What are SRC-20 tokens?

You may have heard of SRC-20 Tokens (often referred to as SRC 20 or SRC20 tokens), a new digital asset on the Bitcoin blockchain. Essentially, SRC-20 allows data to be directly embedded into Bitcoin transactions. This ensures immutability and permanence.

But what exactly do SRC-20 tokens offer and how do they fit into the broader Bitcoin ecosystem? They are important for supporting various image formats and helping digital collectibles marketLet’s just say that SRC-20 tokens are gaining popularity, and in this article we will look at why.

What are SRC-20 tokens

SRC-20 Tokens represent a new generation of digital assets on the Bitcoin blockchain. They allow users embed data directly into transactions and use a cutting-edge protocol for immutability and durability. These tokens join the ranks of Ethereum’s ERC-20 tokens in terms of their use in decentralized applications, but with a twist that is unique to Bitcoin.

SRC-20 tokens are used Bitcoin stamps technology for storing data in unspent transaction outputs (UTXO).

Essentially, SRC-20 tokens are fungible tokens that can store different types of images including JPG, SVG, GIF and PNGalthough their size is limited to 24×24 pixels.

This token standard is gaining momentum, with over 260,000 tokens issued to date. Additionally, their market cap has surpassed $100 million, demonstrating the huge community involvement.

These advances open up great prospects for the secure creation of digital assets in the Bitcoin ecosystem.

What are Bitcoin Marks

Bitcoin stamps embody a new method embedding images straight to bitcoin blockchain. The SRC20 Stamp Protocol is the underlying technology that SRC-20 tokens use. This technology allows users to issue non-fungible tokens (NFTs) and expand Bitcoin’s use cases in that it allows for the inclusion of unique digital images in the blockchain.

Each stamp is identified by a unique transaction number and contains a valid image string in base64 formatcomponent that is critical to its legitimacy. This base64 encoding ensures that the Stamp is securely encoded and easily recoverable from the transaction data.

When you create a Bitcoin Stamp, the metadata for the original image is securely stored in the UTXO, preventing data truncation. This makes Stamps truly permanent digital artifacts.

Bitcoin brands are mainly focused on artistic performance and collectiblesand therefore different from other types of assets. The technology offers users an exciting way to create, buy and trade unique digital art in the Bitcoin ecosystem.

You can explore existing Bitcoin stamps at stampchain.io.

Bitcoin Marks vs. Bitcoin Serial Numbers

When looking at the differences between Bitcoin Stamps and Bitcoin Ordinals, one key difference stands out – the permanent embedding of metadata in the UTXO for Stamps, as opposed to the potentially deletable data entries on the satoshis for Ordinals.

These differences imply completely different use cases and levels of data storage reliability.

Here are some key differences to consider:

1. Data persistence: Bitcoin Stamps store data directly in the UTXO, meaning it remains immutable. On the other hand, ordinal data can be truncated due to its reliance on witness data.
2. Image size restrictions: The maximum image file size for stamps is 24×24 pixels, while serial numbers can handle up to 4MB.
3. Use cases: Bitcoin Stamps are focused on digital collectibles, art, and memorabilia. Ordinals focus on increasing the granularity of transactions in the Bitcoin ecosystem.
   Storage methods: Stamps use the Bitcoin Stamps protocol, which emphasizes direct embedding in UTXOs. Ordinals, on the other hand, write data into the Witness field of a block.

How SRC-20 Tokens Work

You save data for SRC-20 tokens by converting images to Base64 format. Then you decrypt it into the Bitcoin transaction description key. This way, the storage in the blockchain remains permanent and unchangeable.

During this process, a unique numerical identifier is created for each token, making them indivisible.

Once encoded, these tokens are broadcast to the Bitcoin network for verification. The use of UTXO as a storage method distinguishes SRC-20 tokens from other standards, and it makes the data non-deletable, meaning it remains on the blockchain.

Essentially, this allows each token to be truly immutable and secure.

Once created, these tokens must meet certain criteria. Each stamp must be numeric and have a unique identifier.

What is the significance of SRC-20 in the Bitcoin ecosystem?

Frankly, if you dive deeper into the Bitcoin ecosystem, it becomes clear that SRC-20 tokens have significantly expanded the use cases of this blockchain and made it more competitive compared to other decentralized platforms.

The SRC-20 token standard has expanded the capabilities of the Bitcoin blockchain. What was once used exclusively for financial transactions has now gained new use cases. Four key impacts include:

1. Best security: By storing data in UTXO, SRC-20 tokens are secure, immutable, and cannot be trimmed. This ensures long-term preservation of data and asset information.
2. Expanding use cases: The SRC-20 standard allows for fungible and non-fungible tokens to be created directly on the blockchain. This has opened up new creative and trading opportunities for digital collectibles and NFTs on Bitcoin, similar to Ethereum’s ERC-20 tokens.
3. Independence from currency functions: SRC-20 tokens operate independently of the core function of the Bitcoin currency, demonstrating the potential of the blockchain for a variety of decentralized applications.

How to use SRC-20 tokens

To use versatility SRC-20 TokensYou will start by understanding the basic steps to create and manage these innovative assets in the Bitcoin ecosystem.

1. Since SRC-20 tokens are created using Protocol of postage stampsyou need to convert images to Base64 formatTherefore, the data is recorded in the Bitcoin blockchain.
2. Then you will need a compatible one Bitcoin wallet to facilitate peer-to-peer transactions and independent storage of tokens.
3. When you create an SRC-20 token, you generate a Bitcoin receiving address and follow the instructions minting processThis process includes selecting tickers and confirming payment for the desired amount of tokens.

SRC-20 token transaction fees are paid in Bitcoin, so integration into the ecosystem is seamless.

SRC-20 vs BRC-20: comparison

When comparing SRC-20 and BRC-20, you will notice that each has its own unique features that affect how data is implemented and managed in the Bitcoin ecosystem.

SRC-20 tokens use the Bitcoin Stamps protocol to immutably store data on UTXOs. It is worth noting that the Stamp protocol has its own STAMP token, which is used for trading, peer-to-peer (P2P) transactions, and memorial inscriptions on the Bitcoin blockchain.

On the other hand, BRC-20 tokens use Bitcoin Ordinals for data that can be changed and potentially reduced. The native token of the Ordinal protocol is ORDI, and it serves the same function as STAMP.

Here are the main differences between the SRC-20 and BRC-20:

1. Immutability: SRC-20 tokens cannot be changed once created, while BRC-20 tokens can be changed as needed.
   Data size: SRC-20 tokens allow for larger data sizes, which impacts transaction costs, while BRC-20 tokens benefit from limited size limits, which provides more predictable fees.
   Integration: SRC-20 operates independently of Bitcoin coin transactions, but provides parallel functionality. BRC-20 can change the underlying data and affect how token interactions are performed.
   Adoption: BRC-20 tokens currently have an advantage in adoption and market presence simply due to their established integration on exchanges. SRC-20 tokens are in the early stages of development with growing interest.

Bottom line

SRC-20 tokens are built directly into Bitcoin transactions, providing immutability and facilitating the creation of fungible and non-fungible tokens. They use the Bitcoin Stamps protocol and securely store image data in UTXOs, which support formats such as JPG, GIF, PNG, and SVG.

Their reliance on UTXOs for storage makes them secure and irreversible. This innovation fundamentally expands the use of Bitcoin beyond simple transactions. It allows for the creation and trading of unique digital assets and collectibles, similar to Ethereum’s ERC-20 tokens. As SRC-20 tokens gain popularity, they greatly increase the potential of the Bitcoin ecosystem.

Who knows, maybe protocols like SRC-20 and BRC-20 and projects like Stacks will play a major role in building a thriving Bitcoin-based DeFi ecosystem that can compete with Ethereum and other Proof-of-Stake (PoS) chains. If that happens, Bitcoin’s price could actually hit the seven-figure mark in the distant future.