After a major price correction at the beginning of the week, the crypto market is trying to consolidate. One market that has felt the brunt of this correction is the BRC-20 token, which has seen a major decline in its market cap.
According to brc-20.iowhich tracks the nascent market for tokens minted on the bitcoin blockchain, the market cap of all BRC-20 tokens fell from $990,000,000 to $379,000,000 between May 8 and 11, a 62% drop. At the time of writing, the market capitalization of the BRC-20 token has rebounded and is around $570,000,000, having dropped 40% within a seven-day trading period.
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Related Reading: Bakkt streamlines Apex crypto platform by delisting 25 tokens
The BRC-20 market is largely tied to the capitalization of the ORDI token, which dominates over 80% of the trading volume. At the time of writing, it is currently trading around $15, down from its all-time high price of $28 achieved earlier in the month. ORDI’s importance in this market means that price changes directly and substantially affect the market capitalization of the BRC-20 token.
A Deep Dive into BRC-20 Tokens
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BRC-20 is an experimental standard for the issuance and transfer of alternative tokens on the bitcoin network. The deployment, issuance and transfer of these tokens is done through JSON data entry. Hence its correlation with the NFT ordinals of bitcoin.
The creation of this standard is credited to a developer on Twitter named Domo. On March 8, the computer scientist announced his progress in this area and admitted that it would be difficult for him to take the test going forward. For this reason, he preferred to share the project with others to experiment with. Since then, the ecosystem has exploded, with over 14,000 tokens launched. BRC-20.IO.
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Although the name BRC-20 is a reference to Ethereum’s ERC-20 standard. However, the two standards differ in many of their features, especially due to differences between the networks in which they operate, Bitcoin and Ethereum.
First, bitcoin’s BRC-20 token does not have the ability to interact with smart contracts, while ERC-20 does. Other limitations of BRC-20 tokens compared to Ethereum are that they cannot have decimals, can be burned or frozen, and have additional functions such as approval or delegation.
related reading, PayPal Plunging Despite Growing Crypto Holdings
BRC-20 Token Not Without Controversy
Some bitcoin extremists have criticized the growing popularity of BRC-20 tokens because of their impact on the bitcoin network. Congestion is on the rise on the bitcoin network, and it has broken the record for the average number of transactions processed per block, with an astonishing 4,373 transactions, the highest ever. Nevertheless, supporters of this token standard argue that it expands the bitcoin blockchain to new possibilities and provides new use cases for the leading cryptocurrency.
Featured images from iStock, charts from brc-20.io and Tradingview
