In May 2023, the BRC-20 and LTC-20 standards were put into operation, which has generated some commotion in the community. But what exactly are BRC-20, LTC-20 and ERC-20 tokens? whatAre tokens either standards cryptographic?, these will be the basic questions that are going to be elucidated in this article.
The cryptographic community has been evolving since the launch of Bitcoin in 2009. The development of this technology has been a constant among enthusiasts, therefore, shortly after the launch of the Bitcoin network other networks emerged that stood out. At the time they were Litecoin and Ethereumeach one with quite marked characteristics.
The three referred networks each have a native token, this token or cryptocurrency, as it is known, are bitcoin, litecoin and ethereum.
Bitcoin emerged as the decentralized payment method par excellence. After a globalized financial crisis, this way of doing things arose peer-to-peer transactions without the intervention of a third party.
For this reason, the technology behind this new system has allowed the development of multiple environments for all types of financial products and services based on cryptography. The Blockchain, or chain of blocks as it has been called, allowed the cryptographic verification to accumulate data safely, quickly, cross-border and without third-party intervention.
With this panorama, From the bifurcation of the first cryptocurrency known as bitcoin, a new one called “Litecoin”. This new cryptocurrency allows faster and cheaper transactions for users.
Then a new environment emerges: ethereum. This was born as an alternative way on the environment that Bitcoin led, allowing a development of new services and products on the ecosystem that brought to public knowledge “smart contracts”.
BRC-20, LTC-20 and ERC-20 are cryptographic communication standards
In the scenario described above, the development of cryptography ceased to be a government project for military use. The staging of Blockchain allowed companies from all over the world, and independent developers, to take the base of generating encrypted and immutable transactions proposed by Satoshi Nakamoto in the Bitcoin White Paper and develop improvements based on these principles.
The ERC-20 standard is the cryptographic communication language used on the Ethereum network, which allows the use of fungible tokens to be interchangeable with each other, such as voting tokens, staking tokens or virtual currencies.
Despite the popularity of labeling the ERC-20 standard as “token”, the reality is that this was the way to generate a standard that each developer must comply with so that the “token or cryptocurrency” is compatible with the Ethereum network and, therefore, is operable in that environment.
Consequently, the ERC-20 standard allows the development and creation of tokens utility, coins or virtual assets to operate on the network and facilitates the exchange of these different digital assets within the same network.
Examples of this are the USDT token and the native token of the Ethereum network.. Both are ERC-20 tokens that coexist in the same network, but each one has a different utility, the tokens were developed in the environment of this network, and with the use of decentralized applications or centralized services. to switch from ethereum to tether and vice versa.
The difference with Bitcoin, the network whose cryptocurrency has been leading the crypto space, did not allow the creation of new cryptocurrencies or fungible tokens additional.
the recent The Ordinals project allowed other types of non-fungible tokens to be hosted on the Bitcoin network that had not initially been used. This new standard was called BRC-721 and sought to emulate the functions of Ethereum’s ERC-721.
Subsequent to this, the development of a new standard emerged in the Bitcoin network, the BRC-20, which has allowed the creation of new fungible tokens in this network. This evolution allows users of the Bitcoin network can exchange tokens directly, that is, between peerswithout having to resort to a centralized or decentralized entity as happens in Ethereum.
In addition, a fundamental difference with the well-known ERC-20 standard is that this new way of generating tokens within the bitcoin network does not allow interaction with smart contracts that uses Ethereum, so it is not yet reprogrammable as it happens in Ethereum, depending on the project that requires it.
Currently, the BRC-20 token standard allows generating one (BRC-20) token with the deploy function, minting a number of BRC-20 tokens with the minting function, and transferring a number of BRC-20 tokens via the minting function. transfer.
Basically, with the implementation of this new standard, a development of tokens for the bitcoin network could be made for specific purposes other than that of payment method how bitcoin was conceived
Having said that, the LTC-20 standard allows for the creation of new tokens that can originate from the Litecoin blockchain. They are similar to the ERC-20 tokens on the Ethereum blockchain, but are designed to be more efficient and scalable according to the developers.
It is logical that this development also reached the Litecoin chain, since this is a fork of the Bitcoin network.which means that their programming format has a certain similarity, and consequently it is understandable that these developments are applied to the Litecoin network.
One marked difference in the LTC-20 standard is that they can be used to represent a variety of assets, including digital currencies, securities, and collectibles. Also can be used to originate decentralized applications (dApps).
These LTC-20 tokens are created using the LTC Ordinals protocol. This protocol allows users generate tokens that are both fungible and non-fungible. Fungible tokens are tradeable while non-fungible tokens are unique. The LTC Ordinals protocol also allows users to create tokens that have different properties, such as different levels of scarcity or different levels of utility.
The LTC-20 standard is a significant development for the Litecoin ecosystem, providing a new way for developers to create and use tokens on the Litecoin blockchain. LTC-20 tokens could also help make Litecoin more attractive to users interested in dApps and other decentralized technologies.. This is a marked difference between the Bitcoin network and the Litecoin network.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information presented here should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
It may interest you: