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SRC-20 Meaning

Sep 19, 2024 | Updated Sep 19, 2024
SRC-20 is the token standard for creating fungible tokens on the Bitcoin blockchain by adding data to transactions.

What Is SRC-20?

Akin to the BRC-20 standard for issuing Ordinals, SRC-20 also extends the possibilities of the Bitcoin blockchain. This token standard is based on the Bitcoin STAMPS protocol (Bitcoin Secure Tradeable Art Maintained Securely) for issuing SRC-20 tokens and Stamps NFTs.

Originally, SRC-20 tokens were built through Counterparty, a protocol extending Bitcoin functionalities that burnt BTC to execute smart contracts and create tokens. However, with recent evolvements in Bitcoin ecosystems, anyone can create SRC-20 tokens using the Bitcoin STAMPS protocol – as said by creator Mike In Space.

To issue an SRC-20 token, the STAMPS protocol converts the file (supported jpg, png, and gif formats) into a base64 string format. 

This base64 format represents the image as a sequence of characters that is added to the key description of the Bitcoin transaction, with the prefix “STAMP:64”. The transaction is then broadcast on the network, where it is validated and recompiled back to the original image.

The STAMPS protocol etch SRC-token data in Bitcoin’s unspent transaction outputs (UTXOs), which ensures its immutability and permanence.

SRC-20 vs BRC-20: What’s the Difference?

SRC-20 token standard attaches data in UTXOs using STAMPS protocol – making them prunable. This also allows for larger data to be stored immutably, but can lead to higher transaction fees.

On the contrary, the BRC-20 standard records data in the witness field of the block, which risks data loss and can potentially be altered by nodes. BRC-20 tokens have restrictions on image format and size and support SegWit discounts, making them cheaper in transaction costs.

While multiple exchanges and wallets support BRC-20 tokens due to their wider popularity, SRC-20 tokens are still in the early stages and are better suited for use cases of long-term data authenticity such as legal documents, certificates, etc.

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