BRC-20 tokens

BRC-20 is an experimental token standard that lets developers create fungible assets on the Bitcoin blockchain. It arrived because a software upgrade expanded what could be stored in blocks. A second innovation introduced a way to inscribe data onto individual satoshis and that made token-like experiments practical. Fungible tokens are interchangeable units that act like identical coins. On chains with virtual machines, tokens are driven by smart contracts that execute logic. Bitcoin does not have a full virtual machine, so BRC-20 takes a different route. It uses tiny JSON inscriptions written onto specific satoshis to record minting, transfers, and simple token state. Those inscriptions ride on top of the ordinals method and they reuse basic Bitcoin transactions to move value and metadata. The result is a crude but clever system that brings currency-like behavior to Bitcoin without rewriting its core rules. This approach creates new possibilities for decentralized finance and experiments that once only lived on other chains. It also creates limits and risks. The process of inscribing and moving these tokens is energy intensive because it depends on proof-of-work mining and larger transaction payloads. The inscriptions often generate many small unspent outputs that add clutter to the UTXO set. That clutter raises fees and forces nodes to store more data. Functionality is also constrained. BRC-20 tokens cannot run complex on-chain programs or easily interact with external storage systems like other ecosystems can. They are not naturally interoperable with other chains and they lack advanced composability. New protocols have since appeared that aim to fix efficiency and compatibility problems by changing how data is stored and how tokens are represented. Some of those alternatives are designed to work more cleanly with fast payment layers and to avoid wasteful outputs. For people who want to hold or use these experimental assets, the safest practice is to keep private keys offline and to use compatible wallet software to build and sign transactions. Treat BRC-20 as a laboratory technology. Expect volatility, technical quirks, and design changes. Study the mechanics before you engage. If you experiment, do small tests first and plan for irreversible actions. In a way, BRC-20 is a new scene on Bitcoin’s stage where script and inscription meet, and where risk and creativity perform a fragile duet under the bright, electric lights of a network that was born to move value.