hasn’t seen in some time. Many people have claimed that Bitcoin has lost the attention game to Ethereum and the like, but the creation of NFTs and BRC-20 tokens appears to be changing that. From a financial perspective, **Bitcoin miners need to continue to be rewarded–even as block rewards decrease, fees must make up for this income loss**, just like any company that might expect core revenues to continue decreasing until they reach zero.

Many people have claimed that Bitcoin has lost the attention game to Ethereum and the like, but the creation of NFTs and BRC-20 tokens appears to be changing that.

5. Community Response

The initial innovation of creating inscriptions by using ordinal theory to track individual sats and further engrave them with data sparked a fierce debate within the Bitcoin community. As you might imagine, BRC-20 tokens have taken this debate to a new level.

“Friendly” Crowd

As discussed above, the sustainability of the Bitcoin security model has been a major concern for many in the community [5]. As block rewards continue to decrease, how will miners be compensated in the future? What does this mean for the long-term viability of Bitcoin if miners are not adequately incentivized to secure the chain? It is inevitable that miners must be compensated for providing security, and for this reason, Bitcoin transaction fees need to be higher. For this reason, many in the community are surprised by the attention given to ordinals and BRC-20 and its impact on the relatively weak Bitcoin fee market.

Figure 10: Many notable cryptocurrency figures are optimistic about this new unlocking

Source: Twitter (@danheld, @nic_carter)

It is inevitable that miners must be compensated for providing security, and for this reason, Bitcoin transaction fees need to be higher.

A specific sub-sector of the community that has benefited greatly from Bitcoin’s recent developments is the mining community. To add more background information to our discussion above, please refer to Figure 11 to see the Bitcoin block reward halving cycles that have occurred to date.

Figure 11: Bitcoin block rewards per successful block

Source: Bitcoin Visuals, Binance Research

While the Bitcoin price has risen significantly since the 50 BTC block reward era, this table illustrates the challenges of the Bitcoin miner business model. With transaction fees supplementing their revenue and potentially signaling a bright future for block space demand, this equation looks more favorable to miners and may attract more people to join the network. Remember, the more independent miners there are, the better the decentralization, and ultimately the better the security of the Bitcoin blockchain.

It is worth noting that there was even a Bitcoin block in early May where the transaction fee exceeded the 6.25BTC block reward. This is a remarkable achievement considering that for most of 2022, transaction fees averaged 1-2% of miner revenue, and did not exceed by much in earlier years (see Figure 8). This demonstrates the ordinal and BRC-20 have helped introduce a constantly growing demand for block space – even without a major bull market backdrop.

Figure 12: Block 788795 had a total fee of 6.46BTC, while the block reward was 6.25BTC


The “Low Fee” Camp

While many are excited about the increased activity and buzz surrounding the Bitcoin ecosystem, and are encouraged by the increased fees from a sustainability perspective, others are more critical. **The people in this camp are more interested in what they see as the “true purpose” of Bitcoin as a hard currency, a non-fiat currency, and that the chain should be specifically used to facilitate peer-to-peer transactions.** This group believes that data-intensive transactions associated with ordinal, i.e. script and BRC-20, are primarily causing Bitcoin network congestion and driving up fees, ultimately hindering peer-to-peer transactions.

While some argue that the increase in fees leads to pricing out users in countries that rely on Bitcoin as a substitute for their local fiat systems, others take a more extreme view and even see ordinal and BRC-20 as attacks on the chain.

Figure 13: Some are concerned about high Bitcoin user pricing

Source: Twitter (@MarceMR19)

Figure 14: Others take a more extreme view

Source: Twitter (@proofofjogi)

Some in the community have even suggested that Bitcoin core developers should review ordinal-related transactions. We need not explain why such a review would be completely antithetical to the spirit of Bitcoin, as it is incredibly concerning for decentralization.

While transaction fees on the Bitcoin network are indeed rising and will inevitably result in some consumers paying more, the question we should be asking is whether users have to use base Bitcoin L1 just to send $10 to their friend. This is why Lightning Network was created and why Bitcoin chose to be a fast, secure, peer-to-peer payment solution. In fact, as you can see from our recent report “Bitcoin’s New Era?”, Lightning Network capacity continues to grow year over year, and fees remain manageable.

The question we should be asking is whether users have to use base Bitcoin L1 just to send $10 to their friend. This is why Lightning Network was created and why Bitcoin chose to be a fast, secure, peer-to-peer payment solution.

Trading on the base L1 was never guaranteed to remain very cheap.

**Even if Bitcoin’s popularity greatly increases, attracting millions of new users who use it for peer-to-peer transactions, it will have the same effect on transaction fees.** Therefore, more Bitcoin usage is not a bad thing as it makes consumers lose out on pricing, which is a fallacy, especially considering the future growth prospects of the network. In fact, the focus should be on making it more efficient and easier to onboard into the Lightning Network and doing further work on Bitcoin’s L2 solutions, so that transactions can occur on layers outside of the base Bitcoin L1.


Before entering this section, we want to remind readers to read the disclaimer on page 3 and the general disclosures on page 26. As mentioned earlier, we are here to discuss things on the cutting edge of the cryptocurrency market and report on them to better educate and inform our readers. These technologies are very new and the risks are enormous. Be extremely cautious when interacting with any of these projects or builders.

Perhaps the most important group are those who are building tools and infrastructure to take these innovations to a new level. Of course, the key builders to mention first are Casey Rodarmor, founder of Ordinals Protocol, and domo, creator of the BRC-20 token standard. Trevor.btc and Leonidas.og have also done extensive reporting on Ordinals and BRC-20’s legendary story and helped host the Ordinals Show podcast, which covers the latest in cryptocurrency.

In terms of key projects, the UniSat wallet has been an early participant in the story of the sats/BRC-20 at an early stage. Although initially offering a sats wallet, followed by BRC-20, UniSat now also helps users subscribe to sats and recently released a BRC-20 market (currently labeled as “experimental testing”). It is worth noting that at the start of the market, in order to trade on UniSat, you needed to have already carried out a certain number of trades before being allowed to trade. This meant that early traders were extremely crypto-native (i.e., DeFi degens). These restrictions were later lifted, and other trading venues have also emerged. UniSat has also been developing BRC-20 indices and has released some preliminary features related to this (more about this later

Figure 15: Casey Rodarmor’s Ordinal Scarcity Index


6. Risks and Challenges

As previously mentioned, Ordinal, Inscription, and BRC-20 tokens are recent innovations, and at this early stage, there is considerable risk at the forefront of cryptocurrency. These are neither the same tools nor occupy the same market as Ethereum, BNB, or Bitcoin itself. This is at the forefront of today’s cryptocurrency work. Accordingly, there are some key risks that all readers need to be aware of.

1. Limited infrastructure

Plainly put, BRC-20 tokens are just an idea generated by an experimental token standard created by a Twitter user who isn’t even real. While we say this not to diminish the innovation and potential of this idea, we must state it first to illustrate how early we are in this story.

The token standard has existed for several months but has only seen significant activity in the past few weeks. While builders are working quickly, and we underscore that some project teams are working hard to ship related tools and infrastructure, there is nothing yet, at this stage. Yes, we have seen the beginnings of market platforms and DEXs, but most trading is still conducted OTC via Discord servers. There isn’t a mature indexer, and tracking tokens and holders is a tricky process.

Indeed, the risk of centralized indexing is significant, as theoretically, if an exchange isn’t using the same indexer, they may not recognize something you bought on another exchange. These tools are not native to the Bitcoin blockchain, but come from ordinal theory, which essentially “ties” certain sats to certain attributes. If we haven’t come to social consensus on this approach, some aspects may not recognize certain ordinals, and thus not recognize specific BRC-20 tokens.

If we are to see a market of more than a few thousand holders, there is a lot of work to be done, and while we remain optimistic about what BRC-20 tokens unlock and what they can offer, infrastructure still has a long way to go.

2. No Real Utility

Most, if not all, of the BRC-20 tokens being traded currently are meme tokens. By definition, these tokens have no utility and are primarily driven by social media and community sentiment. While this has brought attention and created hype, the lack of utility means a lack of serious holders, which could lead to these tokens crashing suddenly and without warning.

This risk is something every reader should keep in mind, and if you see a new token offering some form of utility, you should dig deep and question whether it is real or just a marketing gimmick.

3. High Risk of Scams

Given how new the entire experiment is, we should remember that there is a high risk of scams. For example, OTC token trading on Discord servers is naturally a very high-risk activity and has led to many people losing money. Projects building infrastructure for Ordinal or BRC-20 are also uncertain and may bring potential security risks at this early stage. While we are not trying to scare readers, the high risk of scams should be taken seriously given the early stage of these tokens and this new technology.

7. Future Outlook: Bitcoin Layer 2

This whole frenzy shows that the scale of Bitcoin does not match its grand ambitions, and if it is not Ordinal, Script, or BRC-20, it will be something else. **As long as a few million people decide to use Bitcoin for peer-to-peer transactions, we will see the same result of skyrocketing transaction fees; this skyrocketing is caused by BRC-20, which is incidental.** If anything, we should take this as a warning for the future and understand that if Bitcoin is to truly become a global peer-to-peer payment system for millions or even billions of people, a lot of work still needs to be done.

This further underscores the importance of scaling solutions used by other chains for Bitcoin as well. Do we need to send $5 transactions on Bitcoin L1, or can we do it on the L2 layer? Many people would argue that bottom-layer transactions are a scarce commodity and that chains cannot be expected to remain cheap forever if they are to develop. The conclusion to be drawn here is simple: the use case for Bitcoin L2 is clear, and this is where developers should focus. Scalability solutions will be the next crucial step for Bitcoin if it is to become a technology that millions of people can use on a regular basis.

In our report “A New Era for Bitcoin?”, we closely examined potential solutions including Lightning Network, Stack and Rootstock, as well as quick-start guides for Liquid Network and Rollkit. Stack’s soon-to-be-released sBTC[6] looks particularly interesting and may provide a significantly more decentralized way to use BTC on L2 than is currently possible. Usage of the Lightning Network continues to rise, with Binance recently announcing they are seeking to integrate it, while startups like LightsBlockingrk[7] are creating “enterprise-grade” network gateways to allow businesses to join. Bitcoin open-source development platform Spiral, backed by Jack Dorsey, recently released an ambitious new roadmap[8] for its Lightning Development Kit (“LDK”) project.

The future of the Bitcoin second layer market looks promising, with more and more users and developers seeing clear use cases for Bitcoin scalability, and we remain optimistic about developments in this space next year.


As mentioned in the Risks and Challenges section above, infrastructure around BRC-20 tokens is very limited at this early stage. While many different aspects, such as Unisat and ALEX, have released test versions or are exploring solutions, we are still very early and experimental.

The transaction process must become notably smoother and peer-to-peer Discord server trades should be phased out in the coming weeks and months. Deploying a fully functional and efficient DEX is a key step in taking BRC-20 to a new level and should be closely watched.

Additionally, as BRC-20 token standard founder domo recently stated in a Twitter Spaces, his top priority is to have a fully on-chain and trustless indexer released. An indexer is software that reads the Bitcoin chain and can compile all transactions to create an agreed-upon global balance state. UniSat and ALEX are both researching solutions in this area, and an effective indexer will be critical as it will further increase the legitimacy of BRC-20.

We expect significant developments in related infrastructure in the coming months. For example, the Bitcoin Frontier Fund recently announced[9] that their accelerator program has accepted 8 new startups. These startups are researching various solutions, from ordinal lending to development toolkits for Bitcoin Web3 games, to ordinal cross-chain bridging. Developer interest in the Bitcoin ecosystem is clearly benefiting from this recent wave, and we are excited to see what innovations may come of it.

Innovation in Token Design

Finally, with regard to specific BRC-20 innovations, it should be noted again that this is a very simple token standard with limited flexibility.

A key feature is that all BRC-20 token minting is fair, meaning that you cannot take team allocations or have a traditional “whitelist” function that allows some users to mint before others. While the initial design used this functionality to reduce the prevalence of rug pulls and scams, there are of course legitimate reasons to have “whitelists” and tokens with team allocations, etc. Builders are working to address this issue, and whether the solution appears in BRC-20 or perhaps in other token standards remains to be seen.

Similarly, builders are also trying to find a solution to “burn” tokens. Given that BRC-20 lacks smart contract functionality, this is currently impossible, and there may be some very real and legitimate use cases, especially when considering adding different utilities to these tokens.

Outside of BRC-20, builders have been innovating rapidly. The ORC-20 token recently appeared on the timeline, aimed at addressing some of the limitations of BRC-20. For example, BRC-20 tokens are currently limited to a four-letter naming convention. ORC-20 does not have this restriction, which adds a degree of flexibility for developers. We’ve also seen the embryonic form of the SRC-20 token, which is related to “Bitcoin Stamps.” SRC-20 tokens store data differently than BRC-20 tokens, and due to some technical specifications, it’s possible that they are more secure than BRC-20, but this also means they can store much less data than BRC-20.

These are just a few examples of symbolic design features that builders are trying to innovate. We believe there is much more to come and we will closely monitor developments in the process.

8. Conclusion

Ordinal numbers, inscriptions, and BRC-20 tokens have helped prove to the world that there is indeed a demand for Bitcoin block space beyond the classic peer-to-peer payment model. Users want to be able to do the same things on the Ethereum and BNB chains as they do on Bitcoin. While Casey and Domo stimulated innovation with their unlocks, it is now up to the community and developers to take it to the next level.

The lack of income from transaction fees for miners has long been a key concern for many Bitcoin supporters, and recent developments have proven the potential outside. Recent developments are encouraging and help represent potential avenues for sustainable development of Bitcoin in the long run .

The scaling solution for Bitcoin Layer 2 will be crucial, and we expect to see growth in this area. Further infrastructure development and token innovation are also on the menu.

Before ending, we want to remind readers that cryptocurrency growth is often exponential. For example, it took over a month to reach 100 after the first inscription on December 14, 2022. However, between February 2 and February 15, the number of inscriptions increased from 1K to 100K. By April, we had reached 1 million, and now we have surpassed 7 million. The market first grows slowly, and then suddenly. While we cannot say how big this market will be, we can predict that we will soon surpass the milestone of 10 million inscriptions. Keep an eye on this space.

Figure 16: Exponential growth of inscriptions so far

Source: Dune Analytics (@dgtl_assets) Binance Research, as of May 16, 2023










About Binance Research

Binance Research is the research division of the world’s leading cryptocurrency exchange, Binance. The team is dedicated to providing objective, independent, and comprehensive analysis with the aim of becoming a thought leader in the cryptocurrency space. Our analysts regularly publish insightful thought pieces on topics related to but not limited to the cryptocurrency ecosystem, blockchain technology, and the latest market themes.

Shivam Sharma

Macro Research Analyst

Shivam is currently working at Binance as a Macro Research Analyst. Prior to joining Binance, he worked as an Investment Banking Assistant/Analyst in Bank of America’s Debt Capital Markets division, specializing in European financial institutions. Shivam holds a Bachelor’s degree in Economics from the London School of Economics (“LSE”) and has been active in the cryptocurrency space since 2017.

Disclaimer: Blocking all articles only represents the author’s point of view and does not constitute investment advice
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