What Are BRC-20 Tokens? A Complete Beginner's Guide

Bitcoin has long been associated with simple peer-to-peer transactions and a store of value. However, BRC-20 tokens have expanded how some users interact with Bitcoin by enabling token-like activity through Ordinals inscriptions and off-chain indexing.

These tokens represent an experimental approach to fungible tokens on Bitcoin, introducing token issuance and transfer mechanics that were previously more common on smart contract platforms such as Ethereum. 

BRC-20 tokens are fungible digital assets created as part of an "experimental" token standard on the Bitcoin blockchain. Unlike Ethereum's ERC-20 tokens, which rely on smart contracts, BRC-20 tokens use Ordinals inscriptions, which store JSON-formatted token data on satoshis and are interpreted by off-chain indexers. These inscriptions store JSON-formatted data (for example, token name, ticker, and supply rules) on satoshis.  

This extends Bitcoin’s use beyond standard payments by enabling on-chain data inscriptions that third-party tools interpret as token activity. BRC-20 tokens can be deployed, minted, and transferred via inscriptions, while Bitcoin provides the base-layer transaction and data availability; token state is tracked by off-chain indexers.
 

The BRC-20 token standard was introduced in March 2023 by the pseudonymous developer “domo.” Inspired by Ethereum's ERC-20 standard, domo used Ordinals inscriptions—enabled by Bitcoin’s Taproot upgrade in November 2021—to inscribe token specifications onto individual satoshis using JSON files.

Initially introduced as an experiment, BRC-20 saw increased activity, with over 14,000 tokens created by early 2025. Examples include ORDI and SATS (Ordinals). As of February 2026, the BRC-20 sector market capitalisation is estimated at approximately $85–$90 million, although this figure can change with market conditions.

This activity has also been associated with challenges such as increased demand for blockspace, which may contribute to network congestion and raise scalability considerations for the Bitcoin network.
 

Peer-to-Peer Transfers
BRC-20 tokens can be transferred between wallets, offering a decentralized medium for digital currency transactions. This functionality is particularly useful for individuals seeking a pseudo-anonymous and efficient way to exchange value.

Decentralized Exchanges (DEXs)
BRC-20 tokens can interact with decentralized exchanges and trade assets directly on the Bitcoin layer. Users can trade native BRC-20 on on-chain protocols and easily withdraw their holdings to their wallets.

Tokenization of Assets
BRC-20 tokens can be used to tokenize real-world assets on-chain through the Ordinals protocols.

Supporting Continuous Experimentation
BRC-20 tokens have opened the doors to innovation on the Bitcoin network. Developers continue to push boundaries, making these tokens a key part of Bitcoin's evolutionary trajectory.

DeFi on Bitcoin
BRC-20 tokens enable lending, borrowing, yield farming, and other DeFi applications directly on the Bitcoin network.

Governance and Community Tokens
BRC-20 tokens can be used for community membership and governance, allowing token holders to participate in decision-making processes. 

Compatibility with Bitcoin: BRC-20 tokens operate directly on Bitcoin's blockchain, allowing them to exploit Bitcoin's robust and well-established infrastructure fully. This includes the network's outstanding security features, which are recognized as among the most reliable in cryptocurrency.  

Simplicity: Unlike Ethereum's ERC-20 tokens, which require smart contracts, BRC-20 tokens simplify the process using JSON inscriptions. This streamlined approach makes creating and deploying tokens more accessible, even for those with limited technical expertise.  

Decentralization: The minting and distributing of BRC-20 tokens are designed to be more inclusive. They often involve multiple wallets rather than relying on centralized parties, which helps to prevent issues of centralization and ensures a fairer token distribution process. 

Lack of Smart Contract Functionality: BRC-20 tokens do not support smart contracts, which limits the range of applications they can support compared with smart-contract-based tokens. This means they cannot directly facilitate complex decentralized applications or automated processes on Bitcoin’s base layer.

Bitcoin’s limitations: Bitcoin’s base layer processes only a few transactions per second on average, often cited in the ~3–7 TPS range, and fees can rise during congestion. These factors can make BRC-20 tokens less suited for high-volume or low-cost transactions compared with some other blockchain networks, depending on network conditions.

Limited interoperability: BRC-20 tokens have limited interoperability compared with smart-contract ecosystems, and most integrations require specialized tooling and off-chain infrastructure.
 

BRC-20 tokens, despite their experimental nature, have made a notable impact on the blockchain space. With over $500 million in market capitalization at the time of writing, they have driven increased adoption of Bitcoin for tokenization. However, in the past, the surge in transaction volumes has overwhelmed Bitcoin's network, exposing significant scalability challenges.

Critics argue that this added strain could impair Bitcoin's ability to handle traditional transactions efficiently. On the other hand, users see BRC-20 as a catalyst for innovation, potentially transforming Bitcoin into a versatile, multi-functional blockchain and breathing new life into its ecosystem. 

Purchasing BRC-20 tokens requires a Taproot-enabled Bitcoin wallet. Here's how you can get started:

1. Create an Ordinals Wallet on specialized platforms and make sure to follow security best practices, making sure to secure your passphrase carefully.
2. Browse Available Tokens and select from listed BRC-20 tokens.  
3. Make Your Purchase by clicking "Buy Now" and ensuring sufficient Bitcoin in your wallet for transactions and fees.   

Blockchain Platform:  

• BRC-20 tokens operate parallel to Bitcoin transactions, meaning they utilize Bitcoin's base layer for validation but do not integrate as deeply into Bitcoin's architecture.
• ERC-20 tokens are built on the Ethereum blockchain and other EVM-compatible networks, leveraging Ethereum's flexibility and smart contract ecosystem.  

Creation Method:  

• BRC-20 tokens are created using JSON inscriptions, a relatively new method designed for the Bitcoin network that involves embedding data into transactions.  
• ERC-20 tokens are created through smart contract coding, offering a more programmable and feature-rich approach to token design.  

Functional Scope:  

• BRC-20 tokens are more limited in functionality as they cannot execute smart contracts, focusing mainly on basic token operations like minting and transferring.  
• ERC-20 tokens are highly versatile, supporting a variety of use cases, including complex dApps and DeFi applications.

Transaction Processing:  

• BRC-20 tokens operate parallel to Bitcoin transactions, meaning they utilize Bitcoin's base layer for validation but do not integrate as deeply into Bitcoin's architecture.  
• ERC-20 tokens are fully integrated into Ethereum's network architecture, allowing seamless interaction with smart contracts and other decentralized features within the ecosystem.

Use Cases:

• BRC-20 tokens are currently more focused on speculative assets, meme coins, and basic tokenization, with limited integration into complex decentralized applications.
• ERC-20 tokens support a wide array of use cases, including stablecoins, governance tokens, utility tokens, and are integral to numerous DeFi platforms and blockchain-based projects.

Network Performance:

• BRC-20 tokens are subject to Bitcoin's lower transaction throughput, typically around 7 transactions per second, which can lead to slower processing times and higher fees during network congestion.
• ERC-20 tokens benefit from Ethereum's higher transaction capacity and ongoing scalability improvements, allowing for faster and potentially cheaper transactions, especially with Layer 2 solutions.

Decentralization and Immutability:

• BRC-20 tokens are often considered more decentralized and immutable due to their attachment to Bitcoin's robust and widely distributed network, with limited ability for centralized modifications.
• ERC-20 tokens, while benefiting from Ethereum's decentralized nature, may be subject to more centralized control in some cases, as project teams can potentially modify or upgrade token contracts. 

What Is a BRC-20 Token Contract?
A BRC-20 token contract is a set of rules coded onto Bitcoin's blockchain via JSON inscriptions, defining a token's name, supply, and other essential properties.

What Is an Example of a BRC-20 Token?
ORDI was the first BRC-20 token created and remains one of the most popular, boasting a market cap of over $185 million as of March 14th 2025. 

BRC-20 tokens remain experimental and have contributed to discussions about Bitcoin’s use cases by enabling inscriptions-based token activity. However, their functionality remains more limited than smart-contract platforms, and users should consider the technical, operational, and market risks before interacting with them.