Recently, the SRC-20 token or the token standard that supports Bitcoin Stamps, has been gaining a lot of attention. The protocol designed to embed data in Bitcoin transactions has similarities to the BRC-20 standard, although with a different approach to data embedding.
Often hailed as Bitcoin's "nonfungible token ( NFT ), Bitcoin Stamps take inspiration from Counterparty, a peer-to-peer (P2P) platform on Bitcoin, and colored coins, an early attempt to differentiate cryptocurrency units.
Similar to ERC-20 tokens on Ethereum, SRC-20 tokens enable the creation of tokens on the Bitcoin blockchain , expanding their usefulness beyond a store of value. However, some critics argue that such tokenization moves Bitcoin away from its original vision.
The name SRC-20 refers to the well-known ERC-20 standard and the subsequent BRC-20 standard. This article will review complete information about the SRC-20 Token, read in full!
Origin: Colored and Ordinal Coins
The history of the SRC-20 token relates to colored coins, namely an early attempt to provide Bitcoin with additional metadata for non-monetary transactions. Although this concept did not gain traction, it inspired innovative protocols such as BRC-20 and eventually SRC-20.
Colored Coins
These are specific Bitcoins that carry additional metadata to differentiate them from regular Bitcoins, which aim to facilitate non-monetary transactions. Although not widely adopted, colored coins laid the foundation for future developments.
Ordinals
Introduced by Casey Rodarmor in January 2023, the Bitcoin Ordinals protocol allows writing digital content into the Bitcoin blockchain. This protocol, based on Ordinal theory, gives satoshis a unique identity, enabling the storage of digital content directly on the blockchain.
Distinguishing Stamps from Ordinal and BRC-20
The stamps, conceptualized by Twitter user Mike In Space, allow for the direct storage of data, such as text and images, using Unspent Transaction Outputs (UTXOs). This ensures permanent blockchain storage is pruning-resistant, unlike metadata in BRC-20 and Ordinals.
How Stamps Operate
Stamps leverages the Counterparty protocol, which was built on Bitcoin in 2014, where users burn BTC to acquire native Counterparty (XCP) coins. Data up to 80 bytes is saved using the "OP_Return" function, while larger files are split into multiple outputs in a multi-sig setup.
To mint Bitcoin tokens, Counterparty converts the image to text, encodes it as a Base64 file, and adds a “Stamp:” before broadcasting it to the Bitcoin network. Encoded files undergo splitting, validation, and recompilation on the network, restoring the original image.
Also Read:
What is the SPL Token Standard and Solana Token-2022
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