How to Buy BRC-20 Tokens: A Beginner’s Guide

In the early stages of 2023, the cryptocurrency market faced significant challenges. Despite these bearish conditions, Bitcoin-based BRC-20 tokens emerged as a standout trend. Their rapid ascent within the Bitcoin ecosystem and the broader crypto market is a testament to their innovative approach and potential applications.

BRC-20 tokens are a groundbreaking innovation in the realm of digital assets. Operating on the Bitcoin blockchain and adhering to the BRC-20 standard, these tokens bring the concept of fungibility, familiar with Ethereum's ERC-20 tokens, into the Bitcoin sphere. This integration allows for a diverse representation of assets, including cryptocurrencies and digital collectibles, while ensuring seamless interactions with smart contracts and decentralized applications (dApps) in the Bitcoin ecosystem.

BRC-20 Tokens: Transactions and fees over time | Source: Dune Analytics 

As of December 2023, over 55,000 distinct BRC-20 tokens have been created, indicating a robust and growing ecosystem. At its peak, almost 400k BRC-20 transactions took place on the Bitcoin blockchain in May 2023, while a total of almost 40 million BRC-20 transactions have occurred since launch. The total market cap of BRC-20 tokens exceeds $451 million, and they enjoy a trading volume of over $145 million as per data on Coinmarketcap at the time of writing.

Here’s a detailed guide on BRC-20 tokens and their potential. 

Introducing Bitcoin Ordinals and Bitcoin NFTs

BRC-20 tokens and Bitcoin Ordinals are two sides of the same coin, representing different types of asset tokenization on the Bitcoin blockchain, each with its unique use cases and functionalities. While they serve different uses (fungibility vs. non-fungibility), both contribute to expanding the capabilities of the Bitcoin blockchain beyond just a payment network, moving into areas like DeFi, digital art, and tokenization of assets. They represent innovative approaches to tokenization on the Bitcoin blockchain – BRC-20 tokens for fungible asset representation and Ordinals for unique, indivisible asset representation.

Bitcoin Ordinals

Ordinals have revolutionized the way we perceive assets on the Bitcoin blockchain. They create unique digital artifacts akin to NFTs by assigning ordinal numbers to individual satoshis. This technology has opened up a new realm of digital ownership and investment on the Bitcoin platform.

NFT Trading Volume by Chain: The rising popularity of Bitcoin NFTS | Source: TheBlock

Non-fungible tokens (NFTs) have been a significant force in digital ownership, representing unique digital content such as art, music, and videos. Bitcoin NFTs extend this concept to the Bitcoin blockchain, offering a new dimension of authenticity, ownership, and rarity in digital items.

The trading volume of Bitcoin NFTs reached a remarkable $200 million within just three months of their inception. Over 45 million unique Ordinals inscriptions have been minted, demonstrating the burgeoning interest and creativity in this space.

Here’s a deep dive into Bitcoin Ordinals and Bitcoin NFTs.

The crypto community's growing interest in diverse digital assets has fueled the popularity of BRC-20 tokens and Bitcoin NFTs. The potential real-world applications of these tokens, from digital collectibles to DeFi, have captivated investors and collectors alike. The versatility of BRC-20 tokens offers various applications:

1. Tokenization of Physical Assets: They can represent tokenized real-world assets like real estate, art, or commodities, enabling easier and more secure trading on the blockchain.

2. Decentralized Finance (DeFi) Applications: BRC-20 tokens can be used in various DeFi platforms for activities like lending, borrowing, or yield farming, leveraging the security and widespread adoption of the Bitcoin blockchain.

3. Gaming and Virtual Goods: In the gaming industry, these tokens can be used to buy, sell, or trade in-game items and assets, providing a secure and transparent way to handle virtual goods.

4. Digital Identity and Credentials: They could represent digital identities or credentials, allowing for secure and verifiable transactions in online services.

5. Loyalty and Reward Programs: Businesses can issue BRC-20 tokens as part of loyalty or reward programs, offering a blockchain-based solution for tracking and redeeming rewards.

6. Governance and Voting: In decentralized organizations or applications, they can be used for governance tokens, giving holders voting rights or influence over decisions.

7. Cross-Chain Interactions: As a bridge between Bitcoin and other blockchains, BRC-20 tokens can facilitate cross-chain interoperability, enhancing connectivity in the crypto ecosystem.

8. Custom Financial Instruments: They can be tailored to create bespoke financial instruments, such as stablecoins or derivative products, expanding the scope of financial solutions on the Bitcoin blockchain.

Now that you've understood what BRC-20 tokens are and their potential, it’s time to invest in BRC-20 tokens. Here are step-by-step guides on buying BRC-20 tokens on centralized exchanges (CEXs) and web3 platforms:

How to Buy BRC-20 Tokens on KuCoin 

Let’s explore how you can buy BRC-20 tokens on a CEX using KuCoin as an example. As of December 2023, Kucoin has listed three popular BRC-20 tokens – Ordinals (ORDI), SATS (SATS), and Rats (RATS). Follow these steps for buying BRC20 tokens on KuCoin:

Step 1: Sign Up for KuCoin

Sign up for a KuCoin account if you are a new user. Complete your KYC formalities and verify your account.

Add funds to your trading account, or purchase base cryptocurrencies like USDT on KuCoin's Fast Trade and Spot Market.

Step 2: Head to KuCoin Spot Trading 

Visit the KuCoin Spot Market and find the trading pair of the BRC-20 token you want to buy: ORDI/USDT, SATS/USDT, or RATS/USDT. In this example, let's consider buying Ordinals (ORDI).

Step 3: Place Your Order

Place your order by specifying the quantity of tokens you want to buy, in this case, ORDI/USDT. You can choose to buy your targeted BRC-20 tokens at the market price immediately or at a specific price using our Limit Order option.

Receive your purchased BRC-20 tokens - ORDI, SATS, or RATS - in your trading account. You can hold them on KuCoin or transfer them to a self-custodial wallet for safekeeping. You can also sell BRC-20 tokens on the KuCoin Spot Market by following similar steps and selecting the Sell option.

How to Buy BRC-20 Tokens on a Web3 Platform

Centralized Exchanges (CEXs) usually offer limited options for trading BRC-20 tokens. If the specific BRC-20 token you're interested in isn't listed on an exchange, you can often find it on compatible web3 platforms. Here's a streamlined guide to buying and selling BRC-20 tokens through web3 protocols:

1. Select a Platform That Supports BRC-20 Tokens: Find a web3 platform that supports trading BRC-20 tokens you are interested in. Ensure the exchange is reliable, secure, and has a user-friendly interface.

2. Choose a Compatible Wallet: You will need a digital wallet that supports BRC-20 tokens, such as Ordinals Wallet, Unisats, Xverse, and Sparrow Wallet. Ensure the BRC-20 compatible wallet is secure, user-friendly, and compatible with the Bitcoin blockchain.

3. Acquire Bitcoin (BTC): Since BRC-20 tokens are part of the Bitcoin blockchain, you will need BTC to purchase them. Buy Bitcoin from KuCoin using fiat currency, credit card, bank transfer, or another cryptocurrency.

4. Transfer BTC to Your Wallet: Move the purchased BTC to your chosen digital wallet. This step is crucial as you will need BTC to trade BRC-20 tokens and possibly to pay for transaction fees.

5. Connect Your Wallet to the Exchange or Trading Platform: Access the platform where the BRC-20 tokens are listed. Connect your wallet to this platform, following their specific instructions.

6. Purchase BRC-20 Tokens: Once your wallet is connected, search for the BRC-20 token you want to buy. Place a buy order for the desired amount of BRC-20 tokens. This process can vary depending on the exchange or platform, so follow the instructions provided.

7. Store Your Tokens Securely: It’s important to store your BRC-20 tokens securely after purchasing. Keep them in your compatible wallet, and consider using hardware wallets for added security, especially if dealing with large amounts.

8. Monitor and Manage Your Investment: Regularly check on your investment and be aware of any updates or changes in the cryptocurrency market that may affect the value and utility of your BRC-20 investments.

Remember, investing in BRC-20 tokens involves risk, and it's important to do your own research and consider seeking advice from a financial expert before making investment decisions.

The rise of BRC-20 tokens, Bitcoin NFTs, and Ordinals signals an exciting era in the world of digital assets. With their unique characteristics and potential applications, these tokens present diverse opportunities for investors, creators, and collectors. By understanding these trends and how to participate in them, you will find the promising gems with more confidence. However, while it's an exciting journey, it's wise to tread carefully and manage risks as you explore these new trends.