Have you seen a picture of a giant green frog face with red lips in the cryptocurrency world recently? If so, you are not alone. The new memecoin boom, which is connected to coins such as Pepe (PEPE) or Meme (MEME), has sparked the interest of an incredible amount of people.

What is more fascinating about this is the fact that most of these new projects are either migrating, or are being developed right on Bitcoin thanks to a new BRC-20 protocol. What is this new memecoin craze, how is it connected to Bitcoin NFTs and what projects from this ecosystem do you need to know? These are just some of the questions that the following article will try to tackle.

What are Memecoins?

Memecoins are a type of cryptocurrency that have gained popularity in recent years, particularly among younger investors and internet communities. These coins are often created as a joke or satire, and are designed to capitalize on the viral nature of internet memes.

One of the most famous memecoins is Dogecoin (DOGE), which was created in 2013 and features the image of a Shiba Inu dog as its logo. The creators of Dogecoin intended it to be a fun and light-hearted alternative to Bitcoin, which was the dominant cryptocurrency at the time. However, it has since gained a significant following and has been used for various charitable causes and as a means of payment for certain goods and services.

Other memecoins that have gained popularity include Shiba Inu (SHIB), SafeMoon (SAFEMOON), and Hoge Finance (HOGE). However, currently the memecoins boom has resurrected and we have been witnessing something that can only be described as “Memecoin mania 2.0.” Still, before we explore what this means, there are few concepts that needs to be looked over for better understanding.

What are Ordinals and Bitcoin NFTs?

Bitcoin Ordinals, NFTs that are minted and stored on the Bitcoin network, have been very popular since the beginning of the year. Ever since they were introduced, Ordinals have gained not only the popularity and traction, but also the community and development.

Number of total inscriptions to date, Source: dune.com

Thanks to this, many curious minds have become more attracted to the development directly on the Bitcoin network. This is not surprising as many expect the Bitcoin NFTs to be the next big boom. For instance, Galaxy Research has estimated that by the end of 2025 the Bitcoin NFT market could be worth well over 4.5 billion.

And the recent advancement in this field only supports this with the introduction of the new Bitcoin NFT standard that has been introduced fairly recently. The BRC-20 (Bitcoin Request for Comment) introduced by pseudonymous on-chain data enthusiast Domo, has pushed Bitcoin NFTs to an unimaginable sphere, which allowed both Bitcoin NFTs and memecoins to blend together and create something unique and unexpected.

BRC-20 – where memecoins and Bitcoin NFTs come together

Ever since the BRC-20 standard was introduced, the majority of Ordinal inscriptions went live as text-based. This experimental token standard built on top of Bitcoin blockchain was inspired by Ethereum’s ERC-20 token standard and enables developers to create fungible tokens solely by using the Ordinals protocol. The move from ERC-20 to BRC-20 has however led to many nuances.

Number of Ordinals by type, Source: dune.com

For instance, while ERC-20 tokens are issued on Ethereum network that uses Proof-of-Stake as its new consensus mechanism, BRC-20 tokens are issued directly on Bitcoin, meaning that they are secured by Proof-of-Work. However, as of now, they have much less features and tools when compared to the ERC-20 standard, which is also supported by the lack of smart contract implementation.

“At the end of the day, it was an experiment, and I think the majority understand that. Those people seem to be having fun.”

Those were the words of Domo. And they are supported by the data as well, since it seems that huge numbers of tokens are currently being created and developed right on the Bitcoin blockchain. Yet, most of them seem to be rather useless, as they represent the category of memecoins.

Ecosystem around BRC-20

Right after the Domo’s implementation, the Bitcoin network has seen an increase of memecoins being developed on the chain. These include the likes of Ordinals (ORDI), Pepe (PEPE), Meme (MEME) and countless others. These three are probably the best-known tokens due to their recent rises. Some of the most significant price movements connected to memecoins include:

• Milady Meme Coin (LADYS) – 13,000% in a day (11th of May – most probably due to this tweet of Elon Musk)
• Bob (BOB) – 12,000% in one week (between 28th of April and May 5th)
• Wojak (WOJAK) – 1,650% in one week (between 28th of April and May 5th)
• Ordinals (ORDI) – 1,460% in one day (May 8th)
• Pepe (PEPE) – 800% in less than 5 days (between May 1st to May 5th)

Price chart of Pepe (PEPE), Source: TradingView.com

Most of them were, however, achieved on other chains. Yet, their presence on Bitcoin already portrays that the new phenomenon of token creation on this blockchain has already started. 

This is also supported by the fact that many new tokens have been created and the whole BRC-20 ecosystem includes countless newcomers to the crypto world. It is anticipated that more than 14,000 different tokens have been minted. Few of the less known examples include VMPX (VMPX), Drac (DRAC), PEPEBRC (PEPEBRC) or NOOT (BRC-20).

It also includes for instance BSVBRC (BRC), which was deployed as an experimental token. The goal of this implementation was to show that Bitcoin will absorb all the forks and imitations, such as Bitcoin Satoshi’s Vision (BSV).

The current emerging ecosystem also contains for instance Ordinex (ORD). This platform aims to be the all-in-one place for trading of Bitcoin NFTs. Its goal is to be built with a sense of security, transparency and trustlessness and have an easy-to-use interface.

The whole ecosystem obviously encompasses many more projects, with the assumption that countless others will join. The current situation clearly points to this trend and one can only assume that this ecosystem is in its growth phase.

Risks associated with BRC-20

Nevertheless, while the trend is clear and the topic of memecoins on BRC-20 standard is very hot, traders and investors need to exercise a huge amount of caution. Memecoins are some of the most risky and volatile investments in the cryptocurrency world. Combined with the fact that they are rather new on the Bitcoin blockchain, their safety is also posing higher risks.

This could have been seen for instance with Unisat, a wallet that has already experienced some exploits. On top of that, rather complex technological issues are still pretty common as this sector needs to develop and become much more user friendly.

Memecoin fans can also become bagholders of coins and tokens that are worthless. Even Domo himself has stated that a lot of these tokens are worthless and the initial craze can diminish rather quickly. Thus, people can lose significant amounts of money if investing solely based on their impulses and emotions such as FOMO (fear of missing out).

Last, but definitely not least, the community behind these tokens and developments is unknown. While this is not something uncommon in the cryptocurrency world, we have already witnessed countless rugpulls, exit scams or frauds. Especially new projects, which are not tested “by time” will have a hard time proving themselves.

New standard already proposed – what is BRC-21?

One more issue with the whole situation can be connected to Bitcoin as such. With the network overload that we are seeing now, the transactions can be stuck in the network for a really long time or cost a tremendous amount of money in fees to be validated and included in the blocks.

Luckily, there have already been some proposals for improvements of BRC-20. More specifically, on 7th of May BRC-21 standard was introduced as a new idea. It would allow other tokens on the blockchains to be minted and redeemed to or from Bitcoin blockchain. This should help smooth out the interoperability and the whole “jumping-between-chains” experience.

Conclusion

Everyone knows that anything that happens in the cryptocurrency world, happens fast. The latest trend connected to memecoins on Bitcoin, BRC-20, is the best example of that. Few weeks ago, barely anyone had heard of them or used them. Today, there are more than 14,000 of them and they seem to be getting more attention than initially thought.

That is however not without risks. The pace at which this innovation is progressing as well as the technological aspect of it should also mean that the investors or traders should exercise caution as these types of assets can be prone to really complicated and unpredictable moves. Increased volatility and presence of scams are just a few of the risks connected to the current meme coin craze on Bitcoin.

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