Bitfinex Claims BRC-20 Has Many Limitations
Bitfinex has delved into a comprehensive study of BRC-20 tokens, exploring their features and potentialities. The conclusions drawn were shared through a final document, accessible to the crypto community online.
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Bitfinex analysts acknowledge that the popularity of the BRC-20 format, designed for the Bitcoin blockchain, is picking up, and the hype around memecoins cannot yet be considered over. According to brc-20.io, ordinals have reached a market capitalization of $858,775,461.
(This figure is accurate as of the report‘s publication.)
The current state of BRC-20 is impressive: about 14,500 (!!!) token titles have been issued. But, while projects like ORDI, PIZA, PEPE, and MEME demonstrate a stable (albeit speculative) potential of the Ordinals protocol, the future of other assets seems uncertain.
BRC-20 lacks support for smart contracts. The value of its tokens primarily depends on market manipulations, with their daily trading volume substantially lagging behind the market capitalization.
One key limitation of BRC-20 tokens is their incompatibility with EVM, which poses challenges for ecosystem development and integration.
BRC-20 enables users to transfer tokens via the BTC blockchain, a feat once deemed impossible. Thanks to its Proof-of-Work consensus mechanism, this network is regarded as highly secure for such transactions. But the recent surge in memecoin popularity has led to an overwhelming network congestion. The blockchain now mirrors a metropolitan intersection during rush hour: transaction speeds have plummeted, and associated fees have skyrocketed.
(As per mempool.space, the queue of pending transactions in the mempool exceeds 200,000 transfers at the time of writing this article.)
Future speculations suggest that introducing ordinal numbers for BRC-20 could potentially enhance the utility of the Bitcoin blockchain. But miners, who are presently reaping significant profits processing NFT transactions, aren't too keen on this. A move towards spam filtering, which technically includes memetokens, would cut into a significant chunk of their current profits.
However, it's crucial to remember that the BTC blockchain was primarily designed for money transfers, not for deploying DeFi. That's where Ethereum with its PoS consensus comes into play.
Bitfinex analysts opine that a sustainable rally of ordinals seems highly unlikely unless the protocol brings to the table real-use cases, apart from memecoin speculations. Nakamoto's network is too crucial for global operations to be trivialized as a decentralized casino.
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