What are SRC-20 tokens and Bitcoin Stamps? A Comprehensive Guide

Have you heard about the recent updates in the Bitcoin Blockchain? The innovations like SRC-20 and Bitcoin stamps are gaining significant attention. Well, the Bitcoin market always has some buzz following it around, but this update isn’t ordinary at all. It will improve the blockchain and will help in making Bitcoin transactions more efficient.

In this blog post, we will discuss everything about these new SRC-20 tokens and Bitcoin stamps. You will get to know about their relationship, usage, and much more. So, let’s get started. 

What are SRC-20 tokens?

SRC-20 are the tokens designed entirely and solely for the Bitcoin blockchain. These tokens are somehow similar to the BRC-20 but they work using more secure methods. Just like ERC-20 helps with the mining and trading of tokens within the Ethereum network, SRC-20 enables these functions within the Bitcoin blockchain.

It also offers a variety of other features as well, making it unique from ERC-20. SRC-20 tokens bring a fresh twist to Bitcoin by allowing token creation. This means developers can now build more applications directly on Bitcoin, increasing its value and use. Bitcoin stamps are used to power the SRC-20 tokens. But what exactly is a Bitcoin stamp? Let’s discuss.

What is a Bitcoin Stamp?

Bitcoin Stamp is a method of permanently storing digital assets, like images or data, on the Bitcoin blockchain in a way that cannot be removed or changed. It is different from other inscription methods, like Ordinals, because it stores data in Unspent Transaction Outputs (UTXOs) instead of witness data. This makes it more secure and truly immutable, as the information remains forever on the blockchain, even if the network undergoes upgrades or changes.

Mike In Space, an artist and developer, introduced the idea of Bitcoin Stamps for the first time. These stamps are used to mint NFTs and expand the use of Bitcoin to a wide range of applications. These stamps are also used to power the SRC-20 token which will improve the network’s security and functionality.

How SRC-20 and Bitcoin Stamp are Related?

Tokens SRC-20 and Bitcoin Stamps work together and support each other. The token uses stamp protocol to store token-related data on the Bitcoin blockchain. The stamps ensure that SRC-20 tokens are securely recorded and cannot be changed.

These two help in the evolution of Bitcoin from a payment system to a multi-currency network that supports, NFTs, tokenized assets, and dApps. In short, the Bitcoin stamp works as the foundation of src-20 tokens.

How do SRC-20 Tokens Work?

SRC-20 tokens bring tokenization to Bitcoin, much like ERC-20 does for Ethereum. But since Bitcoin doesn’t support smart contracts like Ethereum, SRC-20 works differently. Here’s a simple breakdown of its working:

1. Token Deployment (Creation of a New Token)

To create a new SRC-20 token, a user must write a special transaction on the Bitcoin blockchain. This process is called "inscription." Here’s how it works:

A user writes data into a Bitcoin transaction’s metadata (using Bitcoin Stamps). This metadata includes:

• Token name (e.g., "BTC-TOKEN")
• Maximum supply (e.g., 21,000,000 tokens)
• Minting limit per transaction (e.g., 1,000 tokens max per mint)

Once recorded on Bitcoin’s blockchain, this cannot be changed. The token is now publicly visible, and anyone can mint tokens based on its rules.

2. Minting SRC-20 Tokens

Once a token is deployed, users can mint (create) tokens by following the minting rules explained above. Here’s how minting works:

A user sends a Bitcoin transaction with a special message that follows the token’s minting rules. Example: If a token allows 1,000 tokens per mint, a user can send a transaction to mint 1,000 SRC-20 tokens. The minted tokens are recorded inside Bitcoin’s transaction history.

There is no central authority. Anyone can mint tokens as long as the supply limit is not reached.

3. Storing SRC-20 Tokens

Bitcoin does not have built-in token support like Ethereum. That’s why SRC-20 tokens are tracked in the Bitcoin blockchain itself. Here’s how it is done:

• The token details are stored using Bitcoin Stamps (UTXOs).
• Every token transaction is permanently recorded in Bitcoin’s transaction history.
• Wallets and explorers (like UniSat) read these transactions to show balances and ownership.
• Unlike Ethereum, where smart contracts automatically track tokens, here the Bitcoin ledger itself is used to track ownership.

4. Sending and Receiving SRC-20 Tokens

Once minted, SRC-20 tokens can be sent between users. Here’s a breakdown of its working:

• A user sends a Bitcoin transaction with an embedded message saying: "I’m sending 500 SRC-20 tokens to Address X."
• The Bitcoin network records this transaction.
• Wallets and explorers read these messages and update token balances accordingly.

Note that Bitcoin nodes don’t recognize SRC-20 tokens—only special wallets and explorers (like UniSat) can track and display them correctly.

5. Using SRC-20 Tokens for Applications

Once SRC-20 tokens exist, they can be used in different ways like:

• NFTs: Store unique digital assets on Bitcoin (like art, and collectibles).
• DeFi: Enable financial applications on Bitcoin (like lending, and staking).
• Gaming: Players can own and trade game assets on Bitcoin.

SRC-20 tokens bring tokenization to Bitcoin without smart contracts, relying on inscriptions and transaction metadata for tracking. As adoption grows, they could unlock new possibilities for Bitcoin-based DeFi, NFTs, and gaming.

Top 4 SRC-20 Tokens You Should Know:

Here are some of the top SRC-20 tokens on the Bitcoin blockchain:

1. SATS (Satoshis)

What it is: SATS is a token that represents satoshis, the smallest part of Bitcoin.

Why it’s popular: SATS makes it easier to do small transactions or experiment with Bitcoin in a more flexible way.

How it works: SATS are used like tokens, letting people do tiny Bitcoin transactions or try out new things on the Bitcoin network.

2. STAMP (Bitcoin Stamps)

What it is: STAMP is a token linked to Bitcoin Stamps, which let users store digital assets like images or data directly on the Bitcoin blockchain.

Why it’s popular: STAMP makes it easy to store things like digital collectibles safely on Bitcoin, without needing other platforms.

How it works: Using Bitcoin’s network, STAMP makes sure the data stays permanent and safe, providing extra security for digital items.

3. KEVIN

What it is: It is a novelty token that has a strong and loyal support system.

Why it’s popular: KEVIN was initially a meme coin and gained popularity from its grassroots community methods to address a problem.

How it works: It focuses on explaining and improving the versatility of SRC-20 tokens, enabling the users to understand the potential of SRC-20 tokens.

4. BITDN

What it is: It is a utility token designed for the multiple aspects of decentralized applications working under the Bitcoin blockchain.

Why it’s popular: Its flexibility and diverse applications are one of the major reasons behind its popularity.

How it works: It is designed to expand Bitcoin’s use by supporting different decentralized apps (dApps). It allows users to make transactions, access services, and interact with smart contracts built on Bitcoin’s network.

Benefits Of SRC-20 for the Bitcoin Network:

The launch of these new tokens brought so many benefits for the Bitcoin blockchain. Users no longer need to make extra efforts to create and trade digital assets. These tokens make it easier to build decentralized apps, enable faster transactions, and expand Bitcoin’s use beyond just payments.

Here are some key benefits it offers:

• Easy Token Creation – Users can create digital assets without needing complex coding or extra tools.
• Faster Transactions – These tokens help process transactions quickly, making Bitcoin more efficient.
• Supports Decentralized Apps (dApps) – Developers can build apps on Bitcoin, expanding its use beyond payments.
• Better Accessibility – Anyone can create, trade, and use these tokens without a central authority.
• Safe and Permanent Data Storage – Since SRC-20 uses Bitcoin Stamps, the data stays on Bitcoin forever and cannot be changed or removed. This is helpful for storing important records, contracts, or history.

With these benefits, SRC-20 tokens bring new possibilities to Bitcoin’s blockchain.

Challenges and Limitations of SRC-20 and Bitcoin Stamps:

While SRC-20 tokens and Bitcoin Stamps bring new features to Bitcoin, they also have some challenges and limitations.

1. High Transaction Costs

Bitcoin’s network is already expensive to use, and adding SRC-20 tokens and Bitcoin Stamps increases its cost even more. More transactions mean higher fees, making it costly for users to mint, trade, or store data on Bitcoin. This high cost can result in low user satisfaction.

2. Blockchain Bloat (Increased Size)

SRC-20 tokens and Bitcoin Stamps store extra data on the blockchain, increasing its size. This can slow down the network, make it harder to run a full Bitcoin node and lead to scalability issues.

3. Permanent Data Storage Issues

Bitcoin Stamps store data permanently, which means mistakes or unwanted content cannot be removed or changed. Moreover, if someone stores harmful or illegal data, it stays on the blockchain forever, creating risks.

4. Adoption and Wallet Support

Not all Bitcoin wallets and platforms support SRC-20 tokens and Bitcoin Stamps yet and users may struggle to find the right tools to store, transfer, or trade these assets easily.

Step-by-Step Guide for Buying SRC-20 Tokens

• Choose a Platform – Visit a marketplace like Stampscan or OpenStamp, which supports SRC-20 tokens and makes minting or buying easy.
• Set Up a Wallet – Download a Bitcoin wallet that supports SRC-20 tokens, such as Leather Wallet or Unisat Wallet, to store your tokens securely.
• Add Bitcoin (BTC) to Your Wallet – Deposit BTC into your wallet to cover transaction fees and token purchases.
• Explore Available Tokens – Browse different SRC-20 tokens on the platform, such as STAMP, KEVIN, and BITDN. Some tokens are also available on KuCoin. 
• Mint Your SRC-20 Tokens – If minting, enter the token details like total supply and metadata. Platforms like OpenStamp provide step-by-step guidance.
• Confirm Your Transaction – After entering the details, review the transaction details and confirm it through your wallet.
• Receive Your Tokens – After the transaction is completed, the tokens will appear in your wallet

The Future of SRC-20 Tokens

With its increasing popularity and fame, the SRC-20 tokens hold the potential for immense improvements. Users and investors have high expectations as they believe that SRC-20 will play a key role in expanding Bitcoin’s network from simple finance to something exciting.

As development progresses, the token would aim to lower the costs, enable greater scalability, and increase the speed of transactions. The goal is to increase wallet compatibility, security, and affordability of SRC-20 tokens, and overall ease of use.

Final Verdict

While SRC-20 tokens and Bitcoin Stamps bring exciting changes, they also face high costs, slow transactions, and storage issues. As technology improves, developers need to find solutions to make them more efficient and widely accepted.

Before you make the decision to buy SRC-20 tokens, make sure to conduct proper research to understand the new tokens better. Best of luck for your investment.