How this game-changing technology is revolutionizing Bitcoin transactions

by James · May 9, 2023

The crypto world is constantly evolving, and with BRC-20, investors are witnessing a significant change in the Bitcoin (BTC) ecosystem. According to researcher Tom Wan, BRC-20 has driven Ordinals to the next level of adoption, and this has resulted in an increase in BRC-20-related transactions.

In recent times, BRC-20 transactions related to the distribution, minting and transfer of tokens have surpassed non-ordinary transactions. On May 7, the percentage of BRC-20 transactions reached a peak of 65%, indicating the growing use 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 ordinal, which creates a longer queue in the Bitcoin mempool. However, the memory usage for mempool is currently lower than in March because the size of BRC-20 tokens is about 10 times smaller than image inscriptions.

Despite lower mempool usage, the average transaction fee still rose to $18.9, the highest since May 2021. This is due to the long queue in the mempool, which requires users to pay a higher gas fee for their transactions to be settled by miners .

According to Tom Wan, one of the main benefits of BRC-20 adoption is the higher income it brings to miners. Fees coming from Ordinals transactions have reached 61%, of which 99.5% come from BRC-20. This is a significant increase compared to the previous levels, indicating that BRC-20 is gaining more and more foothold in the Bitcoin ecosystem.

Charges from Ordinals. Source: Tom Wan on Twitter.

Furthermore, according to Tom Wan, Bitcoin transaction fees have reached their highest point in six years. On May 7th, the percentage of transaction fees reached 31%, which is a significant increase from the 1-2% range since July 2021. This increase in fees resulted in block 788695 recording the fifth highest USD block transaction fee with $194,000 and 6.7 BTC.

While this increase in fees may be of concern to some Bitcoin users, it is important to note that fees are still relatively low in BTC terms. For example, Block 409008 recorded the highest transaction fee in BTC with 291 BTC ($135k) back in April 2016.

BRC-20’s revolutionary approach and utility

The BRC-20 token’s utility could be enhanced if a layer 2 solution like Stacks opens up to bridge BRC-20s. This can potentially improve the user experience and lower the entry barrier for users. However, the ceiling for the BRC-20 token’s decentralized finance (DeFi) capabilities may be limited given the current size of DeFi on Stacks.

According to Tom Wan, BRC-20 tokens have received 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 bridge BRC-20s, BRC-20 tokens could see an improvement in their DeFi capabilities, which could attract more users and investors. However, it remains to be seen whether BRC-20 tokens can overcome their current limitations and become a more widespread cryptocurrency.

Overall, while BRC-20 tokens have seen an increase 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 improve their DeFi capability, which has the potential to become a more widespread cryptocurrency.