With the rise of new token standards, Bitcoin tokens are becoming more liked. The goal of these new rules is to make it easier to create assets and make Bitcoin work better.
We will learn more about Bitcoin token standards and the best ones you should know about in this book.
What are the rules for Bitcoin tokens?
The Bitcoin token guidelines describe how a token on the Bitcoin blockchain should be built and how it should work. Token standards tell people how to make, distribute, and use coins on crypto blockchains.
At first, token standards were the same thing as blockchain systems that let smart contracts work. Ethereum had the first rules for tokens.
Going back to Bitcoin, the blockchain did not support token standards from the start because of how it was built. But in the years that followed, changes to the core system made it possible to store more data on the blockchain and speed up transactions.
Five New Token Standards That Are Changing Bitcoin At the time this was written, these were the five most popular token standards on Bitcoin.
BRC-20
BRC-20 is the first standard for making Bitcoin fungible coins that are part of the Ordinal system. A coder who goes by the name Domo came up with the idea for the token standard in March 2023. The standard lets developers put JSON code inside a sat to make Bitcoin network tokens that can be used in different ways. Tokens that follow this standard get the protection and longevity of Bitcoin.
Runes
Runes is a model for making Bitcoin coins that can be used in different ways. It is based on Unspent Transaction Output. Runes came out in April 2024 as an option to BRC-20 that was easier to use and didn’t need as many resources. Runes are made by saving runestones in the results of Bitcoin transactions. A runestone can carve a new rune, mint an old one, and move runes from the inputs to the outputs of a transaction.
ARC-20
The Atomicals system is a standard for making any kind of Bitcoin token that can be used in any way. It was released in December 2023 and backs each unit of an issued coin with a single Sat. That is, each ARC-20 token is always backed by one satoshi and has the same qualities as Bitcoin, like being able to be exchanged for other tokens. You can create these tokens, send them to any Bitcoin address, and store them in Bitcoin apps that support UTXO.
CBRC-20
The CBRC-20 standard is a way to make ordinal-based fungible tokens on Bitcoin. A group of programmers called THEMOTO put out the standard in December 2023. CBRC-20 is meant to be better than BRC-20 in some ways, like lowering the cost of writing and making it easier to find fungible coins on Bitcoin. Using a CBOR format to store info in Ordinal packets makes these tokens.
BRC-420
The BRC-420 standard adds information features to BRC-20 tokens, making a new group of tokens that are more flexible. It was proposed in 2023 as a standard for all metaverse assets, and its goal is to power an economy in the metaverse in the future. Developers can use this standard to make labels for animations, game things, videos, art, and more that range from 2D to 3D. The standard has a royalty system that lets people who made things get paid for inscriptions.
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