Bitcoin BRC-20 Tokens Are Now Moving Over to Ethereum - Decrypt

Bitcoin BRC-20 Tokens Are Now Moving Over to Ethereum – Decrypt

Time Stamp: July 7, 2023 1:49 PM
Bitcoin BRC-20 Tokens Are Now Moving Over to Ethereum - Decrypt PlatoBlockchain Data Intelligence. Vertical Search. Ai.

Six months after launching a protocol that lets people mint NFT-like media assets on the Bitcoin blockchain, the Ordinals space is rapidly evolving. Not only are new products springing up one after another, but the Ordinals-based BRC-20 tokens are now expanding onto none other than Ethereum, the dominant NFT and token ecosystem.

Two of the largest BRC-20 tokens on the market, ORDI and OXBT, have partnered with Emblem—a tool that lets users store tokens across blockchains without need for a bridge—to release BRC-20 Curated Collections.

“This should be considered a day in which BRC-20s began exploring what their asset class is,” said Jake Gallen, who is in charge of NFT strategy and product at Emblem.

BRC-20 tokens use the Ordinals protocol to generate what are effectively fungible tokens built on top of the Bitcoin blockchain. Broadly, they’ve been used thus far to create a wide variety of meme tokens, with the total market cap of all BRC-20s briefly nearing $1 billion in May before falling sharply since.

Gallen told Decrypt that the BRC-20 Curated Collections are important “because we can now test what type of asset BRC-20s are most closely related to.” He’s looking forward to “how the community views them,” and whether they want to trade them like fungible tokens “or want some variety.”

He teamed with Adam McBride, colleague and self-proclaimed NFT archaeologist, to share a video deep dive earlier this week about the collection launch. An official launch was pegged for next week, but the functionality is already live and the resulting NFTs are being traded on the OpenSea and Blur marketplaces.

According to McBride, the innovation at play with the new partnership is to sidestep traditional cross-chain bridges. He explained that “before, users would send their BRC-20s to a Bitcoin wallet, which then would mint new ERC-20s on Ethereum.”

Emblem’s solution, created in-house, is to create specialized vaults. Before Ordinals, Emblem vaults were used to transfer digital artwork minted on other Bitcoin-related protocols (like Counterparty) over to Ethereum, where they were newly minted as ERC-721 NFTs. The Rare Pepe collection is a prominent example.

In this case, with Ordinals-based BRC-20 tokens, users send their ORDI or OXBT to a vault which stores the private keys and holds the tokens. Then, using a single ERC-721 token, users will mint their Bitcoin-based NFT on Ethereum. 

In essence, “the BRC-20 sits inside a Taproot wallet, which sits inside an NFT,” said Gallen, explaining that “the NFT (which is an ERC-721 token) is the one doing all the traveling.” 

“I’m super excited to see how the Ethereum marketplace will react to this,” said McBride. “This will bring a level of ownership which is far more superior than what already exists, unlocking a bunch of use cases like farming, lending, and other stuff that is built out on Ethereum smart contracts.”

The creator of BRC-20s and ORDI in particular, pseudonymous on-chain data enthusiast Domo, did not reply to a request for comment. According to Gallen, however, Domo “is really excited to get to show his creation to Ethereum,” adding that “getting those tokens to OpenSea and Blur is huge.”

Gallen told Decrypt that the Emblem team has interacted more with ORDI builders than holders, whereas they are in direct contact with the OXBT community—led by the pseudonymous BitGod—since it is more ETH-native, “so the interest in ETH-denominated trading is much higher.”

Nonetheless, Gallen said that Emblem’s team “believes Bitcoin can equal or overtake Ethereum in NFT trading volume, but with its own culture and style.”

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