What Are SRC-20 Tokens and Bitcoin Stamps? A Comprehensive Guide

Over 15 years since it was first introduced, Bitcoin is evolving beyond its original purpose as a digital currency. Especially since Bitcoin’s third halving in 2020 and its emergence into mainstream attention, it now serves as a platform for innovation. After the introduction of Bitcoin Ordinals and BRC-20 tokens, advancements like Bitcoin Stamps and SRC-20 tokens make the blockchain no longer just a ledger for transactions. These innovations unlock new possibilities, from creating digital art to tokenizing assets.

 

SRC-20 tokens stand out as a powerful addition to Bitcoin's ecosystem. They use Bitcoin Stamps technology to make data storage on the blockchain immutable. This expands Bitcoin’s utility beyond payments, opening the door to new applications in decentralized finance (DeFi), NFTs, and community-based tokens.

 

In this article, you’ll learn what SRC-20 tokens are, how they work, and why they matter. You’ll also discover their connection to Bitcoin Stamps, how they differ from BRC-20 tokens and Bitcoin Ordinals, and what makes them a significant step forward for Bitcoin.

 

Source: X

 

SRC-20 tokens are a type of fungible asset on the Bitcoin blockchain. Like Ethereum’s ERC-20 tokens, they enable you to create, transfer, and trade digital assets. However, SRC-20 tokens use Bitcoin Stamps, a unique protocol for storing data securely on Bitcoin.

 

Bitcoin Stamps technology ensures that SRC-20 tokens are immutable. It stores data in Bitcoin’s unspent transaction outputs (UTXOs), the part of the blockchain that tracks unused Bitcoin. This approach makes SRC-20 tokens more permanent than alternatives like BRC-20 tokens, which rely on prunable witness data.

 

SRC-20 tokens are designed to operate entirely within Bitcoin’s ecosystem. They run parallel to Bitcoin's native coin, and transaction fees are paid in BTC. Each token is created by encoding its metadata—like its name, supply, and image—into the blockchain. This data is stored forever, making SRC-20 tokens tamper-proof and secure.

 

With SRC-20 tokens, Bitcoin becomes more than a currency. It becomes a foundation for digital assets, offering you a new way to participate in the blockchain economy.

 

SRC-20 tokens use the Bitcoin Stamps protocol to operate on the Bitcoin blockchain. These tokens are created by encoding metadata into Bitcoin transactions, making them permanent and immutable.

 

To mint an SRC-20 token, you start by defining its parameters. This includes details like the token's name, total supply, and any attached data. The data is encoded using the "STAMP:base64" string, which signals to the network that this transaction contains a valid Bitcoin Stamp.

 

Once encoded, the transaction is broadcast to the Bitcoin network. Miners validate and include it in a block, storing the data in Bitcoin's UTXOs. This ensures the data remains secure and tamper-proof, as UTXOs are not pruned like witness data.

 

Tools like Stampscan and OpenStamp make the process easier. These platforms allow you to create, view, and trade SRC-20 tokens. You can use compatible wallets like Leather Wallet or Unisat to store and interact with your tokens. These tools provide a seamless way to engage with SRC-20 tokens, whether you're minting new tokens or trading existing ones.

 

Potential Use Cases for SRC-20 Tokens

• Digital Collectibles and NFTs: SRC-20 tokens power digital art and collectibles. Artists can mint unique works directly on Bitcoin’s blockchain using Bitcoin Stamps. These collectibles are secure, immutable, and accessible worldwide. Collectors appreciate the permanence and transparency that SRC-20 tokens bring to digital ownership.

• Tokenized Assets in DeFi: SRC-20 tokens enable tokenization of financial assets like stablecoins or commodities. Developers can create decentralized applications that use SRC-20 tokens for lending, staking, or trading. This expands Bitcoin’s role in DeFi, making it more than a store of value.

• Community Tokens and Reward Systems: Communities use SRC-20 tokens to incentivize participation and reward loyalty. These tokens can fund projects, provide governance rights, or offer discounts within ecosystems. Projects like KEVIN highlight how SRC-20 tokens foster engagement and support grassroots initiatives.

 

Bitcoin Stamps are the foundation of SRC-20 tokens. They are a protocol for embedding data directly onto the Bitcoin blockchain. Unlike other data storage methods, Bitcoin Stamps use UTXOs, ensuring that the data is permanent and immutable.

 

Bitcoin Stamps allow you to securely store token metadata on the blockchain. This includes everything from token supply details to associated images. By using the UTXO model, Bitcoin Stamps protect the data from being pruned or altered, which is a limitation in other protocols like Bitcoin Ordinals.

 

One unique role of Bitcoin Stamps is their ability to preserve digital art. Artists can mint their creations as Stamps, ensuring that their work remains safe from loss or manipulation. Collectors and traders also benefit from this security, knowing that their assets are stored directly on Bitcoin’s blockchain. This makes Bitcoin Stamps a game-changer for NFTs and tokenized assets, offering unmatched reliability and permanence.

 

Bitcoin tokens and fees collected | Source: Dune Analytics

 

 

Data Storage

SRC-20 tokens use Bitcoin’s UTXO model to store data. This approach embeds token metadata directly into unspent transaction outputs, making the data permanent and immutable. BRC-20 tokens and Bitcoin Ordinals, on the other hand, rely on witness data storage. This method stores information in the transaction's witness section, which can be pruned by syncing nodes.

 

Immutability

SRC-20 tokens offer unmatched resistance to data pruning. Because their metadata resides in UTXOs, it remains permanently on the blockchain. In contrast, BRC-20 tokens and Ordinals face the risk of data modification or removal since witness data can be pruned. This makes SRC-20 tokens more reliable for applications requiring permanence.

 

Transaction Costs

Transaction costs vary significantly. SRC-20 tokens allow flexible data sizes, meaning you can attach larger files like high-resolution images, but this increases fees. BRC-20 tokens impose size limits, ensuring standardized and typically lower transaction fees. The SegWit discount further reduces costs for BRC-20 tokens.

 

Adoption

BRC-20 tokens have gained broader adoption. They are supported by major centralized exchanges and decentralized protocols, and tools like trackers and bots enhance their accessibility. SRC-20 tokens, by contrast, are still in their early stages. While platforms like Stampscan and OpenStamp support them, they lack widespread wallet and exchange integration. This could change as the ecosystem matures.

 

The following examples highlight the diverse use cases of SRC-20 tokens. Whether for digital art, community engagement, or decentralized applications, SRC-20 tokens showcase the growing potential of Bitcoin's evolving ecosystem.

 

STAMP

STAMP is one of the most popular SRC-20 tokens. It is widely used in the digital art community. Artists mint limited-edition collections, ensuring their work remains immutable on Bitcoin's blockchain. Collectors value STAMP for its ability to preserve and authenticate digital art.

KEVIN

KEVIN started as a novelty token but quickly gained a loyal community. It is used in creative and social applications, showcasing how grassroots support can drive token adoption. KEVIN demonstrates the versatility of SRC-20 tokens in fostering unique community-driven projects.

 

BITDN

BITDN is a utility token designed for decentralized applications on Bitcoin. Developers use it to power projects and incentivize participation within their ecosystems. Its flexibility makes BITDN a vital tool for expanding Bitcoin’s role in decentralized finance and beyond.

 

Here are some of the key advantages Bitcoin’s SRC-20 tokens offer: 

 

• Immutability and Permanence: SRC-20 tokens store data in Bitcoin’s UTXOs, ensuring it cannot be altered or removed. This makes them ideal for applications that require long-term data preservation.

• Leveraging Bitcoin's Security: SRC-20 tokens benefit from Bitcoin’s robust security. The blockchain’s decentralized and tamper-proof nature protects tokens from fraud or manipulation.

• Expanding Bitcoin’s Utility: By enabling new use cases, SRC-20 tokens transform Bitcoin from a payment system to a versatile platform. They unlock opportunities in art, finance, and community-driven projects, showcasing Bitcoin’s potential beyond transactions.

However, the SRC-20 token standard also experiences some challenges holding back its widespread adoption: 

 

• High Transaction Costs: Storing data on Bitcoin comes at a price. SRC-20 tokens often require larger data sizes, especially for detailed images or metadata. This results in higher transaction fees compared to other token standards like BRC-20, which have stricter data size limits.

• Scalability Concerns: Bitcoin’s limited block size and throughput create scalability challenges. As the popularity of SRC-20 tokens grows, the network may face congestion. This could lead to slower transactions and increased fees for all users.

• Limited Integration: SRC-20 tokens are still in their early stages. Many wallets and exchanges, including major centralized platforms, do not yet support them. In contrast, BRC-20 tokens enjoy wider adoption and integration. This limits the accessibility and trading potential of SRC-20 tokens for now.

SRC-20 tokens hold significant promise, but addressing these challenges will be crucial for their long-term success. As tools and infrastructure improve, the adoption and impact of SRC-20 tokens could grow dramatically.

 

How to Buy or Mint SRC-20 Tokens

How to mint an SRC-20 token | Source: StampChain

 

Here’s a step-by-step guide to help you mint SRC-20 tokens. 

 

1. Choose a Platform: Visit a marketplace like Stampscan or OpenStamp. These platforms support SRC-20 tokens and make buying or minting easy.

2. Set Up a Wallet: Download a compatible Bitcoin wallet. Popular options include Leather Wallet and Unisat Wallet. These wallets support SRC-20 tokens and allow you to store them securely.

3. Fund Your Wallet: Add Bitcoin (BTC) to your wallet. You’ll need BTC to pay for transaction fees and token purchases.

4. Browse Tokens: On the platform, browse the available SRC-20 tokens. Popular choices include STAMP, KEVIN, and BITDN. You can also buy some SRC-20 tokens on KuCoin. 

5. Mint SRC-20 Tokens: If you’re minting, input the token's details, including the total supply and any metadata. Platforms like OpenStamp guide you through this process.

6. Confirm the Transaction: Review the costs, including transaction and platform fees. Confirm the transaction through your wallet.

7. Receive Your Tokens: Once the transaction is complete, your SRC-20 tokens will appear in your wallet. You can trade or hold them as desired.

Notes: Always double-check token details to avoid errors. Ensure you have sufficient BTC in your Bitcoin wallet for transaction fees.

SRC-20 tokens and Bitcoin Stamps are poised to reshape Bitcoin's ecosystem. Their potential to drive innovation in DeFi is significant. As developers create tools to integrate SRC-20 tokens with lending, staking, and trading protocols, new opportunities will emerge for both investors and developers. Tokenized assets, real-world applications, and digital art are areas where this technology could thrive.

 

Wider adoption is on the horizon as more wallets and exchanges begin supporting SRC-20 tokens. Enhanced tooling and standardized protocols will make it easier for you to mint, trade, and interact with these tokens. This evolution could bring SRC-20 tokens closer to mainstream use, fostering growth in diverse applications like NFTs, community rewards, and financial products.

 

However, challenges remain. Bitcoin's scalability and efficiency must improve to handle the increasing demand for on-chain data storage. Critics worry about network congestion and rising transaction fees, which could hinder broader adoption. Addressing these issues will be critical for SRC-20 tokens to reach their full potential.

 

Despite these hurdles, SRC-20 tokens and Bitcoin Stamps offer a transformative vision for Bitcoin. They expand the blockchain’s utility, leveraging its security and permanence to support new use cases. As the ecosystem grows, these innovations could redefine how you interact with Bitcoin. By turning the blockchain into a versatile platform, SRC-20 tokens signal a bold future for Bitcoin, one that extends far beyond its origins as a store of value. Stay informed and explore these advancements—they may shape the next chapter of the crypto revolution.

 

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

• BRC-20 vs. ERC-20 Tokens: Similarities and Differences Explained