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BRC-20, or Bitcoin Request for Comment 20, is modeled after the Ethereum protocol called ERC-20 (Ethereum Request for Comment 20) and was introduced in March 2023 by an anonymous developer known as Domo. BRC-20s are basically (with some major caveats like a lack of smart contracts) Bitcoin’s version of ERC-20s.
That said, there haven't been other “BRC” numbers as Bitcoin changes actually go through a process called BIP, or Bitcoin Improvement Proposals. So there hasn’t been a BRC-1 or BRC-2 and so on.
ERC-20 is an Ethereum token standard that enables developers to create tokens that are compatible with the broader Ethereum network and have built-in smart contracts. These tokens can embody a broad spectrum of transferable assets or rights, such as ownership interests, access rights or even different cryptocurrencies – many cryptocurrencies such as Tether and Shibu Inu coin are ERC-20 tokens under the hood.
BRC-20 takes a page out of this book, made possible because of Bitcoin’s November 2021 Taproot upgrade, which enabled ordinal inscriptions, the behind-the-scenes tech plumbing that make BRC-20 tokens work.
Ordinals inscribe a serial number onto a satoshi, the smallest currency unit of bitcoin. This serial number, along with the ordinal’s data, are inserted into a part of the bitcoin transaction called the witness signature field. This data verifies the legitimate ownership of the funds being utilized and ensures they are not double spent.
BRC-20 tokens use ordinals, but not all ordinals are BRC-20 tokens. This is why there are millions of ordinals but just over 14,000 BRC-20 tokens.
Currently, the BRC-20 protocol has very limited functionality compared to ERC-20. Right now users are limited to only minting, deploying and transferring tokens.
It’s also important to note some other differences from ERC-20. Unlike ERC-20, BRC-20 is not an approved standard but still in the proposal phase, and unlike ERC-20 tokens, BRC-20 tokens are not easily traded on exchanges at this time.