The world of crypto is constantly evolving, and with BRC-20, investors are witnessing a significant shift in the Bitcoin (BTC) ecosystem. According to according to researcher Tom Wan, BRC-20 took Ordinals to the next level of adoption and this led to a surge in BRC-20-related transactions.
Recently, BRC-20 transactions related to the implementation, mining and transfer of tokens have surpassed ordinary transactions. On May 7, the BRC-20 transaction rate peaked at 65%, indicating the growing adoption of this protocol.
Unlocking the power of Bitcoin
BRC-20 tokens are a cryptocurrency that runs on the Bitcoin blockchain and are used for smart contract applications. Unlike regular Bitcoin transactions, BRC-20 transactions require the user to enter a new sequence number, which creates a longer queue in the Bitcoin mempool. However, mempool memory usage is currently lower than in March because the size of BRC-20 tokens is approximately 10 times smaller than image captions.
Despite mempool’s lower usage, the average transaction fee still rose to $18.9, the highest value since May 2021. This is due to the long queue in mempool, which requires users to pay a higher fee for gas to have their transactions settled by miners.
According to Tom Wan, one of the key benefits of adopting BRC-20 is the higher revenue it provides for miners. Fees coming from ordinal transactions reached 61%, of which 99.5% came from BRC-20. This is a significant increase from previous levels, indicating that BRC-20 is gaining more and more traction in the Bitcoin ecosystem.
Additionally, according to Tom Wan, Bitcoin transaction fees have reached their highest point in six years. On May 7th, the transaction fee rate reached 31%, a significant increase from the 1-2% range seen since July 2021. This surge in fees resulted in block 788695 being recorded at the 5th highest fee level for a USD block transaction with $194k and 6.7 BTC.
While this spike in fees may be disconcerting for some Bitcoin users, it is important to note that fees are still relatively low when measured in BTC. For example, block 409008 recorded the highest BTC transaction fee at 291 BTC ($135k) in April 2016.
The revolutionary approach and utility of BRC-20
The utility of BRC-20 tokens can be enhanced if a layer 2 solution like Stacks opens up to connect BRC-20. This could potentially improve the user experience and lower the barrier to entry for users. However, the ceiling for decentralized finance (DeFi) capabilities of BRC-20 tokens may be limited given Stacks’ current DeFi size.
According to Tom Wan, BRC-20 tokens have attracted a lot of attention in the crypto space, but there is still room for growth in terms of utility and DeFi capabilities. With the potential for a layer 2 solution like Stacks to connect BRC-20, BRC-20 tokens could see an improvement in their DeFi capabilities that could attract more users and investors. However, it remains to be seen if BRC-20 tokens can overcome their current limitations and become a more widely adopted cryptocurrency.
Overall, although BRC-20 tokens have seen a surge in popularity and market capitalization, their utility remains limited due to the lack of smart contract capabilities. However, the potential for a layer 2 solution could enhance their DeFi capabilities, which have the potential to become a more widely accepted cryptocurrency.
Featured image from Unsplash, chart from TradingView.com