BRC-20 style tokens, originally designed as a workaround for Bitcoin's lack of native token support, are increasingly being adopted on other blockchains that already have native token capabilities. This trend is somewhat unexpected since these other blockchains don't require such a workaround. Here are some insights into why this is happening:
Popularity and Accessible Mining: According to Eric Wall, co-founder of the Bitcoin NFT collection Taproot Wizards, these tokens are becoming popular because they enable more widespread participation in the token mining process. This accessibility is somewhat akin to Bitcoin's proof-of-work mining, which has become less accessible to average individuals.
Speculative Nature: HedgedHog, a high-profile crypto trader and co-founder of eGirl Capital, believes that speculation is driving interest in these tokens. Since they represent a new vertical without previous pricing metrics or reference points, they have become a 'flavor of the month,' attracting speculative investments.
Cost Efficiency in Transactions: Transacting with inscription-based tokens can be cheaper than with tokens built natively on blockchains. For example, it's more cost-effective to move Ethereum's native coin ether (ETH) along with an inscription-based token than to use a token built natively on Ethereum using smart contracts. Tom Lehman, creator of Ethscriptions, argues that using inscriptions is over 10 times cheaper than using smart contracts, which he deems unnecessary and a waste of money.
Widespread Adoption Across Chains: BRC-20 tokens have spread to several blockchains, with chains like Celo, Avalanche, Fantom, and Polygon PoS witnessing millions of inscriptions. This expansion has led to increased network activity, with significant surges in transaction numbers as users mint and transfer these tokens. Polygon PoS alone has reported over 109 million inscriptions.
Influence on Other Blockchain Features: This approach is not just limited to tokens but has also influenced NFT launches on blockchains that already support native NFTs. Examples include Ethereum Punks, which recreated the original CryptoPunk collection using inscriptions. Tron founder Justin Sun has also shown interest in bringing support for inscriptions to the Tron network.
In summary, the spread of BRC-20 style tokens to other blockchains is driven by a combination of factors including cost efficiency, speculative interest, and the desire for broader participation in token issuance. However, this expansion also raises concerns about the additional data requirements imposed on these networks.
Disclaimer: Please note that the information provided in this article is based on the referenced research articles. It is essential to conduct further research and analysis before making any investment decisions. The cryptocurrency market is highly volatile, and investors should exercise caution and consult with financial professionals before engaging in cryptocurrency trading or investment activities.
