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5/9 News Roundup: BRC20, Bitcoin, Bhutan, Pepe, Sui

Bitcoin’s blockchain has been congested as investors got excited about BRC20 tokens. This event has revived a years-old debate about the scaling of Bitcoin. The tiny Asian country of Bhutan revealed that it has been mining Bitcoin since 2017. Pepe rose from nowhere to one of the most traded coins on the market. The new smart contract platform Sui launched its MainNet.

BRC20 tokens made the Bitcoin blockchain congested

The Bitcoin blockchain has seen rare events in recent days. The reason for this is the abbreviation BRC20, which refers to a new token standard. BRC20 has enabled the creation of tokens on the Bitcoin blockchain for the first time.

BRC20 leverages the Ordinals protocol released earlier this year. Ordinals, on the other hand, was made possible by the launch of the Taproot update in 2021. Taproot removed certain restrictions from the so-called witness data of the blockchain blocks.

The Ordinals protocol made it possible to store NFT images and videos on the Bitcoin blockchain. Now it’s been utilized to create tokens as well.

The BRC20 standard was created by an anonymous on-chain analyst Domo. He introduced BRC20 already in March, but the invention didn’t take off until last week. A token is created in the Bitcoin network by attaching its description data to one satoshi. Satoshi is the smallest amount that can be transferred on the Bitcoin blockchain.

Below is an example code on how to send 1000 ORDI tokens. As you can see, the code is intentionally created in an easy-to-understand format.

{
"p": "brc-20",
"op": "transfer",
"tick": "ordi",
"amt": "1000"
}

BRC20 tokens can be traded and managed by using an Ordinals wallet. You can download one from ordinalswallet.com. You can also browse the most popular BRC20 tokens from that website.

brc20

Only bitcoins (satoshi) are still circulating in the Bitcoin network. Therefore, BRC20 tokens do not exist in reality. There are only descriptive texts attached to a single satoshi that can be interpreted as tokens using the Ordinals protocol.

Domo, who created the BRC20, would certainly not have been able to guess where his invention would lead. Last weekend a proper BRC20 mania started, which completely clogged the Bitcoin blockchain. Bitcoin’s mempool has had 400,000–500,000 transactions queued up lately.

At the same time, Bitcoin’s transaction fees have also increased by more than 10x. This resulted in a historic event.

Bitcoin miners get the block reward (now 6.25 BTC) and the transaction fees included in each block. On Sunday, we saw a situation for the first time where the transaction fees exceeded the block reward.

Bitcoin’s mempool still has around 417,000 transactions queued at the time of writing, so there is no sign of an end to this mania.

Is Bitcoin broken?

Let’s continue with topics related to Bitcoin and the aforementioned BRC20 mania.

The events of the past few days have revigorated the debate about Bitcoin scaling. Has the Ordinals protocol “broken“ Bitcoin? Should Bitcoin’s block size be increased to accommodate more data?

Many users have complained about Bitcoin’s transaction fees, which have risen from a couple of dollars to tens of dollars. This makes the network unusable for smaller transactions.

One thing is certain; Bitcoin’s block size will not increase in the near future. This “civil war” has already been fought years ago, and the “big blockers” forked their own branch of Bitcoin at that time. A good five years later, the combined market share of Bitcoin Cash and Bitcoin SV branches is not even a percent of Bitcoin.

It has become clear that Bitcoin with large blocks is of no interest to anyone. In addition, hundreds of other solutions already exist for fast and cheap transactions.

Many Bitcoin maximalists argue that Bitcoin’s blockchain is not meant to support cheap transactions. It is true that Bitcoin has already solved scaling and micropayments with the lightning network. The problem is that few exchanges support lightning withdrawals.

The world’s largest crypto exchange Binance had to close withdrawals on Sunday due to huge congestion. Now it looks like Binance will support Lightning transfers! Coinbase has also previously made a similar announcement.

So, Bitcoin is not broken. High fees are just a natural consequence of high demand. That’s how the free market works. We are most likely witnessing a short-term boom, which will cool down by itself.

We also have to remember that many BRC20 traders have to pay a huge amount of bitcoins to be able to make transactions. Such extra fees may help the Bitcoin network significantly in the future.

One of Bitcoin’s potential risks is the halving of block rewards. Either the Bitcoin price or the transaction fees have to rise significantly to compensate for this, or a large part of the miners are no longer profitable. NFTs, BRC20 tokens, and other Ordinals-based features could help to patch up this potential security risk.

Bhutan revealed that it is mining Bitcoin

Bhutan is a country in the Himalayas between India and China. There are less than a million inhabitants in Bhutan. It is a small country that hasn’t been known in the Bitcoin community until now. This is because Bhutan recently revealed that it has been mining Bitcoin since 2017!

Although Bhutan is a small and poor country in the Himalayan mountains, it has an ace up its sleeve when it comes to energy production. Bhutan, like Norway, gets a huge amount of clean energy from waterfalls and rivers formed by mountain meltwater. In recent years, the country has begun to utilize this energy in Bitcoin mining.

And that’s not all.

As the tweet above states, Bhutan’s state investment company DHI plans to raise $500 million to increase the country’s mining capacity. The partner in the operation is a mining company called Bitdeer, which is listed on the US Nasdaq stock exchange.

Bitdeer was founded by Jihan Wu, who is remembered for his comments during the “Bitcoin block war” in 2017. At the time, Wu was the CEO of Chinese ASIC manufacturer Bitmain.

Bhutan has also made significant investments in ASIC chips. Last year, Bhutan imported ASIC chips worth 142 million dollars, which is 10% of the country’s total imports! In 2021, the investments were also significant for the size of the country, 51 million dollars.

Bhutan isn’t probably the only country that has been secretly mining Bitcoin at the state level. It has been speculated for years that Russia and China, among the big countries, are doing the same thing.

Pepe started a meme coin boom

The Pepe cryptocurrency was definitely one of the hottest topics of the previous week. It is a pure meme coin that was created from scratch less than a month ago. Pepe reached a staggering market cap of 1.8 billion dollars last Friday. This put the PEPE token in the top 40 ranking of cryptos.

The meme coin reached its price peak when Binance announced that it would list Pepe. At the same time, Pepe became one of the most traded coins in the entire market.

The price of Pepe was up more than 300 percent on a weekly basis. At the time of writing the article, Pepe’s price has already fallen by more than 50 percent from the peak.

Pepe is based on the popular Pepe The Frog meme. It’s a cartoon character created by comic artist Matt Furie. Pepe memes have become very popular on social media in recent years. However, the Pepe cryptocurrency has no official connection to the character created by Furie.

Since Pepe is a meme coin it has no real use case. Like most meme coins, it is an ERC20 token created on Ethereum. This means that the Pepe mania is all about price speculation and social media hype. Time will tell if the token will permanently remain in the top 100 list with Dogecoin and Shiba Inu.

Was the BRC20 mania also triggered by Pepe? Possibly. Pepe also boosted the price of other well-known meme coins, such as Floki Inu, but no broader altcoin rally has been seen.

The MainNet of Sui was launched

Many of our readers remember the smart contract platform Aptos. It was a big topic of conversation last fall when the platform was launched. Its APT token was even called a possible rocket ship of 2022, but this never materialized.

The timing of Aptos was the worst possible, as the APT token was launched just a couple of weeks before the collapse of the FTX exchange. The fall of FTX froze the entire crypto market for several months and killed any hopes of an uptrend in the market.

Aptos made headlines due to its underlying technology and team. Aptos was founded by former Meta employees, and the project leverages the technology of Meta’s Diem stablecoin.

However, not all engineers from the Diem project joined Aptos. Some chose a different path and founded a competing smart contract platform called Sui. The project made headlines last week due to the launch of the Sui Mainnet. At the same time, its native token SUI became available for trading.

Like Aptos, Sui is a highly scalable and modern Proof of Stake smart contract platform. Both use a smart contract programming language called Move, which was originally developed for Meta’s Diem project.

Sui and Aptos are quite similar in terms of architecture, but both have also made different choices in technology. Both projects are united by Meta’s background and hundreds of millions of funding from the industry’s largest VC firms.

The theoretical capacity of both Sui and Aptos is more than 100,000 transactions per second. It will be interesting to see how far this goes in a highly competitive sector.

The SUI token is currently trading at $1.1, giving the cryptocurrency a market cap of around $590 million. The market cap of Aptos, on the other hand, is 1.6 billion dollars, which is almost three times larger

It is worth noting that only 5.3% of SUI tokens are currently in circulation. In the coming years, huge amounts of coins will be released on the market, which can cause severe downward pressure. If you are interested in SUI as an investment, make sure you understand the magnitude of these unlock events.