As the crypto market continues to experience high levels of volatility, Bitcoin Request for Comments-20 (BRC-20) tokens, a token standard for Ordinals, have become quite popular. This technology allows customers to etch digital art references into small Bitcoin transactions. The tokens were created by a pseudonymous crypto developer, Domo, and have caused a frenzy, with the combined value of all 11,705 tokens standing at around $923 million as of Monday, 8 May 2023.

However, Enrico Rubboli, the CEO of Bitcoin sidechain Mintlayer, has noted major glitches in the BRC-20 tokens, along with the decentralised applications connected to them. According to Rubboli, the technology behind these assets is severely flawed. He has pointed out various issues including speed, transaction costs and security. Transactions have to wait for Bitcoin blocks to be confirmed before settlement, which when combined with network congestion translates to hours of waiting. The use of token bridges and wrapped BTC could also potentially prove a weak point, leading to exploitation and more than $1.4 billion of user funds lost to hackers in 2022.

Rubboli strongly believes that the confusion created around the token concept is to deceive potential investors, while the creators take advantage of the popularity of the Ethereum’s ERC-20 token standard. He also fears that recent minting of BRC-20 tokens might be a ‘rug pull’, where users get scammed. He raised the worry that unspecified tokens could expose Bitcoin blockchain to legal scrutiny due to its exposure to ‘bad actors’.

Mindlayer CEO Enrico Rubboli has hence suggested a layer 2 solution to combat the issues related to BRC-20 tokens. These protocols, which run on the top of layer 1 cryptocurrencies including Bitcoin and Ethereum, are known to bring improved scalability and privacy among other features. Stat channels, sidechains and zero knowledge roll-ups are some common layer 2 solutions. In conclusion, as user sentiments around Bitcoin continue to be positive, it is important to be prudent and ensure that you take steps necessary to secure your funds.



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