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  • Network Congestion
  • Gas Fee Increase
  • Potential for Scams
  • Ecosystem Fragmentation
  1. FAQs
  2. BRC20

Cons of BRC-20 Tokens

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Last updated 1 year ago

Network Congestion

The emergence of BRC-20 tokens on the Bitcoin blockchain has led to increased network activity. This surge in usage can cause congestion on the network, resulting in slower transaction processing and higher fees. A notable example of this impact was observed during a specific four-day period from April 29 to May 2. During this time, BRC-20 token swaps accounted for over half of all network transactions, leading to significant congestion and delays in the processing of regular Bitcoin transactions.

Gas Fee Increase

The utilization of block space by BRC-20 tokens on the Bitcoin blockchain can lead to increased gas fees. This rise in costs affects the cost-effectiveness and accessibility for individuals executing transactions. A clear instance of this was on May 8, 2023, when Bitcoin's transaction fees escalated to an unprecedented $30. This spike in fees was primarily attributed to over 300,000 pending transactions, largely driven by BRC-20 token swaps.

Potential for Scams

As BRC-20 tokens gain popularity, they may also attract scammers looking to take advantage of less experienced users. This underscores the necessity for thorough research and careful due diligence before engaging in any activities related to these tokens.

Ecosystem Fragmentation

A large number of BRC-20 tokens could lead to a divided and scattered ecosystem, where many of these tokens might have limited practical applications. This scenario could create challenges for these tokens to achieve broad adoption and functional utility in the market.

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