A Quick Overview of the Bitcoin Token Standard ORC-20

Introduction

The field of Bitcoin inscriptions is rapidly evolving. The recent attention-grabbing BRC-20 fork controversy is not only a test that new token standards must endure during development but also a struggle for the discourse power of different stakeholders. Importantly, BRC-20 is closely linked to the numerous and high-market-value asset protocols, making it crucial in the grand scheme of things. Bitcoin’s major upgrades, SegWit and Taproot, have provided strong support for Bitcoin’s programmability and scalability, paving the way for the success of the Ordinals protocol and, consequently, BRC-20.

BRC-20, an experimental token standard on the Bitcoin blockchain, emulates Ethereum’s ERC-20 token creation. BRC-20 offers a simplified feature set, allowing users to inscribe data (such as text or images) onto satoshis (the smallest unit of Bitcoin) for token creation and trading. Developers can create and send fungible tokens using the Ordinals protocol based on BRC-20.

Following BRC-20, more concepts emerged to enhance security and flexibility and address BRC-20’s limitations, including but not limited to ARC20, BRC420, BRC100, and ORC-20. The emergence and widespread application of these standards ensure the interoperability of different tokens across blockchain networks and recognition by supporting wallets, exchanges, and other platforms.

This article focuses on one such token standard: ORC-20. ORC-20 defines a set of common rules and functions that these tokens must adhere to and implement. It can be seen as an enhanced version of BRC-20, creating new possibilities for the Bitcoin Ordinals ecosystem.

In-depth Look at ORC-20

From a development perspective, ORC-20, launched in March 2023, builds on the Ordinals and BRC-20 token standards. It aims to improve some limitations of BRC-20.

BRC-20, an experimental format standard for issuing homogenized tokens on the Bitcoin network, was created by Twitter user @domodata on March 8, 2023, based on the Ordinal protocol. Deployers of BRC-20 can decide the total amount and name of the token, following a first-come, first-served principle.

BRC-20’s blockchain-specific nature defines its characteristics. Unlike ERC-20, Bitcoin does not support smart contracts. It uses the Ordinal protocol to set inscriptions as JSON data format for deploying Token contracts and transferring Tokens.

Compared to other mainstream token standards, BRC-20 faces limitations such as maximum supply constraints, four-character naming, inability to upgrade, double-spending risks, and irreversible transactions. ORC-20 is backward compatible with BRC-20, aiming to solve these limitations and add new functionalities for tokenization on the Bitcoin blockchain. ORC-20 allows users to deploy new tokens and migrate existing BRC-20 tokens, ultimately promoting Ordinals adoption.

How ORC-20 Tokens Operate

Compared to the BRC-20 token standard, ORC-20’s core operations include deployment, minting, sending, and a new cancellation feature. These operations are as follows:

• Deployment: This process involves setting ORC-20 token parameters, including token name, supply, and minting quota per transaction.
• Minting: This process requires specifying the number of tokens to be minted and the inscription ID confirmed during the deployment phase.
• Sending: The token transfer process uses the UTXO model. In ORC-20, the “send” function can use a nonce to track partial transactions.
• Cancellation: ORC-20 allows users to cancel certain transactions; to cancel a token transfer, a nonce must be specified.

Improvements of ORC-20 Over BRC-20

To break through some of BRC-20’s limitations, ORC-20 has been improved in specific ways, demonstrating greater flexibility, security, and scalability:

• ORC-20 allows token issuers to change the initial and maximum minting amounts.
• ORC-20 transactions, based on the Bitcoin Unspent Transaction Output (UTXO) model, facilitate minting and transferring. This means the sender can specify the amount received by the recipient during the transfer. The sender must send the remaining token balance to themselves during the transaction, and the balance recorded before each transaction is considered invalid after completion.
• ORC-20 does not have size restrictions when naming tokens, allowing issuers to create token names of any length.
• ORC-20 permits the cancellation of transactions that are not fully processed.
• ORC-20 supports multiple data formats.

List of ORC-20 Tokens

According to 20scan data, numerous ORC-20 tokens have been deployed. Ranking by the number of holders, leading projects include orc, doge, ordi, and ordinals. Orc is an ORC-20 token deployed on April 30, 2023, with a supply of 21 million, already 100% minted, and currently has over 1800 holders.

As of now, the number of cryptocurrency exchanges supporting ORC-20 is relatively limited. The first ORC-20 token market launched on December 18, 2023, and is now open for Beta version public testing. Additionally, according to Dune Analytics, as of January 5, 2024, there have been 387,431 ORC-20 transactions, with a total fee of 23.31 BTC. Inscription deployment, minting, and trading volume have been in a slump since a steep decline in May 2023.

The acceptance of ORC-20 tokens still remains to be explored, as Coinranking has not tracked the latest price, market cap, or trading volume of ORC-20 tokens. Relevant trading activities may be conducted through over-the-counter (OTC) trading on platforms like 20scan.

Common ORC-20 Tools

The market offers tools to track and support the ORC-20 ecosystem, including:

• Explorer: BitPunks
• Token lists: Coinranking, Loveords, 20scan
• Inscription services: Unisat, Gamma, Ordinalsbot
• Trading market: Xrcswap
• Ecosystem information: OrcDAO

Conclusion

The Bitcoin inscription track is worth focusing on due to the significant vitality shown in its development. The continuous innovation of Bitcoin token standards brings broader application possibilities to the Bitcoin ecosystem.

In addition to BRC-20, the market has introduced various new token standards like DRC-20, SRC-20, and ASC-20, each with its unique propositions. It is foreseeable that more innovative projects and protocols will emerge in the future, further enriching the inscription ecosystems of Bitcoin and other public blockchains.

As for ORC-20, its goal is to improve upon BRC-20 and open new possibilities for the Bitcoin inscription market. However, as an experimental project, ORC-20’s application scope and acceptance still need to stand the test of time and community.