Historical and Social Context

Written By zbam

Last updated 25 days ago

The Ordinals Catalyst (2023)

BRC-20 emerged in March 2023, just two months after Casey Rodarmor launched the Ordinals protocol in January. Ordinals introduced a method to track and inscribe data to individual satoshis, initially focused on creating NFT-like "digital artifacts" on Bitcoin.

@domodata created the BRC-20 standard as an experiment, a tongue-in-cheek nod to Ethereum's ERC-20. The first BRC-20 token, ordi, was deployed on March 8, 2023, with a simple JSON structure anyone could replicate. Within weeks, hundreds of tokens launched, and a speculative frenzy began.

The Metaprotocol Debate

BRC-20's metaprotocol design sparked fundamental questions about Bitcoin's purpose:

Critics argued it was spam, clogging mempools with "useless" JSON inscriptions and driving up transaction fees for regular Bitcoin users. Some questioned whether metaprotocols that require off-chain indexers truly inherit Bitcoin's security guarantees, or if they introduce new trust assumptions.

Supporters contended that anyone willing to pay fees has a legitimate claim to block space—that Bitcoin is permissionless and should not discriminate between transaction types. They argued that metaprotocols represent valid experimentation on Bitcoin's most secure settlement layer, and that indexer consensus is no different from how Bitcoin infrastructure has always worked (exchanges, wallets, and explorers all run their own validation).

During peak BRC-20 activity in May 2023 and later surges, transaction fees spiked dramatically, creating friction between traders and Bitcoin purists who saw it as an attack on the network's intended use.

Market Dynamics and Ecosystem Growth

The ordi token, initially minted for fractions of a cent, reached a market cap exceeding $1 billion by late 2023, demonstrating real demand for Bitcoin-native tokens despite technical limitations. This success spawned an ecosystem:

  • Marketplaces like UniSat and Best in Slot enabled trading inscribed satoshis

  • Indexers competed to provide the canonical state of BRC-20 tokens, with services like Best in Slot becoming de facto standards

  • Wallets added BRC-20 support, creating UX patterns for managing inscribed tokens

  • Alternative standards emerged (ORC-20, Runes) as the community experimented with different metaprotocol designs

The Evolution to Programmability (2024-2025)

Recognizing BRC-20's limitations—no smart contracts, limited composability, purely manual operations—the community developed BRC2.0 throughout 2024. This extension adds an EVM-compatible execution layer while maintaining BRC-20's inscription-based model.

BRC2.0's launch in 2025 represents a watershed moment: transitioning from simple metaprotocol token ledgers to a programmable computing environment on Bitcoin. The addition of smart contracts enables:

  • Decentralized applications on Bitcoin

  • DeFi primitives (DEXs, lending protocols, staking systems)

  • Native Bitcoin operations via precompiles (transaction verification, signature validation)

  • Complex financial logic previously impossible with BRC-20 alone

This evolution positions the BRC-20 ecosystem not just as a token standard, but as a comprehensive application platform built on Bitcoin's security model.

Cultural Impact

BRC-20's emergence validated that Bitcoin's block space has value beyond simple value transfers. It demonstrated:

  1. Fee market dynamics: Users will pay premium fees for functionality they value, regardless of Bitcoin maximalist opinions

  2. Permissionless innovation: No one needed approval to experiment with a new metaprotocol—this is Bitcoin's core value proposition

  3. Bitcoin's flexibility: The base layer, unchanged since before Ordinals, could support entirely new use cases through creative interpretation

  4. Metaprotocol viability: Off-chain indexers with social consensus can enable complex systems while still leveraging Bitcoin's immutability

Whether viewed as innovation or spam, BRC-20 fundamentally altered how developers think about building on Bitcoin. BRC2.0's introduction of programmability takes this further—establishing Bitcoin not just as a settlement layer for wrapped assets, but as a direct platform for application development with native smart contract capabilities.

Further reading:Ordinals and BRC-20 History |Bitcoin Block Space Demand Analysis