The introduction of the Ordinals protocol has enabled the creation of NFT-like (non-fungible token) assets on the Bitcoin network. Unlike conventional <a href="https://www.delta.exchange/blog/beginners-guide-non-fungible-token">NFTs</a>, which involve creating a new token, Bitcoin Ordinals involve direct inscription of raw file data onto the blockchain. This approach is a notable innovation, adding new dimensions to digital asset management within the Bitcoin ecosystem. The BRC-20 ( Bitcoin Request for Comment 20) tokens gained immense popularity quickly after their introduction in March 2023. This surge in popularity led to a significant increase in Bitcoin’s network transactions, causing a record high in unconfirmed transactions in May 2023 and a temporary halt of the Bitcoin blockchain. This event highlighted the substantial impact of BRC-20 tokens on Bitcoin’s network performance. 
Understanding Bitcoin Ordinals NFT- as they are referred to colloquially- and BRC-20 tokens is crucial for those interested in digital currencies and blockchain technology. Let’s begin with the basics: 
<h2>What Are Bitcoin Ordinals NFT and How Do They Work?</h2>
Bitcoin Ordinals, introduced by developer Casey Rodarmor, allow users to inscribe data such as text, images, or videos directly on the Bitcoin blockchain. This is achieved through inscribing data onto satoshis, the smallest unit of Bitcoin- with each inscription generating an Ordinal (also known as a Bitcoin NFT). The technology was made possible by Bitcoin’s 2017 SegWit and 2021 Taproot upgrades. 
Ordinal NFTs have sparked debate in the Bitcoin community regarding the use of the blockchain for non-financial purposes. 
<h2>What Is The BRC-20 Token Standard ?</h2>
The BRC-20 token standard on the Bitcoin network is a new protocol for creating and transferring fungible tokens, akin to Ethereum’s ERC-20 (Ethereum Request for Common 20). This standard utilizes Bitcoin’s Ordinal inscriptions to embed token data directly on the blockchain. However, unlike ERC-20 tokens, BRC-20 tokens do not rely on smart contracts, leading to a simpler but less feature-rich functionality. 
As an experimental protocol, BRC-20’s long-term viability and effectiveness are still under evaluation, marking an evolving phase in the digital asset industry on the Bitcoin platform.
<h2>How Do BRC-20 Tokens Work?</h2>
BRC-20 tokens operate uniquely within the Bitcoin ecosystem, and their functionality is distinctive from other token standards like Ethereum’s ERC-20. Here’s an in-depth explanation of how BRC-20 tokens work:
<ul>
<li style="font-weight: 400;" aria-level="1">BRC-20 tokens utilize the Bitcoin Ordinals protocol, which was made possible by Bitcoin’s Taproot upgrade in November 2021. This protocol allows for the inscription of additional data, such as text, images, or audio, onto individual satoshis. These inscriptions give each Satoshi a unique ordinal number based on the order in which they are mined.</li>
<li style="font-weight: 400;" aria-level="1">To create BRC-20 tokens, JSON (JavaScript Object Notation) data is inscribed onto satoshis. This JSON code defines the token’s attributes, including its name, symbol, supply, minting conditions, and transfer conditions. The process of deploying a BRC-20 token involves defining these parameters and creating a JSON file that details the token’s attributes.</li>
<li style="font-weight: 400;" aria-level="1">After deployment, the minting of new tokens is managed according to predefined criteria, with the initial recipient being determined by the service used for the inscription. Transfers of BRC-20 tokens between users involve altering the JSON data in the inscriptions, effectively tracing the token’s journey across Bitcoin addresses.</li>
<li style="font-weight: 400;" aria-level="1">Unlike ERC-20 tokens, which use smart contracts for storage and transactions, BRC-20 tokens store their information within the Bitcoin blockchain through script files. This design choice, while limiting the tokens to basic functionalities, potentially reduces vulnerabilities and contributes to their security.</li>
<li style="font-weight: 400;" aria-level="1">BRC-20 tokens can be acquired through centralized exchanges like Gate.io or decentralized platforms. However, they are not as easily traded on exchanges as ERC-20 tokens, and their availability remains limited.</li>
</ul>
BRC-20 tokens have seen significant market adoption and thousands of tokens have already been minted. They are being used for peer-to-peer transfers, potentially in decentralized finance (DeFi), and for tokenizing real assets like gold and real estate. BRC-20 tokens have also been utilized to create meme tokens and other digital assets.
Despite their innovative nature, BRC-20 tokens face limitations inherent to the Bitcoin blockchain, such as scalability challenges and limited functionality compared to ERC-20 tokens. Their current capabilities are primarily focused on the minting, deploying, and transferring of tokens, without the advanced features found in smart contract-based tokens.
<h2>Are Bitcoin Ordinal NFTs Worth Investing In?</h2>
 
 
Investing in Bitcoin Ordinals is a decision that depends on your risk tolerance and investment strategy. Here are some insights: 
<ul>
<li style="font-weight: 400;" aria-level="1">BRC-20 tokens, closely related to Bitcoin ordinals, have been gaining substantial momentum in the market. Increase in value suggests that there is growing investor interest and market potential in these types of tokens​​.</li>
<li style="font-weight: 400;" aria-level="1">Bitcoin Ordinal cryptos are expected to enable new and innovative use cases and markets for NFTs. They could offer solutions for things like decentralized identity, web2 analogs, and physical infrastructure networks. This potential for diverse applications could make Bitcoin Ordinals an attractive area for investment, especially if you’re interested in emerging technologies and the expansion of the Bitcoin ecosystem​​.</li>
<li style="font-weight: 400;" aria-level="1">If you’re looking for a long-term investment strategy that can weather the volatility of the crypto market, Bitcoin ordinals, alongside Bitcoin and BRC-20 tokens, might be worth considering. Each of these assets has unique characteristics and advantages, making them suitable for different investment goals. Bitcoin, for instance, is recognized as a reliable store of value, while BRC-20 tokens offer innovation and experimentation opportunities in the crypto space​. </li>
</ul>
<h2>The Future of Ordinal NFTs and BRC-20 Tokens</h2>
The introduction of Ordinal NFTs and the BRC-20 standard has not only broadened the scope of Bitcoin’s functionality but also sparked new conversations about the blockchain’s potential uses. As we look to the future, the trajectory of Bitcoin Ordinals and BRC-20 tokens appears promising, highlighting the dynamic and evolving nature of blockchain technology. Their ongoing development and integration within the digital asset ecosystem will undoubtedly be a key area of interest for investors, developers, and enthusiasts in the blockchain community.

We answer all your questions about Bitcoin Ordinals NFT and BRC-20 tokens in our blog. Learn what they mean for the future of digital currencies.

What Are Bitcoin Ordinals and The BRC-20 Token Standard?

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