While the new BRC-20 token standard highlights the potential of Ordinals, it still shows that more use cases are needed to accelerate adoption.
The latest buzz in the crypto world revolves around the newly introduced Bitcoin token standard (BRC-20) which has attracted significant attention and support thanks to the recent memecoin craze. Despite the ongoing hype, this token standard is still subject to certain limitations in the broader crypto landscape.
A recent report by leading exchange Bitfinex highlighted the potential of this token standard and the importance of identifying more use cases to accelerate widespread adoption.
BRC-20 token standard
In March, the BRC-20 token standard, called âBitcoin Request for Comment,â was established using the Ordinals protocol. While initially designed to facilitate the minting of Bitcoin NFTs by recording data such as images, videos, code and text into the witness portion of BTC transactions, the protocol has evolved to allow for the transfer of tokens. fungible on the blockchain.
According to data from brc-20.io, the market capitalization of the BRC-20 token exceeded $900 million at one point, with more than 14,400 tokens issued. However, this market is down to about $493 million at the time of writing.
Since the introduction of Bitcoin-based fungible assets, the number of transactions on the network has increased sharply. Specifically, BRC-20 Ordinals transactions exceed non-BRC-20 transactions by more than 4 million, according to data from Dune Analytics.
Some of the most in-demand BRC-20 tokens are ORDI, NALS, PIZA, PEPE, and MEME.
Network limitations
Despite demonstrating the potential of the Ordinals protocol, the new token standard faces limitations that could hinder its development and advancement.
A significant drawback is the lack of use cases, which can hinder development. Additionally, the BRC-20 network does not support smart contracts, and the price of the asset mainly depends on market speculation. Coupled with a 24-hour trading volume that is less than 30% of the market capitalization as in the case of ORDI, this makes predicting the future of the new standard difficult.
Another limitation is the lack of compatibility with the Ethereum Virtual Machine (EVM), limiting developers' access to network resources and building capabilities. This can limit adoption and shrink the ecosystem.
Furthermore, the BRC-20 token consumes significant block space, easily causing network congestion and higher transaction fees.
Despite such limitations, Bitcoin's PoW consensus mechanism makes it difficult for hackers intending to breach the network, resulting in better blockchain security.
(Synthetic Aliniex)
