Deep Dive into BRC20: Possibilities of Success and Failure for Newborns on the BTC Network

Mint Ventures research partner Alex, along with KOL BTCdayu and Yilan from LD Capital US, discussed the necessity, representative projects, reasons for popularity, impact on Bitcoin, and narrative space of BRC20.

There are three reasons why BRC20 is necessary. First, it satisfies the desire for many experiments and innovations within the Bitcoin ecosystem. Second, BRC20 is part of BTC’s influence, including the emotional overflow of assets such as the number of BTC users and the value of BTC on the chain, which I believe will become the initial liquidity of BTC Layer2 DeFi ecosystem. Third, simpler things are more likely to be accepted, and controversy and discussion can also promote the BTC ecosystem to enter a new stage of development.

Does transferring the value of BRC20 token trading to Layer2 weaken or enhance its value? Transferring to Layer2 will bring more users due to lower transaction friction, and then higher turnover. Once there is some DeFi support in Layer2, these DeFi will bring more usage scenarios, thus constructing new demands, which may further increase their intrinsic value.

What are the possible reasons why BRC20 may not take off? First, the problem of token liquidity, as the liquidity of many BRC20 tokens is relatively poor, and many of them have no market value. Some external reasons may include factors such as chip structure degradation, which could lead to a loss of confidence among retail investors, market funds flowing elsewhere, other hotspots emerging, and miners finding better revenue streams, all of which are possible reasons for the decline of BRC20’s popularity.

Behind the fireworks of BRC20, there are several factors at play. From a timing perspective, the diminishing effect of Bitcoin’s halving has created a need for a new story in the market, and consensus is that the time is right to tell it. Additionally, the era of Bitcoin being valued in “satoshi” has arrived, which is positive for the overall cryptocurrency. Finally, from a human perspective, miners are pleased with the development, while individual investors are attracted by the potential for new stories, new funds, and new opportunities for wealth creation.

BRC20 presents a greater narrative space, including the wealth effect, as there are no market makers behind ORDI, but VCs and large miners have an incentive to control the market. The second is the new story of the Bitcoin ecosystem, including smart contracts, lightning payments and networks, and BTCFi. The third is the development of NFTs, with the possibility of a more powerful brand emerging than Azuki/BAYC in the future.


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