BRC20 Narrative Review: Is There a Mess Behind the Myth of Wealth Creation?

Source: Crypto New Little Belly

The heat of the BRC20 ecosystem has gradually decreased after the frenzy a few days ago, with BRC-20 related transaction fees (minting, transferring, and deploying) dropping to 3.5 BTC, a staggering 98.63% decrease from the peak of 255 BTC on May 8. The market has entered a cooling period, and this round of sudden wealth creation myths is coming to an end. In this article, Crypto New Little Belly will take you through a deep review of the BRC20 ecosystem narrative. For those who still want to enter the market or have not yet understood BRC20, I believe this article will help you gain a deeper understanding.

The Concept of BRC20

The BRC-20 token standard was created by Twitter user@domodata on March 8, 2023, as an experimental fungible token standard for Bitcoin, utilizing the Ordinal protocol.

It uses ordinal inscriptions of JSON data to deploy token contracts, mint tokens, and transfer tokens.

The author's goal is to enable fungible tokens to be issued and transferred on the Bitcoin blockchain.

The original technical link is attached https://domo-2.gitbook.io/brc-20-experiment/

Many people have heard of ERC-20, but the recently emerged BRC-20 feels somewhat strange. When I first heard about it, it felt like a knockoff version of ERC-20. I wonder if you feel the same way. In fact, BRC-20 is an interpretation of Ethereum's ERC-20 token standard; you can think of it as a counterpart. BRC20 is a protocol for issuing fungible tokens on the BTC native chain, where B stands for BTC, while ERC20 stands for Ethereum, so E represents Ethereum. However, BRC20 is simpler than ERC20 and does not involve the concept of smart contracts; everything is pre-written on the BRC protocol platform. We only need to do four things: deploy, mint, transfer, and trade.

The Biggest Feature of BRC20: Almost No Barriers to Issuing Tokens (No Coding Knowledge Required)

As mentioned earlier, BRC20 does not have the concept of contracts, and the relevant code on the BRC protocol platform has already been written for you. Beginners only need to learn some basic logic and adjust the code parameters to deploy and issue tokens with one click. You may have seen many incidents involving projects on the ETH chain where the project parties did not understand the contract code and were held accountable by the community, but you hardly see BRC20 project parties encountering technical issues. This already indicates that the technical threshold for issuing tokens in BRC20 is much lower.

How BRC20 Quickly Gained Popularity

Even though the author has repeatedly stated in documents and on Twitter: "BRC20 is just a fun experiment." BRC20 is merely an interesting experiment aimed at enabling fungible tokens to be issued and transferred on the Bitcoin blockchain.

However, while the creator thinks this way, speculators in the crypto circle who yearn for overnight wealth do not share the same sentiment.

For a token that has no underlying assets, cannot be burned or frozen, and lacks additional features such as approval or authorization, the price fluctuations rely entirely on community consensus and market enthusiasm. This is simply a paradise for MEME coins, where retail investors trust the last shred of assurance.

Consequently, this experiment will also witness the madness of the crypto circle's game of passing the parcel.

A series of influencers began to pay attention and comment, and many YouTube bloggers personally taught how to mint, purchase, and trade BRC20 tokens. The concept of BRC20 received massive exposure in a short period, and with the recent explosion of MEME coins, retail investors discovered this underlying technology suitable for playing MEME coins, leading to a surge in BRC20 trading.

How hot was this frenzy? I have compiled some data for you:

The normal daily transaction fees for BRC20 were around 0.1 BTC, but starting in May, transaction fees skyrocketed to 20 BTC, 63 BTC, 245 BTC… with an overall increase of 250,000%. Binance even temporarily closed BTC withdrawal channels (short-term liquidity for coin withdrawals disappeared), and He Yi clarified that it was an internal adjustment at the exchange. However, on May 8, which happened to be the day with the highest trading volume for BRC20, you can guess where everyone was withdrawing their coins; those who understand know.

After a series of operations in the crypto circle, the first minted token of BRC20, ORDI, lived up to expectations, achieving a thousandfold increase in about ten days.

Along with a wave of popular BRC20 tokens such as $moon, $meme, $vmpx, and $pepe, all realized increases ranging from hundreds to thousands of times within days.

In Twitter and WeChat groups, there were constant reports of certain big shots achieving financial freedom and successfully cashing out.

FOMO and anxiety stimulated more retail investors to continue pushing forward.

However, as the saying goes, "One general's success comes at the cost of thousands of bones." The myth of one person's wealth in MEME coins comes at the expense of countless others who are forced to exit. The essence of financial markets is a zero-sum game, and since MEME coins on BRC20 have no intrinsic value or practical application scenarios, it resembles a pure 'casino' where the gamble is about not being the last one holding the bag.

In fact, most retail investors know that BRC20 itself has no intrinsic value; it is merely a speculative commodity. The magic of the crypto circle lies in the fact that what we need is consensus, and with consensus, there is a price.

All coins are filled with imagination. Have you seen the market cap of Shiba on ETH reach 20 billion USD, with an increase of up to 400,000 times? Now, the leading BRC20 token ORDI has a market cap of only 300 million USD and an increase of just 1,000 times. So, do you say to go for it or not?

In Summary

The audience for BRC20 almost covers the entire crypto circle, coupled with strong market promotion, and the market education foundation laid by ERC20, the new narrative effect has jointly contributed to the successful breakout of BRC20.

The BRC20 market is gradually returning to calm; what remains behind the bubble?

As trading volume has dropped back to around 1% in a few days, Brother Sun has rushed in.

Pepe coins and ORDI tokens have both seen declines of over 70%.

The narrative of BRC20 seems to be coming to an end. From the perspective of industry contribution, BRC20 has not changed the essence of Bitcoin as merely a ledger (account + amount + transfer note); it has not generated new productivity or demand. As long as it is not a leading project that emerged from BRC20, the bubble component is enormous. At the end of the BRC20 frenzy, if you ask me what is left, I think what remains is a pile of experiences borrowed from BRC20, preparing for the upcoming BRC21, LTC20, XRC20, ORC20, and a wave of FOMO partners waiting for new narrative stories…

In short, capital never sleeps, and the magical stories of the crypto circle continue to unfold. BRC20 is just the tip of the iceberg.