The BRC-20 token has created a frenzy over the past few days. Users are putting in BTC to mint the token that is set Bitcoin Blockchain via Ordinals Inscription.
Enrico Ruboli, CEO of bitcoin sidechain Mintlayer, however, feels that the technology for creating BRC tokens is “heavily flawed and not in line with the axioms of the core bitcoin community.”
Notable Issues with BRC-20 Tokens
According to Enrico Ruboli, some of the key issues plaguing BRC-20 and offshoot dApps that are attempting to integrate them with smart contracts are:
- Since the low speed of transactions requires waiting for a bitcoin block to be confirmed, which combined with the frenzy created by the BRC-20 token can mean waiting hours for a transaction to complete. May have to
- The nature of the user interface being built for the BRC-20 token requires gas tokens for the exchange and BTC to pay for network fees. This means that the transaction cost is twice the normal fee for a BTC transaction.
- Exchanges are using Token Bridge and Bitcoin Wrapper to bridge Bitcoin to their platform. These token bridges have recently become a target for hackers with $1.4 billion in losses through token bridge attacks in 2022.
- BRC-20 tokens are linked to the bitcoin blockchain using ordinals that encode token information into witness data. This mixing of user-generated tokens with bitcoin is worrying from a regulatory point of view
Reducing popularity of ERC-20 tokens
Interestingly, the BRC-20 token standard was not chosen because it was 20th proposed standard, but to reduce the popularity of Ethereum ERC-20 token standard.
According to Bitcoin Sidechain Mintlayer CEO;
“The developers of the BRC-20 token standard and the tools used to develop the token are not affiliated with Bitcoin, are anonymous, and their software has not been thoroughly tested in this application. Liquidity being used The token is called WBTC, but it is not the popular Ethereum token WBTC. In addition to hundreds of completely worthless tokens designed to siphon money from later investors, the actual software may be hiding malicious attacks. Most Popular The DEX warns of “100% slippage”, which is basically a warning that you can lose all your assets by executing just one trade.”
Recent BRC-20 token creator DOMO warned in a tweet that the tokens are worthless to warn users that some inscription tools are designed to create tokens in middlemen’s wallets, taking control from users from the moment they were minted.
However, not everyone sees the idea of the BRC-20 token as a bad idea. AngelBlock founder and CEO, Alex Strajnevsky recently came out and said that he thinks what is happening within bitcoin is amazing.
Strzeniewski said this while disagreeing with some prominent BTC figures such as Adam Back, who is calling for censoring BRC20 token transactions “as a form of desperation”, saying:
“As a bitcoin extremist, I think what is happening within bitcoin is amazing. It seems that bitcoin is truly going back to its roots of being the “magic internet money”, and no technology Growth is a natural phenomenon for us. I see reactions from many BTC “purists”, but I don’t think anyone should use their platform to try to censor transactions and “legitimate” and invalid” transactions.
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