How to Create Fungible Tokens on Bitcoin

In the world of blockchain, time seems to move faster than usual, not only in terms of crypto market movements, but also in terms of technology. Every day, new technologies are developed, and only at the beginning of 2023 did we see the arrival and birth of a new protocol on the Bitcoin blockchain that allows for the creation of non-fungible tokens (NFTs) on the Bitcoin blockchain.

But what if we told you that you can also create fungible tokens, i.e., tokens with a variable quantity (i.e., the supply)? Well, it's all possible with the BRC-20 standard!

What is the BRC-20 standard?

It all starts with the incredible Ordinals protocol, which allows you to write information inside satoshis, which in the case of NFTs are linked to the asset itself. With fungible tokens, the process is similar, but in this case, code is written with some information, which specifically includes:

• P, the name of the standard used, which for these tokens is "brc-20"
• Op, the type of operation to be performed, such as "deploy" or "mint"
• Tick, the name of the ticker to give to the token
• Max, the maximum supply of the token
• Lim, the maximum number of tokens that can be created (minted) in a transaction

BRC-20 vs. BRC20

An error that some might make is to confuse the BRC-20 standard of the Ordinals protocol with the BRC20 standard of the Bitgert blockchain, which also allows for the creation of fungible tokens, but on the Bitgert Chain, which is quite different from that of Bitcoin.

In fact, we're talking about a few lines of code for Bitcoin tokens versus hundreds of lines of code for a smart contract on the Bitgert Chain blockchain, as well as explorers to check these fungible tokens, which are distinguished by various characteristics.

The Next Crypto Bubble?

Despite only a few months having passed since the launch of this protocol and standard, we can already see that many have jumped into this sector, and over 7500 BRC-20 tokens have already been created, attracting over $100 million (while there are over 23,000 on Coinmarketcap):

In fact, this protocol lends itself well to creating every meme/sh*t coin and dubious utility, given the negligible cost of creating a token, just under $5, and where the first one capitalizes almost $80 million with a price per token of $3.78:

Of course, we're still in the stage of speculation and more illicit than legitimate projects, but they are appealing to those who want and hope for easy gains, as many of these tokens mark triple-digit increases.

How to Create a Fungible Token on Bitcoin

Now we come to the interesting part of the article where we show you the process of creating your own fungible token on the Bitcoin blockchain.

There are several ways to do this, such as doing everything from the command line, a procedure explained in detail in this repository, or through platforms that offer this service such as UniSat.

The first step is to deploy the code with our information, such as the ticker, maximum supply, and maximum number of mint per transaction:

Then our code will appear like this:

{"p":"brc-20","op":"deploy","tick":"Hoke","max":"210000","lim":"1"}

At this point, we insert our Bitcoin address (here's a guide on how to create a dedicated address for Ordinals), choose the fee to process the transaction, submit the order, and pay the transaction:

How Do Ordinals Impact Bitcoin?

Considering that these tokens use the same resources as the Bitcoin blockchain, they occupy the same space and consume fees, going on to excessively congest and weigh down the blockchain with unnecessary information.

So far, almost 3 million "inscriptions" have been created, consuming nearly 10 GB of space and producing fees for over 250 BTC:

Conclusion

This protocol has certainly brought a breath of fresh air to the blockchain landscape, especially on the Bitcoin blockchain, and it's hard to say if it will become widespread, especially since now, with the introduction of thousands of more performant blockchains, it doesn't seem to have a rosy future.

If this protocol and the ease of integration had been developed at the dawn of Bitcoin, we would certainly have had fewer blockchains or perhaps more failed projects than during the era of ICOs a few years ago.