The world of crypto is constantly evolving, and with the BRC-20, investors are witnessing a significant change in the Bitcoin (BTC) ecosystem. According to researcher Tom Wan, BRC-20 has propelled Ordinals to the next level of adoption, and this has resulted in a surge in BRC-20-related transactions.
In recent times, BRC-20 transactions related to deploying, minting, and transferring tokens have surpassed non-ordinal transactions. On May 7th, the percentage of BRC-20 transactions reached a high of 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 is used for smart contract applications. Unlike regular Bitcoin transactions, BRC-20 transactions require the user to inscribe a new ordinal, which creates a longer queue in the Bitcoin mempool. However, the mempool memory usage is currently lower than in March because the size of BRC-20 tokens is approximately 10 times smaller than image inscriptions.
Despite the lower mempool usage, the average transaction fee has still risen 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 the miners.
According to Tom Wan, one of the key benefits of BRC-20 adoption is the higher revenue it provides for miners. Fees coming from Ordinals transactions have reached 61%, out of which 99.5% comes from BRC-20. This is a significant increase compared to the previous levels, which indicates that BRC-20 is gaining more and more traction in the Bitcoin ecosystem.Fees 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 seen since July 2021. This spike in fees resulted in Block 788695 recording the 5th highest block transaction fee in USD with $194k and 6.7 BTC.
While this spike in fees may be concerning for some Bitcoin users, it’s important to note that the fees are still relatively low when measured 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
BRC-20 tokens’ utility could be enhanced if a layer 2 solution like Stacks opens up to bridging BRC-20s. This could potentially improve the user experience and lower the barrier of entry for users. However, the ceiling for BRC-20 tokens’ decentralized finance (DeFi) capabilities could be limited given the current size of DeFi on Stacks.
According to Tom Wan, BRC-20 tokens have gained a lot of attention in the crypto space, but there is still room for growth in terms of its 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 if BRC-20 tokens can overcome their current limitations and become a more widely adopted cryptocurrency.
Overall, while BRC-20 tokens have seen a surge in popularity and market cap, 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 adopted cryptocurrency.BTC is on a downtrend on the 1-day chart. Source: BTCUSDT on TradingView.com
Featured image from Unsplash, chart from TradingView.com