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<p>Bitcoin daily transactions have surged past 600k and the average Bitcoin transaction fees as of 8 May reached a whopping USD 30.91, these are levels not seen since the 2021 bull market.</p>



<figure class="wp-block-image size-full"><img decoding="async" width="885" height="462" src="https://chaindebrief.com/wp-content/uploads/2023/05/image-39.png" alt="" class="wp-image-37645" srcset="https://chaindebrief.com/wp-content/uploads/2023/05/image-39.png 885w, https://chaindebrief.com/wp-content/uploads/2023/05/image-39-300x157.png 300w, https://chaindebrief.com/wp-content/uploads/2023/05/image-39-768x401.png 768w" sizes="(max-width: 885px) 100vw, 885px" /></figure>



<p>Citing heavy transaction volumes and a surge in processing fees, Binance even halted Bitcoin withdrawals twice in a span of 12 hours on May 7 and 8 due to fee miscalculation!&nbsp;</p>



<p>Why is that so?</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">There is a large volume of withdrawal transactions from Binance still pending as our set fees did not anticipate the recent surge in <a href="https://twitter.com/search?q=%24BTC&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$BTC</a> network gas fees.<br><br>Our team is working to accelerate the confirmation of all pending transactions.<br><br>We&#39;ll provide updates here.</p>&mdash; Binance (@binance) <a href="https://twitter.com/binance/status/1655402071435411457?ref_src=twsrc%5Etfw">May 8, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>Some Bitcoin maximalists who are detractors of BRC-20 tokens will likely tell you that people apeing into these tokens are to blame!</p>



<p>What are these BRC-20 tokens and why are they to blame for the surge in transaction fees?</p>



<p><strong>Also Read:</strong> <a href="https://chaindebrief.com/designing-better-cryptocurrencies-7-tokenomic-insights-from-a16z/">Design Better Tokenomics with a16z</a></p>



<h2 id="strong-what-are-brc-20-tokens-strong"><strong>What are BRC-20 tokens?</strong></h2>



<p>These tokens are new tokens on the Bitcoin network based on the BRC-20 standard that was created by domo (<a href="https://twitter.com/domodata?lang=en">@domodata</a>) on 8 March 2023. The first and most popular one is a memecoin known as <a href="https://www.coingecko.com/en/coins/ordi#:~:text=The%20price%20of%20ORDI%20(ORDI,hour%20trading%20volume%20of%20%2442%2C781%2C329.">ORDI</a>.&nbsp;</p>



<p>Users can mint and trade these fungible tokens by inscribing data in the form of NFTs on satoshis (there are 100M satoshis per Bitcoin) via the <a href="https://ordinals.com/">Ordinals platform</a>.&nbsp;</p>



<p>Through the use of <a href="https://decrypt.co/resources/what-are-ordinals-a-beginners-guide-to-bitcoin-nfts">ordinal inscriptions</a> to attach data to individual satoshis, many BRC-20 tokens have been created.</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">An experiment into &quot;brc-20&#39;s&quot; and fungibility on bitcoin with ordinals 1/x <a href="https://t.co/9khKLbEPk6">pic.twitter.com/9khKLbEPk6</a></p>&mdash; domo (@domodata) <a href="https://twitter.com/domodata/status/1633658974686855168?ref_src=twsrc%5Etfw">March 9, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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<p>The market capitalization of BRC-20 tokens has surged past USD 500M. BRC-20 transaction volumes have also surpassed that of regular Bitcoin transactions, accounting for more than half of all BTC transactions on multiple days since 29 April.</p>



<figure class="wp-block-image size-full"><img decoding="async" width="911" height="718" src="https://chaindebrief.com/wp-content/uploads/2023/05/image-40.png" alt="" class="wp-image-37646" srcset="https://chaindebrief.com/wp-content/uploads/2023/05/image-40.png 911w, https://chaindebrief.com/wp-content/uploads/2023/05/image-40-300x236.png 300w, https://chaindebrief.com/wp-content/uploads/2023/05/image-40-768x605.png 768w" sizes="(max-width: 911px) 100vw, 911px" /><figcaption class="wp-element-caption">Image Courtesy: <a href="https://brc-20.io/">brc-20.io</a></figcaption></figure>



<p>While BRC-20 tokens have gained in popularity, critics are quick to highlight that these tokens defy Bitcoin’s original vision of a simple and efficient peer-to-peer electronic cash system.</p>



<p>The process of minting and transferring of BRC-20 tokens requires the user to inscribe a new ordinal and hence requires more data as compared to a regular BTC transaction.&nbsp;</p>



<p>As a result, this has intensified the competition for block space and led to a spike in transaction fees.&nbsp;&nbsp;</p>



<h2 id="strong-brc-20-vs-erc-20-token-standards-strong"><strong>BRC-20 vs. ERC-20 Token Standards</strong></h2>



<p>Although <a href="https://twitter.com/domodata?lang=en">@domodata</a> drew inspiration from Ethereum’s ERC-20 token standard when creating the BRC-20 standard, both token standards have fundamental differences.</p>



<p>First and foremost, unlike the ERC-20 standard, the BRC-20 standard does not have smart contract capabilities and this severely limits its utility and value. BRC-20 tokens cannot interact with other protocols and dApps.</p>



<p>Secondly, the ERC-20 token standard is an established token standard that has proven to be stable. The BRC-20 standard is merely a proposal that has yet to be finalized and it may not be fully integrated with crypto wallets and exchanges.&nbsp;&nbsp;</p>



<p>In fact, <a href="https://twitter.com/domodata?lang=en">@domodata</a> highlighted back in March that “It is unlikely that balances will be safely tradable using existing marketplace infrastructure.” </p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">Updated the gitbook to address common questions and my intentions for the experiment going forward.<a href="https://t.co/h6fksQ1oAe">https://t.co/h6fksQ1oAe</a></p>&mdash; domo (@domodata) <a href="https://twitter.com/domodata/status/1634247606262964228?ref_src=twsrc%5Etfw">March 10, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>Hence, even if the BRC-20 standard becomes widely accepted, it may be some time before markets are fully liquid.</p>



<p>Thirdly, the BRC-20 token standard was conceived as a means to issue and transfer fungible tokens on the Bitcoin blockchain by exploiting a loophole in Bitcoin’s 2021 Taproot upgrade. Most active BRC-20 tokens are memecoins.</p>



<p>ERC-20 tokens, on the other hand, are primarily designed as utility tokens that serve different functions within the Ethereum ecosystem.</p>



<h2 id="strong-closing-thoughts-strong"><strong>Closing Thoughts</strong></h2>



<p>The popularity of BRC-20 tokens was propelled by the ongoing memecoin mania. A vast majority of the 8,500 tokens minted using the BRC-20 token standard are memecoins with little to no utility due to the lack of smart contract capabilities.</p>



<p>This hype has resulted in high demand for blockspace and sky rocketing transaction fees that inevitably drew the ire of some Bitcoin maxis.&nbsp;&nbsp;</p>



<p>While Bitcoin miners have benefited from the surge in transaction fees due to the high BRC-20 transaction volumes, it is important to note that the BRC-20 standard has its flaws and is still in an experimental stage.&nbsp;</p>



<p>In my opinion, the underlying ordinals inscription technology would evolve and survive the test of time but not the BRC-20 memecoins as these are more likely to be a passing fad.</p>



<p>Written by: Clarence Lee</p>



<p><strong>Also Read: </strong><a href="https://chaindebrief.com/how-to-launch-your-own-memecoin-in-under-30-seconds/"><strong>How To Launch Your Own Memecoin In Under 30 Seconds</strong></a></p>



<p><strong><em>“[Editor’s Note: This article does not represent financial advice. Please do your research before investing.]</em></strong></p>



<p><strong><em>Featured Image Credit: ChainDebrief</em></strong>&nbsp;</p>

BRC-20: Are Bitcoin-Based Memecoins Here To Stay?

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