BRC-20 is an experimental token standard that enables fungible tokens to be created and transferred on the Bitcoin blockchain. Inspired by Ethereum’s ERC-20, BRC-20 uses the Ordinals protocol to attach, or “inscribe,” token-related data onto individual satoshis, the smallest units of BTC. Rather than relying on on-chain smart contracts, BRC-20 defines a simple, text-based set of instructions that indexers interpret to track token balances.
How BRC-20 works on Bitcoin
BRC-20 tokens are typically managed through three basic actions: deploying a token, minting a supply, and transferring units between addresses. These actions are encoded in inscription data and recorded in Bitcoin transactions. Because Bitcoin itself does not natively understand BRC-20 logic, wallets and marketplaces depend on off-chain indexers to read inscriptions, apply the standard’s rules, and present balances to users. In practice, this means the “token state” is reconstructed by scanning the chain, rather than executed by a smart contract.
What makes BRC-20 different from ERC-20
Unlike ERC-20 tokens on Ethereum, BRC-20 tokens do not offer programmable features such as automated swaps, lending logic, or complex permissions directly on-chain. Their functionality is comparatively limited and can be resource-intensive, since each action requires Bitcoin block space. Support can also vary across tools, because different indexers may implement edge cases differently.
Use cases, trade-offs, and why it matters
BRC-20 brought a new wave of experimentation to Bitcoin, including token trading and early attempts to integrate Bitcoin-based assets into broader crypto applications. At the same time, it highlights trade-offs around scalability, standards coordination, and reliance on indexing infrastructure. Understanding BRC-20 matters because it shows how Bitcoin can support new asset models, while revealing the technical and economic constraints of building tokens on a chain optimized for secure, simple payments.