ORC20 Docs | What is ORC20? - CoinNav.io

With the launch of $Ordi on Gate.io, the official announcement of Ordinals trading support on the Binance NFT marketplace, and the declaration of OKX Web3 Wallet's endorsement for BRC20, the sentiment surrounding BRC20 tokens has reached its pinnacle.

Simultaneously, due to challenges such as restricted BRC20 token naming, persistent susceptibility to double-spending attacks, and the limited scope for ecosystem development due to token simplicity, the ORC20 token standard has emerged.

Within just half a month of its launch, the minting volume of ORC20 tokens has already exceeded 250,000. Given the wealth-generating effects of BRC20 and the immense potential of the Bitcoin ecosystem, this new token standard has naturally garnered considerable attention.

So, what sets the ORC-20 standard apart from BRC-20? Will ORC-20 replace BRC-20 to become the unified standard for token issuance based on the Ordinal protocol? We will delve into these distinctions in this article.

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Introducing the New Standard for Ordinal Tokens: ORC20 Launch

On April 30, 2023, a groundbreaking moment arrived with the launch of ORC-20. The fundamental aim of ORC-20 is to eliminate certain limitations that were inherent in the BRC-20 standard for token issuance, thereby providing a broader array of functionalities for token issuance based on the Ordinal protocol.

https://dune.com/ordinalstats/orc-20

BRC-20 ordinals (dune.com)

As of May 17, 2023, merely half a month since the introduction of the ORC-20 standard, the count of inscribed tokens has impressively surpassed 250,000. This growth rate significantly outpaces the level achieved by BRC-20 in its initial half-month of existence.

 

Limitations of BRC20

1. Upon the initial deployment of BRC20 tokens, both the token's supply and maximum minting capacity are immutable, imposing constraints on the token's growth potential.
2. The naming of BRC20 tokens is confined to a mere four digits.
3. The functionalities of "Inscribe Transfer" and "bookkeeping" within the BRC20 framework heavily rely on external centralized indexing services.

 

Distinguishing ORC20 from BRC20

ORC20 and BRC20 share a common ground in being token deployment standards within the Bitcoin ecosystem, both based on the Ordinal protocol, akin to Ethereum's ERC20.

However, they differ in ways that ORC20 enhances certain functionalities of BRC20 while removing certain limitations, thus better aligning with the needs of project development. The differences can be summarized in the following five points:

1. Mitigating Double-Spending Risk through UTXO

In each transaction, the sender specifies the amount to be received by the recipient and the remaining balance to be sent back to the sender. Any transaction that doesn't send the entire remaining balance is considered invalid.

Transactions can transfer amounts to multiple recipients, and each transaction (excluding self-transactions) must explicitly define the amount to be sent.

Only when the remaining balance is sent back to the sender is the transaction considered complete.

After each transaction is completed, the previously recorded balance is no longer in a valid state.

2. Token Names Unrestricted to 4 Characters and Case-Insensitive

Given that a majority of BRC20 four-letter words have been pre-minted, the removal of character restrictions caters to market demand. However, this could lead to perceptions that ORC20 tokens are less scarce compared to BRC20 tokens.

3. Enhanced Functionality through Customizable Keys

Prominent among ORC20's customizable keys are "minter" and "tax." The minter serves as a specialized minting address, facilitating whitelist-like functionality, while tax enables project teams to levy transaction taxes or royalties.

4. Upgradeable Token Parameters, e.g., Adjusting Max and Limit Supply

This flexibility in token supply ensures that project teams can utilize ORC20 for varied use cases, such as:

Gradually reducing mint quantities to enhance token scarcity, emulating Bitcoin's halving mechanism.

Increasing the maximum supply and rewarding community members with additional incentives.

Initially utilizing a unique minting address to mint tokens into the DAO treasury, and then altering minting limits to allow community-based token minting.

5. Transaction Cancellation Capability

By employing the "op": "cancel" mechanism, transactions can be canceled. Furthermore, due to ORC20 introducing a nonce value for every transaction, cancellations can apply to all transactions or specific ones based on their nonce values.

In essence, ORC20 distinguishes itself by building upon BRC20's foundation, enhancing features, and addressing limitations, making it an innovative standard that caters to evolving project requirements.

 

Advantages of the ORC20 Standard

Compared to BRC20, the ORC20 standard boasts four major advantages:

01Mitigating double-spending risk through the UTXO mechanism.

While BRC20 has a mere two-month history, instances of double-spending have already arisen. For instance, in late April, Unisat launched BRC20 as scheduled, but promptly had to halt trading due to double-spending issues, causing market turbulence. Therefore, the improvement in ORC20 to mitigate double-spending attacks holds significant value.

02Enabling greater token customization.

For example, ORC20 supports tickers with more than 4 characters and allows the use of certain custom keys. Functions like minter and tax enable whitelisting and transaction tax imposition respectively, granting project teams more operational possibilities for community engagement and sustainable income generation, thereby extending the project's lifecycle.

03Upgradeable tokens.

The upgradeable feature contributes to ongoing project operations. It accommodates scenarios where projects might lack well-defined operational plans or communal financing during initial stages but can subsequently implement functionalities like community incentives and DAO treasuries by modifying the token's total supply.

04Support for transitioning BRC20 minting to ORC20 minting.

The upgrade process is irreversible and exclusive to deployers of BRC20 minting. This could entice a portion of BRC20 minting to transition into ORC20 minting. However, the reverse transition from ORC20 to BRC20 is not possible. This dynamic might contribute to the growing popularity of the ORC20 standard.

 

Drawbacks of ORC20

If the fervor around BRC20 can be partly attributed to its straightforward design, which facilitates easy propagation within the community, then the intricate architecture of ORC20 might result in a fair amount of user criticism.

For instance, the ability for project teams to customize and add certain keys can make token minting, transfers, and other operations more convoluted, leading to potential user errors.

Moreover, the feature of upgradability, allowing changes to quantity limits after token issuance, could paradoxically be the greatest disadvantage of ORC20.

On one hand, this may cause users to perceive a departure from the immutable spirit of blockchain, raising concerns about malicious token inflation by project teams, insider trading, and potential instances of market manipulation.

On the other hand, currently, both BRC20 and ORC20 tokens share the characteristic of being meme-oriented tokens. Most meme coins have a fixed total supply and emphasize deflationary mechanisms, but the upgradability feature could potentially lead to an increasing token supply. This, in turn, might erode consensus around meme coins due to heightened user apprehensions about inflation.

 

Will ORC20 Replace BRC20?

ORC20 and BRC20 each possess their own strengths and weaknesses, catering to distinct application scenarios. BRC20 is designed with simplicity, and immutability, making it suitable for value storage and straightforward exchange.

On the other hand, ORC20 exhibits complexity in design, offering the ability to craft and customize rules, thereby facilitating the implementation of specific business logic. To draw an analogy, BRC20 resembles Bitcoin in essence, while ORC20 takes on a more Ethereum-like role.

Now, if the aim is to compete with BRC-20 within the Ordinals community, the crucial points of competition arguably lie in attracting support from centralized institutions. This includes providing users with more liquid trading markets, enhanced tools, and user-friendly browsers. The competition transcends mere enhancements to token minting capabilities. However, ORC20 might lag behind BRC20 when it comes to garnering support from centralized institutions.

All in all, due to the differentiating factors between ORC20 and BRC20, the probability of ORC20 entirely replacing BRC20 is quite low. Both standards are likely to coexist within the Bitcoin ecosystem.