BRC-20 Tokens on Bitcoin: A Comprehensive Guide From A to Z for New Investors

How to Get Started with BRC-20 Tokens?

If you want to join the BRC-20 token investment wave but don’t know where to start, this guide will help you. The process of buying BRC-20 tokens is actually not as complicated as you might think – you just need a compatible wallet, some Bitcoin, and a spirit of exploring new markets.

Currently, centralized exchanges (CEX) offer limited options for BRC-20 trading. If the token you’re interested in isn’t available on CEX, you can find it on specialized Web3 platforms. The first step is to choose a suitable BRC-20 wallet – such as Ordinals Wallet, Unisats, Xverse, or Sparrow Wallet – to securely store your tokens.

What Are BRC-20 Tokens? Things You Need to Know

In recent years, the cryptocurrency market has faced many challenges, but BRC-20 tokens – unfamiliar assets on the Bitcoin blockchain – have created a notable trend. These tokens operate according to the BRC-20 standard, introducing the concept of fungibility on Bitcoin, similar to the ERC-20 standard on Ethereum.

BRC-20 tokens expand Bitcoin’s capabilities beyond payments. They can represent physical assets, support DeFi applications, or be used in gaming and virtual goods. This diversity makes BRC-20 wallets an essential tool for any investor wanting to participate in this ecosystem.

According to recent data, over 55,000 different BRC-20 tokens have been created. In May 2023, BRC-20 transactions peaked with nearly 400,000 transactions on the Bitcoin blockchain. The total market capitalization of these tokens exceeded $451 million, with a trading volume of over $145 million.

Bitcoin Ordinals and NFTs: Two Sides of the Same Coin

Bitcoin Ordinals have opened a completely new dimension in the Bitcoin ecosystem. This technology creates unique digital assets – similar to NFTs – by assigning serial numbers to individual satoshis. Unlike (fungible assets), Ordinals create non-fungible, indivisible assets with increasing value.

Bitcoin NFTs reached $200 million in transactions within just the first three months. Over 45 million unique Ordinals inscriptions have been created, demonstrating strong community interest. To manage these assets, you also need a BRC-20 wallet supporting Ordinals – these wallets not only store tokens but also manage NFTs on Bitcoin.

Practical Applications of BRC-20 Tokens

BRC-20 tokens are not just a trend; they also have significant real-world application potential:

Asset Tokenization: BRC-20 tokens can represent real estate, art, or tangible goods, making transactions easier and safer.

DeFi Applications: On the Bitcoin blockchain, these tokens can be used for lending, borrowing, or farming, leveraging Bitcoin’s inherent security.

Gaming and Virtual Goods: BRC-20 tokens enable transparent and secure trading of in-game items.

Identity Verification and Certification: They can be used for online identity verification.

Loyalty Programs: Businesses can issue BRC-20 tokens as rewards or points.

Governance: These tokens can grant voting rights in DAOs or decentralized organizations.

Cross-Chain Interaction: BRC-20 can act as a bridge between Bitcoin and other blockchains.

Detailed Guide: How to Buy BRC-20 Tokens

Buying on Centralized Exchanges

The first step is to choose a reliable CEX. By the end of 2023, many exchanges listed popular BRC-20 tokens like Ordinals (ORDI) – currently trading around $4.14 – SATS, and RATS.

Step 1: Register an account on the chosen CEX and complete the KYC verification process. Deposit funds into your account or buy Bitcoin (BTC) at the current price of $87.28K.

Step 2: Access the exchange’s trading market and find the BRC-20 trading pair you want to buy, e.g., ORDI/USDT.

Step 3: Place a buy order. You can choose a market price or set a limit order to buy at a specific price.

Step 4: Receive BRC-20 tokens in your account. You can keep them on the exchange or transfer to a self-custody wallet for better security.

Buying on Web3 Platforms

If the token you want isn’t listed on CEX, use a Web3 platform:

Step 1: Choose a Web3 platform supporting BRC-20 and ensure it is secure and trustworthy.

Step 2: Prepare a compatible BRC-20 wallet – such as Ordinals Wallet, Unisats, or Xverse – ensuring safety and ease of use.

Step 3: Buy Bitcoin from a CEX using fiat currency or other digital assets.

Step 4: Transfer BTC to your BRC-20 wallet. This step is crucial because you’ll need BTC to trade and pay fees.

Step 5: Connect your wallet to the Web3 platform and follow their instructions.

Step 6: Search for the BRC-20 token you want to buy and place a buy order for your desired amount.

Step 7: Store the tokens securely in a compatible wallet. For large transactions, consider using a hardware wallet.

Step 8: Monitor regularly and stay updated on market changes affecting your investment value.

Important Notes When Investing

Investing in BRC-20 tokens is not without risks. Before deciding, thoroughly research the project and consider seeking advice from financial experts. Risk management is key to long-term survival in this volatile cryptocurrency market.

Conclusion: Stepping Into the Future of BRC-20 Tokens

The rise of BRC-20 tokens, Bitcoin NFTs, and Ordinals marks a new era in digital asset history. These tools – from DeFi applications to identity management – open unlimited opportunities for investors, creators, and collectors.

With the support of a reliable BRC-20 wallet, you are ready to explore this ecosystem. However, remember that the BRC-20 token market is still young and volatile. When participating in new trends, always prioritize risk management and only invest what you can afford to lose.