Memecoins on Bitcoin is probably not what Satoshi Nakamoto envisioned
when he released the Bitcoin whitepaper in 2008,
but it just might be the mass adoption that Bitcoin deserves.
Hey there, my name is Trevor here with CMC and today we'll be discussing beers, 20
tokens and the storm that they've caused in the Bitcoin community and beyond.
let's get started.
So what exactly are BRC tokens and how do they work?
Well, you may recall Bitcoin Ordinals or
bitcoin NFTs, which a few weeks ago
caused a bit of an uproar on the otherwise reserved Bitcoin community.
So let's remember how bitcoin Ordinals work.
Imagine two $1 bills.
Both are completely fungible, but have a serial code
which allows us to identify each dollar bill as unique.
But if one bill was signed by Muhammad Ali
and George Foreman, it becomes a dollar and a fee of sorts.
You could still spend it as a regular dollar,
but the signature is make the bills value skyrocket.
Ordinals work in the same manner.
They take advantage of the fact that each individual Satoshi can be
uniquely identified by its equivalent of a serial code.
With the recent meme coin craze
which caused a tsunami of meme coin attention on crypto Twitter.
One thing led to another.
Someone had the idea to create a new token
standard on bitcoin and BRC- 20 tokens were born.
BRC-20 tokens built upon the concept of making single Satoshis
as seen in Bitcoin Ordinals, while Ordinals tag individual satoshis
to serve as NFTs, BRC-20 tokens involved minting satoshis
so that they hold information about a whole collection of tokens.
So for example, if you wanted to create a collection of 100 hypothetical $Trevor,
BRC-20 tokens, you to mint the collection by inscribing one set with the relevant
JSON data.
JSON data can be used to define the token name, symbol, supply
and other properties.
Users can also use the JSON data to mint new tokens or transfer
existing tokens to other addresses or to use the dollar stats metaphor again.
You mark $1 bill with information about 20 $Trevor stickers,
which are not dollar bills.
You always need a dollar bill to transfer stickers,
but the bill does not back the stickers themselves, nor can they do anything.
If this sounds complicated and not intuitive,
that's because it is.
Bitcoin was not created for this workaround,
as many on crypto Twitter have pointed out.
So how did BRC 20 tokens start?
Well, the most likely explanation is opportunity makes a thief.
Taproot upgrade allows for these workarounds
to be implemented on Bitcoin and meme coin season
just happened to come around, so one thing led to another.
Eric Wall explained in detail how the idea of BRC 20 tokens
is an imitation of Xen tokens on Ethereum.
In other words, the Taproot upgrade made it possible to add an amount of data
to the blocks based on Bitcoin
that allows for minting tokens, even though those tokens that
do not have the same properties as ERC 20 tokens on Ethereum.
This hunger for block space surprised the Bitcoin community
and the effect on Bitcoin transaction fees has been significant.
let's talk about that in further detail.
Just when Ordinals were going back to being a niche phenomenon, BRC-
20 tokens started rocking the transaction count boat and Rock they did!
BRC-20 transactions currently make up a majority of all Bitcoin transactions.
Transaction fees surged to previously unthinkable levels and incredibly,
transaction fees
made up a higher share of miner revenue than the block subsidy for some blocks.
This is music to the ears of those who never doubted
that adoption would save the Bitcoin security model.
However, not everyone was amused by the surprising spike in activity on Bitcoin.
So let's talk about the fallout of BRC 20 tokens in the Bitcoin community.
For one BRC 20 tokens caused centralized exchanges to launch
their trading markets and nifty developers to start liquidity pools for them.
But it has also caused a new round of infighting between different
factions of the Bitcoin community.
Eric Wall and Udi Wertheimer both support these second order effects
of the unexpected appetite for Bitcoin block space.
The Lightning Network may have finally stumbled
on a source of significant demand.
However, the surge in fees
doesn't sit well with those who were comfy with the low fee Bitcoin.
This sentiment was shared by Anita Posch, a Bitcoin educator focused
on bringing Bitcoin to financially underdeveloped regions in the world.
again, it may not be the adoption Bitcoiners wanted,
but it's the one they deserve.
Or so Ethereum people would argue.
Nick Carter
outlined in the past that Bitcoin is more akin to Fed wire than to visa.
It isn't meant to be a high speed settlement layer,
but he got quite a bit of flack himself from the community
for suggesting Ethereum's burn fee was a smart move
and applying bitcoin may want to consider something else.
Cue the reply section.
Some members of the community
realize BRC- 20 tokens could provide a much needed impulse
for the community to work only necessary infrastructure improvements.
Now let's talk about the future outlook for Bitcoin.
As with order nodes, the question is whether this is
a sustainable new asset class or merely a flash in the pan
that will subside when the meme coin train inevitably derails.
Regardless, the BRC 20 hyper pointed out weaknesses,
the community will have to address, such as the lack of Layer two infrastructure
and diverging views over how much and what kind of adoption is desirable now.
Who said Bitcoin is boring?