BRC-20s are tokens on the Bitcoin blockchain, which are enjoying a surge in popularity. The new standard was introduced in March by Domo, a coder, who developed it in response to new features introduced in Bitcoin’s recent Taproot upgrade. However, despite their potential, many experts are warning against financial speculation in the new token format, as they could be “worthless”.
There are two reasons for this. Firstly, at this stage, the BRC-20 standard remains a proposal, which means it may not be widely integrated into blockchain tools such as wallets and exchanges, making accessibility difficult for average users. Second, it remains unclear exactly where the economic value of tokens on Bitcoin might come from, as they aren’t compatible with smart contracts or decentralized finance (DeFi) systems. This means that they cannot be used for more complex systems that would give them utility and value, such as decentralized autonomous organizations (DAOs).
Whilst there are certainly possible use cases for simple tokens on the Bitcoin blockchain, their structure may end up being radically different from tokens on Ethereum. In fact, BRC-20s are not parallel to Ethereum’s ERC-20s, leading many to believe that if and when workarounds emerge, getting BRC-20s onto DeFi will likely involve bridges or other higher-risk structures.
Despite warnings, some speculators are still trading BRC-20s for real money. However, even the Pepe BRC-20, which had a fully diluted value (FDV) of $137 million as of May 2, doesn’t come anywhere close to the $1.2 billion FDV of the Pepe memecoin on Ethereum, which was launched in April.
BRC-20s are a fascinating innovation with serious potential, but it remains to be seen whether they will indeed take off. For now, those looking for the thrill of riding ephemeral pumps in animal-based casino tokens will likely be better off sticking with Ethereum.
According to https://www.coindesk.com/consensus-magazine/2023/05/05/pump-the-brcs-the-promise-and-peril-of-bitcoin-backed-tokens/
The material in this article is written on the basis of another article.