Crazy Crypto and WTF are BRC-20 tokens?

in #leofinance11 months ago

So yesterday was one of those days when I woke up wondering what I've gotten myself into with all this crypto shenanigans....

Binance halting BTC withdrawals because of congestion on the network is never a great way to start the day, that is never likely to be good news.

It's just a painful reminder of how reliant we are on centralised entities if we ever want to move crypto out into FIAT.

But also an affirmation of my policy to never hold too much on exchanges.

Congestion caused by BRC-20 tokens

Congestion was severe, spiking up 10 times from around the usual (recent) $2 tx fee to $20....

Screenshot 2023-05-08 at 11.54.01.png

And the cause was apparently people minting BRC20-20 tokens....

BRC20 tokens ...?

I had to dig into this a little, news to me....

The BRC-20 token standard was created in March 2023, which is 'a way to store a script file in bitcoin and use that file as a way to attribute tokens to satoshis' - so it's basically fungible tokens (lame NFTs if you like) stored on the BTC chain.

The congestion has simply been caused by more users jumping in on the BRC-20 protocol and minting and trading their own NFT-meme coins.

The number of these tokens in existence has increased massively in the last few weeks.

The original token, ORDI makes up more than half the marketcap but it seems that people have been jumping on this protocol and minting their own versions and now we have other tokens.

The next four largest are Pepe, Piza, Meme and Moon and along with ORDI the top five have a current marketcap of around $250M, 85% of the value of all BRC-20 tokens.

The problem?

Well despite the congestion meaning it makes it more expensive to move your BTC around, these coins just seem to be absolute shit, with even the creator of ORDI saying this is just an experiment and 'don't expect these coins to have any value' (not those exact words, but the spirit of them).

Take Pepe, for example:

PEPE is a multichain Meme Coin which derives 100% of its value from degens buying it for the lolz, and now someone's created a BRC-20 version of it, meaning this shit version of shit is now clogging up the BTC network.

Fine if you're a degen, not so fine if you think crypto has a more serious side to it.

Or maybe this is a good thing...?

Maybe I just don't have a sense of humour, maybe it's just early days excitement showcasing another valid use-case of BTC...?

Maybe this will push up demand for Bitcoin, maybe there's a legit use case further down the line for some of these tokens, but I dunno, all I see ATM is degens clogging up the network and it just makes the whole crypto space look a bit dodgy.

Final thoughts...

I'm not the slightest bit tempted to buy any of these BRC-20 tokens this just seems like wild speculation and early days excitement, hopefully things will calm down.

In the meantime, I'll Just HODL my BTC and keep it in cold storage, thank you very much! !

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Thanks for writing this up. This whole thing is affecting @v4vapp because the Lightning network takes its base from BTC so the process of opening and closing channels or moving BTC in and out of Lightning is drastically affected by high fee rates.

Most of my work on Lightning I've been lucky enough to pay as little as 1 sat/vb for channels to open and close. Now it's up over 200 sats/vb. That's a big deal.

This is also killing the Muun wallet which tries to be a Lightning Wallet but behind the scenes actually swaps to BTC all the time. Do not use Muun right now.

I did think about you actually, I thought anyone using lightning might be finding it tough.

I think the novelty of this will wear off pretty quickly, I hope!

If you just use Lightning through a custodial wallet like Wallet of Satoshi or GetAlby they can hide the pain.

But systems like Muun and Breeze which give you a degree of custody of your own sats, are by necessity swapping in and out of BTC and trying to hide this from you. They're stuffed by fees like this. Muun in particular will charge you insane fees of 1000's of sats so much so that my own v4v.app system will actually refuse to send to a Muun wallet because I've specifically forbidden my system from paying crazy fees.

If someone does try to send Hive to a Muun wallet right now, you'll just get a failure and a refund of all your Hive within a couple of seconds.

All in all this is exposing a huge failing in Lightning if you try to run your own wallet on a small scale.

I been trying out the zk stark network. I was going to mint a nft for 0.01 eth. But the charge was about 0.011 for transaction fees. Wow even more than the nft itself. I didnt realise the charges on eth is that expensive. Perhaps BTC is slightly cheaper although i heard recently BTC fees are up !

I am all too familiar with high ETH fees unfortunately, but yeah maybe that puts this in perspective, I guess demand will fall once the prices equalise, which seems to be happening petty quickly!

I was surprised to see the notion and the buzz about BRC tokens!
But either way, I do think finally apart from holding/trading BTC might see another use case. With proper utilization this could turn out to be sth. Just like Matic made exclusively easy to get into ERC20 tokenish. Who knows we might see sth like this in the coming days!

I honestly don't know!

I am surprised that the fees are not putting people off minting these monkey jpegs?!

You need to run a full node to do it, I think we are talking about crypto multimillionaires here, with more BTC than sense obviously.

First time in Bitcoin history, Bitcoin miners earn more money with transaction fees than block rewards. People should switch to Lightning for paying their coffee.
!BEER

Totally, but Lightening still depends on BTC, and this has spiked ltn tx fees 200 times.

It's mostly a hype that might die down soon enough when they can't keep up with the fees.

Anyways, we will just stay cool and watch how the rest of the events will unfold.

My heart goes out to those who are using some of the BTC network as base for their projects. 🤦🏿‍♀️

Yeah it is a shame for anyone else that uses it, I am sure that this will blow over by the end of the week though, hopefully!

Yeah. I hope so too. Have a great day/evening, sir.

The way we're seeing it right now is that the news coming out of the market is very bad, and there could be a lot more trouble. If anything happens to binance at this point, we will see the market go down a lot and the way we've seen the Bittrex gone is also very bad news for the market. And now the market is going above and beyond the coins that people could not even imagine.

Yeah things don't look too good for sure!

I dont think its a good thing and was expected to happen soon or latter after NFT found their way into the chain but after all I dont think wealthy people will stop buying BTC for now until fees become outrageous even for them I think we will see more and more BTC going into cold storage and at some point most degens cloud go broke and demand slows down

There is that.... they will go broke eventually, I mean there isn't going to be that much demand for these shitcoins, right?

In the short term for sure there will be demand

That's irritating, but a blip, I guess.


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BRC20 tokens ...?

Blurt side-chain 😀

The future is Blurt!