What is BRC-20?

An experimental token standard that stores balances as JSON text inscribed on individual satoshis, so transfers are interpreted by indexers rather than enforced by Bitcoin.

It has no formal specification body behind it and no smart contract layer: mint and transfer records are written as ordinal inscriptions, and every wallet must run the same indexing rules to agree on who owns what. That makes it fragile compared with an erc 20 token, where the chain itself enforces the balance.

Fees are paid in bitcoin for every operation, and exchange support is limited. The critical point is that Bitcoin nodes do not know these tokens exist; they see ordinary transactions carrying data.

How it works

An inscription writes arbitrary data into the witness portion of a Bitcoin transaction, which ordinals theory then associates with a specific satoshi. BRC-20 uses that mechanism to store short text records describing three operations: deploy, mint, and transfer.

Deploy declares a ticker, a maximum supply, and a per-mint limit. Mint claims an allocation, first come first served, until the declared supply is exhausted. Transfer is a two-step process: you inscribe a transfer record for an amount, then send the satoshi carrying that inscription to the recipient.

Nothing in Bitcoin's consensus rules checks any of this. Balances exist only in the databases of indexers that scan the chain and apply the same interpretation rules. Where two indexers disagree about an edge case, they disagree about ownership, and there is no protocol to appeal to.

Because every operation is an ordinary Bitcoin transaction, minting a supply competes for block space and pushes fee rates up for everyone using the chain that day.

The two-step transfer is the usual source of user error, since inscribing a transfer record and actually sending it are separate transactions and stopping halfway leaves the balance in an odd state.

Example

Illustrative: a token is deployed with a supply of 21,000,000 and a mint limit of 1,000 per inscription, so it takes 21,000 mint transactions to exhaust it. If Bitcoin fee rates sit at 40 satoshis per virtual byte and each mint is about 160 virtual bytes, each mint costs about 6,400 satoshis, and the full mint round costs roughly 134 million satoshis, or 1.34 BTC, paid to miners. Figures are illustrative; fee rates vary constantly.

Why it matters when you buy

Exchange support is thin, custody is unusual because your balance is attached to specific satoshis, and a careless spend can send the carrying satoshi away as change. If you are buying an asset that exists as a BRC-20 record, check where it can actually be sold before buying it at the buyability scores and see the liquidity pages.

Related terms

• ordinals — the scheme that numbers individual satoshis
• runes — a later Bitcoin token scheme with different tradeoffs
• erc 20 — the contract-enforced comparison
• sat vb — the fee unit every operation is priced in
• utxo — why a careless spend can lose an inscription
• coin control — choosing which outputs a wallet spends

Questions

Does Bitcoin enforce BRC-20 balances?

No. Bitcoin nodes see ordinary transactions carrying data. Balances are computed by indexers applying shared conventions, which is a social agreement rather than a consensus rule.

Why did Bitcoin fees spike during minting waves?

Because every mint is a real Bitcoin transaction competing for limited block space. Large minting rounds raised fee rates for everyone using the network at the time.

Can I hold these on a normal Bitcoin wallet?

Only carefully. A wallet unaware of inscriptions can spend the satoshi carrying your balance as change, which destroys the association. Use inscription-aware software.