The BRC-20 Token Invasion: Is Bitcoin Network Feeling the Heat?
BRC-20 tokens have reached a market capitalization of over $1 billion just two months after the creation of the Bitcoin token fungibility protocol. The total trading volume of BRC-20 tokens reached $208.4 million in the past 24 hours.
BRC-20 is an experimental new token standard designed by a pseudo-anonymous developer known as Domo on Twitter.
The token standard is built on the Bitcoin blockchain network and is a Bitcoin-based solution for the creation and transfer of new digital assets. BRC-20 is modeled after Ethereum's ERC-20 standard, but its architecture is different and uses a concept known as "ordinals," which is built into Satoshis, the smallest units of Bitcoin.
However, BRC-20’s creator Domo has openly stated that the standard is worthless and that users should not waste money mass minting. “To emphasize again, this is simply a fun experiment. People much smarter than I have been working on similar ideas for much longer”, Domo explains.
Despite its experimental nature, BRC-20 has spread rapidly with hundreds of new tokens minted in the past couple of months.
However, the rising popularity of BRC-20 tokens has led to increased transaction fees and a backlog of transactions, pushing Bitcoin transaction fees to the highest level since May 2021. According to Dune Analytics, more than 3.5 million BRC-20 transactions have already occurred, generating an additional 493 BTC (approximately $14 million) in miners' fees. BRC-20 token swaps accounted for over 50% of all network transactions between April 29 and May 2.
According to CryptoQuant analytical firm, BRC-20 memecoin minting on the BTC blockchain is causing the surge in block space demand, with the average fee per transaction skyrocketing to over $16 and peaking at $29 on May 9.
Bitinfocharts also reported a spike in the average transaction fees, recording a jump to $31 on May 8 compared to around $19 the day prior.
The situation has become so concerning that Bitcoin core developers are even considering taking action against BRC-20 tokens and Ordinals, which they view as network spam.
It also led Binance, the world's largest crypto exchange, to temporarily halt withdrawals via Bitcoin early on May 10. As a result, transactions on the Litecoin blockchain have also surged to all-time highs as high fees on the Bitcoin network made crypto users search for alternatives.
About the author
Lee Brooks
Lee Brooks is passionate about the world of blockchain and crypto and by the endless possibilities these technologies offer
