BRC-20 Tokens Lose 40% Market Cap In 7 Days – Here’s Why
14 May 2023 - 4:16PM
NEWSBTC
The crypto market has been looking to consolidate following a major
price correction earlier in the week. One market that has felt the
brunt of this correction is BRC-20 token which has suffered a major
dip in its market cap. According to brc-20.io, which tracks
the nascent market for tokens minted on the Bitcoin blockchain, the
market cap of all BRC-20 tokens between May 8 and 11 went from
$990,000,000 to $379,000,000, a 62% drop. At the time of writing,
the market cap of BRC-20 tokens has rebounded and is around
$570,000,000, making it a 40% dip within the seven-day trading
period. Related Reading: Bakkt Streamlines Apex Crypto
Platform By Removing 25 Tokens The BRC-20 market is largely tied to
the capitalization of ORDI token, which dominates more than 80% of
the trading volumes. At the time of writing, it is currently
trading around $15, down from its all-time high price of $28,
achieved earlier in the month. The importance of ORDI in this
market means that price variations directly and considerably affect
the market cap of BRC-20 tokens. A Deep Dive Into
BRC-20 Token BRC-20 is an experimental standard for issuing
and transferring fungible tokens on the Bitcoin network. The
deployment, issuance, and transfer of these tokens is done via a
JSON data entry. Hence its relationship with the NFT Ordinals of
Bitcoin. The creation of this standard is credited to a
developer known as Domo on Twitter. On March 8, the computer
scientist announced his progress in this area and acknowledged that
it would be difficult for him to take this test further. For this
reason, he preferred to share the project with others to experiment
with. Since then, the ecosystem has exploded, with more than 14.000
tokens launched, according to brc-20.io. Although the name BRC-20
is a reference to Ethereum’s ERC-20 standard. However, both
standards differ in several of their characteristics, especially
due to the differences between the networks in which they work,
Bitcoin and Ethereum. First of all, Bitcoin’s BRC-20 tokens do not
have the ability to interact with smart contracts, while ERC-20s
do. Other limitations of the BRC-20 tokens compared to those of
Ethereum is that they cannot have decimals, be burned or frozen,
and have additional functions such as approval or delegation.
Related Reading: PayPal Plunging Despite Increasing Crypto Holdings
BRC-20 Tokens Not Without Controversy Some Bitcoin maximalists have
criticized the growing popularity of BRC-20 tokens due to their
effect on the Bitcoin network. There has been growing congestion on
the Bitcoin network, and it broke the record for the average number
of transactions processed per block with an astonishing 4,373
transactions, marking an all-time high. Nevertheless, proponents of
this token standard argue that it expands the Bitcoin blockchain to
new possibilities and provides new use cases for the leading
cryptocurrency. -Featured Image from iStock, charts from
brc-20.io and Tradingview
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