What Are Bitcoin STAMPS? A Guide to SRC-20 Tokens
September 4, 2023
Bitcoin STAMPS are a new type of Bitcoin NFT, bringing more NFT technology to the Bitcoin ecosystem.
Read on to learn what Bitcoin STAMPS are, how they work, and how they compare to Ordinal inscriptions.
What Are Bitcoin STAMPS?
Bitcoin STAMPS, or SRC-20 tokens, are Bitcoin-native non-fungible tokens (NFTs) that are impossible to prune (removed by nodes). They are created using the Bitcoin STAMPS protocol, which proposes to give permanence to NFTs on Bitcoin. STAMPS is short for Secure Tradeable Art Maintained Securely.
The protocol embeds image data in unspent transaction outputs (UTXOs) instead of storing it in witness data that can be pruned, as is the case with Ordinal NFTs. Therefore, digital collectibles minted with Bitcoin STAMPS cannot be pruned, eternally preserving their immutability.
SRC-20 is one of the token standards supported by the Bitcoin STAMPS protocol. It is modeled after BRC-20, a token standard based on Ordinal Theory.
A developer using the pseudonym Mike In Space on Github proposed the Bitcoin STAMPS protocol in March 2023. Since then, there have been over 70,000 stamps created, according to Stamp Chain, the protocol’s explorer.
SRC-20 Tokens Explained: How Do Bitcoin STAMPS Work?
The Bitcoin STAMPS protocol converts an image to a format called base64 that enables the image to be represented as a string of characters. The string is added to a Bitcoin transaction’s description key and broadcasted to the blockchain by the address holding the SRC-20 balance. The Bitcoin STAMPS protocol supports a few data formats, namely: SVG, PNG, and GIF.
Initially, the protocol used Counterparty during the proof-of-concept phase to broadcast SRC-20 transactions to the blockchain. As of block 796,000, users cannot use Counterparty to generate SRC-20 tokens. If they do, the SRC transaction will be considered invalid.
By encoding SRC-20 transactions directly on the Bitcoin blockchain rather than using Counterparty, the Bitcoin STAMPS project has reduced transaction costs for users. However, transaction fees for producing an SRC-20 token may still be higher than minting an Ordinal inscription because Bitcoin nodes must store its data. For this reason, Mike suggests users embed images with resolutions of 24 by 24 pixels.
Some of the earliest NFTs, before the term “NFT” was coined, were minted on Counterparty, a protocol developed in 2014. It is built on top of the Bitcoin blockchain and interacts with the main chain by embedding Counterparty transactions inside Bitcoin transactions.
Bitcoin STAMPS are numbered chronologically. That means the first STAMP is the first transaction to add an authentic base64 string to the description key of a Bitcoin transaction. The numbering scheme starts from zero and continues indefinitely.
Bitcoin STAMPS creator Mike minted the first STAMP in March 2023. The asset details for STAMP 0 are displayed in the image below.
The two steps in generating an SRC-20 token are deploy and mint. Holders can also transfer SRC-20 tokens to other STAMP-compatible wallets or trade them on RareStamp and Open Stamp.
Here’s an example of an SRC-20 token’s deployment code:
"dec": "18" // [optional]
After deployment, the next step is minting. Once the token is minted, it appears on Stamp Chain. The minting code should look something like this:
As a non-technical NFT enthusiast, you don’t have to write code to mint an SRC-20 token, thanks to third-party services like Open Stamp, Assetic, RareStamp, and Stampverse. These platforms allow non-technical users to create STAMPS easily.
SRC-20 Tokens vs. Ordinal Inscriptions: What’s the Difference?
Despite their similarities, there are significant differences between SRC-20 tokens and Ordinal inscriptions. Here’s a look at some of those.
To generate SRC-20 tokens, Bitcoin STAMPS embed images in UTXOs, data that Bitcoin nodes must store. Therefore, SRC-20 tokens cannot be pruned. On the contrary, Ordinal inscriptions are stored in the witness section of a Bitcoin transaction. Bitcoin nodes aren’t obligated to store witness data, putting inscriptions at risk of pruning.
The risk that all nodes will agree to prune an inscription is low since there are nodes that store the complete record of the blockchain. Still, Ordinal inscriptions create room for pruning, while SRC-20 tokens don’t. Pruning is the process through which Bitcoin nodes fail to store data, making it forever inaccessible.
Ordinal inscriptions are also stored in UTXOs. The distinction between the two Bitcoin-native NFTs is that the Ordinals protocol stores inscription content in the witness segment of a Bitcoin transaction, while the Bitcoin STAMPS protocol stores data as a string in a Bitcoin transaction’s description key.
Supported Data Formats
The Ordinals protocol supports a wide range of data formats such as text, images, audio, HTML, SVG, and videos. Conversely, the Bitcoin STAMPS protocol only accepts three data formats: SVG, GIF, and PNG.
Creating SRC-20 tokens requires encoding images with 24 by 24 pixels resolutions. Otherwise, users must pay high transaction costs to store larger images. In other words, embedding data to UTXOs can get pricey since nodes are required to store this data.
On the contrary, the data storage for Ordinal inscriptions is less inflexible thanks to the 4 MB block size. Also, transaction costs remain reasonable since data is stored in the witness section of a Bitcoin transaction, and nodes don't have to store it.
Ordinal inscriptions enjoy more wallet integrations compared to SRC-20 tokens. That means users can opt to store their Ordinals on several wallets, such as Hiro, Sparrow, Ordinals Wallet, Unisat Wallet, Xverse, or OKX. By contrast, users can only manage their SRC-20 wallets on The Stamp Wallet and Hiro. The project is, however, working on integrating the protocol into more wallets.
What Does the Bitcoin Community Think of Bitcoin STAMPS So Far?
Bitcoin STAMPS have attracted mixed feelings from the community, like all the other recent experiments on the Bitcoin blockchain this year. On the one hand, speculators are happy to ride the Bitcoin NFT trend in the hope of generating a profit. On the other hand, Bitcoin maximalists believe that NFTs aren’t the best use of Bitcoin’s valuable block space.
A third group considers projects like Bitcoin STAMPS good for the blockchain since they open it up to more use cases and draw in new users. In their opinion, new Bitcoin use cases could promote Bitcoin adoption in the long run.
That said, more than 8,300 Bitcoin STAMPS were minted 29 days after launch compared to the 500 inscriptions that were minted over the same time span following the launch of the Ordinals protocol. This could mean that the community may have initially found Bitcoin STAMPS to be a more exciting project than Ordinals. Nonetheless, Ordinal inscriptions remain the go-to on-chain Bitcoin NFTs for the time being, with more than 24 million inscriptions today, while STAMPS are slightly more than 74,000.
What is the SRC-20 Token Standard?
SRC-20 is a token standard on the Bitcoin STAMPS protocol. It is modeled after BRC-20, a token standard based on Ordinal Theory. The tokens created under this standard are called STAMPS or SRC-20 tokens.
The Bitcoin STAMPS protocol allows users to mint Bitcoin-native NFTs that are impossible to prune, unlike Ordinal inscriptions. It achieves this by encoding images to base64 strings. The string is then directly added to the description key of a Bitcoin transaction and then broadcasted to the network by the address holding the SRC-20 token balance.
Where Can You Buy Bitcoin STAMPS?
You can buy STAMPS on Open Stamp and RareStamp. Both marketplaces support Hiro Wallet, which permits users to store and view their SRC-20 tokens. However, Hiro Wallet doesn’t fully support the token standard, so features like sending tokens are not yet possible. Moreover, the two platforms do not support The Stamp Wallet, which the project has officially recommended.