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Educational Post

What Are SRC-20 Tokens?

SRC-20 tokens are tokens that utilize the Bitcoin Stamps technology to attach data to Bitcoin. The SRC-20 token standard expands the utility of the Bitcoin network, enabling the creation of fungible assets. It’s likened to the BRC-20 token standard, but the two have several distinct differences. Now, let’s take a look at how SRC-20 tokens work.

How Do SRC-20 Tokens Work?

Through the use of Bitcoin Stamps, which inscribe data onto unspent transaction outputs (UTXOs), SRC-20 tokens ensure immutable data storage. This allows for the creation of tokens that run parallel with Bitcoin's native coin, with transaction fees paid in BTC, while offering similar functionality to other token standards such as BRC-20.

BRC-20 vs. SRC-20

While both BRC-20 and SRC-20 token standards increase the utility of the Bitcoin blockchain, they rely on different methods. Let’s take a look at the key differences between BRC-20 and SRC-20.

Data storage

SRC-20 tokens utilize the Bitcoin Stamps protocol, allowing information storage directly on UTXOs on the Bitcoin blockchain. In contrast, BRC-20 tokens use the Bitcoin Ordinals protocol, which stores information in the witness data. While details in the witness data can be modified by a syncing mode, Bitcoin Stamps data can’t be pruned.

Data pruning

SRC-20 token data stored on UTXOs can’t be pruned, ensuring immutability and permanence. On the other hand, data attached to Bitcoin ordinals can be pruned by nodes, potentially affecting data longevity.

Transaction costs

SRC-20 tokens offer flexible data storage, letting creators attach data of arbitrary sizes. However, larger data sizes result in higher transaction fees. BRC-20 tokens impose restrictions on information size, ensuring standard transaction costs. Additionally, BRC-20 token data is stored in the Witness section of a transaction. That contributes to cheaper transaction costs.

Adoption

BRC-20 tokens have experienced wider adoption, being listed on centralized exchanges, and multiple protocols are developing technologies to embrace them. In contrast, SRC-20 tokens are still in their early stages, with limited wallet and protocol integration.