How BRC20 Works: Deploy, Mint, Transfer And Market (Bitcoin)

By ☑️0🆇D̺͈͙͕̿ͧ̑ͣ🅰🆅🅸🅳eͤ | Darknet | 10 May 2023

BRC20 is a protocol/standard indirectly linked to Bitcoin: they are like two parallel lines. If these tokens or a transaction is compromised, the Bitcoin protocol is unaffected (unlike the ERC20s on Ethereum). ERC20 respect the Ethereum consensus mechanism, for BRC20 it doesn't work like that. Bitcoin's protocol doesn't "know" what's happening on the BRC20 standard, it sees the transfer as a normal transaction. Paradoxically, the transaction could be accepted on the Bitcoin blockchain and rejected on the BRC20 (perhaps because it does not comply with the BRC20 standards). If someone tries to send 30 tokens but only has 10, Bitcoin would see this as a normal transaction. However it would be considered invalid by the BRC20 standard (if I have 10 token I cannot send 30!).

HOW THE BRC20 WORKS
Basically we have 3 phases for the creation of a BRC20 token:
1) Deploy (creation of BRC20 token)
2) Mint (generation of the amount of tokens)
3) Transfer (allows transfer from a sender to the recipient)

Deployment is an inscription, i.e. the addition of metadata to a transaction (witness field). The saved data is in the ".JSON" format so it is text. The "skeleton" of the deployment inscription will be:

-P (protocol): BRC20
-OP (operation): deploy
-Tick (ticker/token identifier): orders
-Max (supply): xxxxx
-Lim (mint limit for each inbscription): xx
-Dec (decimal): 18

This text will be written in the inbscription. Also in the mint function text will be inserted in the inscription and it will be seen as a normal transaction by the Bitcoin protocol (here the "AMT" function is present, i.e. the amount to be minted). When the mint function is confirmed by the network, the creator of the token is as if it were generating a transaction to its own address (it is autogenerated). The transfer foresees the creation of another inscription always with text where the "OP" operation foresees the transfer function and the "AMT" the quantity to be sent. Subsequently a normal transaction is performed on the Bitcoin network which transfers the inscription created from address A to address B. The Bitcoin protocol sees normal transactions but does not read the data: it does not see the deploy nor the mint. He only sees a transfer of Satoshi from x to y (and not the transfer Satoshi+Inscription). Complete example:

Deploy: { "p": "brc-20", "op": "deploy", "tick": "publish0xtoken", "max": "2100000", "lim": "1000" }
Mint: { "p": "brc-20", "op": "mint", "tick": "publish0xtoken", "amt": "1000" }
Transfer: { "p": "brc-20", "op": "transfer", "tick": "ordi", "amt": "10" }

WALLET AND MARKET
You can use this wallet: OrdinalsWallet it is a wallet that also sees inscription and BRC20. Through the "Inscribe" function it is possible to create inscriptions and BRC20 tokens ("mint" function. Keep in mind that the "deploy" of that token may have already been done by other people). Also on the same site it is possible to buy both inscription (Bitcoin NFT) and BRC20 tokens (offers appear with the quantity of tokens and relative price).

Another interesting site is Unisat which allows you to create inscriptions, BRC20 but also buy and sell them. However, access to the market is only possible for those who have made at least 20 unisat points (20 Inscriptions).