The Importance of BRC-20 for the Future of Cryptocurrency
Being prepared for new trends is extremely important when focusing on the future. BRC-20 plays a significant role in this regard. We had mentioned that a new era had begun in the Bitcoin network with the Taproot update at the end of 2021. The narrative of a Bitcoin network capable of smart contracts was exciting. So, why is BRC-20 important for the future?
BRC-20 and Its Future
Ethereum is the largest smart contract platform and also the top altcoin by market value. We can compare smart contracts to websites on the web2. Smart contract platforms can be likened to Amazon and other services that provide hosting and server services. Bitcoin is both the oldest and the most decentralized cryptocurrency network in terms of mining power.
Security, decentralization, and robustness aspects of Bitcoin reveal its potential to become a hub for smart contracts in the future. Before Taproot, this was not possible. Throughout 2023, Bitcoin’s ecosystem has rapidly developed. New types of assets, exemplified with Ordinals NFTs and BRC-20 tokens, created widespread community enthusiasm, leading to a significant increase in earnings for BTC miners.
However, the only gain was not for miners, but we also left behind a new milestone that would positively affect the future of Bitcoin. Ordinals work attached to Bitcoin without requiring even a single line to change in its code.
The Ordinals concept developed by Casey Rodarmor allows data to be defined on satoshis, which is one hundred millionth of 1 Bitcoin. NFTs were the first use case of the Ordinals protocol, but the same technology can also be used to issue changeable tokens similar to ERC-20 tokens supported by Ethereum.
Ethereum and Bitcoin Joint Contracts
MultiBit launched a two-way bridge for BRC-20 and ERC-20 transfers, triggering a new process. Months later, we can say hello to a world where some new protocols running on the Ethereum network can live integrated with BTC. Moreover, this transformation could turn Bitcoin’s benefit into something that provides infrastructure service in Web3 beyond just the narrative of value storage.
Over the next two years, we may see new projects that operate on the Bitcoin network and with BTC integrated with different networks making a noise in the markets. When we talked about ZK networks in 2021, there were no such advanced initiatives in this field. Today, we are talking about Bitcoin contracts, and what we will see in the upcoming period will be a surprise.
So what should investors do? While risky, following the firsts in this field can bring them profit. For example, the first DeFi platform integrated with (operating on) the Bitcoin network or other things. When some of these firsts achieve success, they can offer good returns to early-stage investors.