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What are Bitcoin Stamps and SRC-20 Tokens?
March 2, 2024

Bitcoin Stamps and SRC-20 tokens have emerged from the Bitcoin network, leading to widespread surprise. Many people did not believe it was possible to create such assets using the Bitcoin network.

Stacks has been instrumental in enabling smart contracts on Bitcoin, and this has paved the way for discovering more functionalities within the network.

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Without further ado, let's delve into the world of Bitcoin Stamps and SRC-20 Tokens, exploring their mechanisms, differences, and practical applications.

What is SRC-20 Tokens andSTAMPS Protocol?

SRC-20 tokens are a type of digital asset that operate on the Bitcoin blockchain. They are generated using the STAMPS protocol, which ensures the security and integrity of the tokens. SRC-20 tokens focus on securing non-fungible tokens (NFTs) and enabling their transactions on the Bitcoin network.

The STAMPS Protocol, also known as SRC-20, lets you store images and text directly on the Bitcoin blockchain, similar to NFTs. It works by encoding the data and including it within Bitcoin transactions.

This makes the data immutable and decentralized, but also means bigger transaction fees compared to some alternatives.

Think of it like tiny capsules carrying your data inside Bitcoin itself! While still under development, STAMPS offers a way to create native Bitcoin NFTs with unique advantages and limitations.

The current highest marketcap in USD value for SRC-20 tokens is STAMP, which is one of the many SRC-20 tokens available on the Bitcoin blockchain. It is a testament to the potential and value of SRC-20 tokens within the cryptocurrency and blockchain ecosystem.

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With their focus on security, compliance, and enabling NFT transactions, SRC-20 tokens offer a promising avenue for innovation and investment in the digital asset space.

What are Bitcoin Stamps?

Bitcoin Stamps are a unique form of Non-Fungible Tokens (NFTs) that are designed to encode and store image data directly on the Bitcoin blockchain. This innovative concept allows users to create digital stamps that represent unique images or artwork, providing a secure and immutable way to transfer and verify ownership of digital visual content.

To achieve this, Bitcoin Stamps utilize the SRC-20 token standard, which enables the encoding of image data in Base64 format. This encoded data is then stored directly in the Bitcoin blockchain, allowing for the creation of digital stamps that can be bought, sold, and traded like traditional NFTs.

However, Bitcoin Stamps have limitations compared to other NFTs, particularly in terms of image size and transaction cost. Due to the constraints of the Bitcoin blockchain, the image data for each stamp must be relatively small, which can impact the quality and complexity of the artwork that can be represented.

Additionally, the transaction cost for creating and transferring Bitcoin Stamps can be higher compared to NFTs built on other blockchain platforms.

In summary, Bitcoin Stamps offer a novel way to represent digital images as NFTs by leveraging the Bitcoin blockchain, but they come with certain limitations in terms of image size and transaction costs.

How Bitcoin Stamps Works?

Bitcoin Stamps are created and stored on the Bitcoin blockchain using the Counterparty protocol. Images are embedded into Unspent Transaction Outputs (UTXOs) as a way to represent the stamp. The creation process involves following specific rules and standards, such as the format of the embedded images and the preservation of a one-to-one relationship between the image and the UTXO.

Minting Bitcoin Stamps involves creating and embedding an image into a UTXO, while the sending process transfers the ownership of the stamp to another Bitcoin address. Receiving Bitcoin Stamps involves accepting the ownership of a stamp that has been sent to a specific Bitcoin address.

These processes are all facilitated and recorded on the Bitcoin blockchain through the use of the Counterparty protocol.

Bitcoin Stamps offer a unique way to represent and transfer digital assets on the blockchain, providing a secure and verifiable method for the creation, storage, and transfer of digital stamps.

Read Also: What is a Bitcoin Oracle?

Bitcoin Stamps vs SRC-20: Key Differences

Bitcoin Stamps and SRC-20 tokens are two distinct protocols in the Bitcoin ecosystem.

CriteriaBitcoin StampsSRC-20 TokensPurpose and ConceptFocused on creating digital collectibles and art, transforming images into unique, permanent blockchain forms.Designed for enabling complex functionalities, akin to smart contracts, on the Bitcoin blockchain.Technical ImplementationUtilizes a unique method for encoding and recording data (like images) onto the Bitcoin blockchain, using Base64 encoding and inscribing onto UTXOs.Implemented as a protocol for creating and managing tokens, with smart contract-like features tailored for Bitcoin.Blockchain InteractionMore about the representation of digital collectibles within the blockchain, emphasizing permanence and uniqueness.Interacts with the blockchain functionally, allowing for a range of applications from asset transfers to decentralized applications.Cost and EfficiencyCreation can be resource-intensive and costly due to the need to encode and permanently store data on the blockchain.Designed for efficiency within the Bitcoin network, balancing functionality with the blockchain's limitations.

Bitcoin Stamps are usually in image format, serving as a unique way to represent ownership of physical or digital assets on the blockchain. On the other hand, SRC-20 tokens are typically in a string of text-like format, providing a standardized method for creating and managing digital assets on the Bitcoin blockchain.

While Bitcoin Stamps focus on visual representation, SRC-20 tokens offer programmable functionality with features such as deployable tokens, maximum supply control, and decimal precision settings.

Both protocols address the shortcomings of the Ordinals ecosystem by offering improved standards for token creation and management. Developers may start shifting focus to SRC-20 tokens due to their programmability and compatibility with other Bitcoin-based applications.

Bitcoin Stamps and SRC-20 tokens provide advantages such as improved token management, interoperability with other Bitcoin services, and enhanced security. Bitcoin Stamps are suitable for representing physical assets, while SRC-20 tokens are ideal for creating and managing digital assets with advanced functionalities.

How to Buy and Store Bitcoin Stamps and SRC-20 tokens?

As of this writing, SRC-20 tokens are not available on centralized exchanges. However, they can be traded on decentralized exchanges compatible with the Bitcoin STAMPS protocol, such as and Stampscan.

To trade SRC-20 tokens, a Bitcoin wallet that supports the protocol is necessary. Options include the Leather wallet (formerly known as Hiro wallet), Unisat, and Freewallet.

To acquire SRC-20 tokens (Using as an example), follow these steps:

  1. Firstly, if you don't have an SRC-20 compatible wallet, choose and download one (Leather Wallet, Unisat, and Freewallet are options). Install and configure your account.
  2. Next, navigate to an SRC-20 trading platform. For this guide, we'll use in conjunction with the Leather Wallet.
  3. Once on the site, select 'Connect' in the upper right corner and choose your wallet provider.
  4. On the asset page, view the available SRC-20 tokens. Select the one you want to buy.
  5. Choose your preferred order and click 'Buy Now' on the right side.
  6. Confirm the order details, acknowledge the risk, and press 'Confirm' to finalize the purchase.
  7. On the asset page, you can see current listings. Click on the SRC-20 token you wish to purchase.
  8. On your desired order, click the Buy Now.
  9. Verify the order details, check the risk affirmation box, and click Confirm to complete.
Confirm SRC-20 token purchase

Ensure your wallet has sufficient BTC for the transaction.

After the Bitcoin blockchain confirms the transaction, the purchased asset will be sent to your Bitcoin wallet.

This process is similar across other Bitcoin Stamps and SRC-20 trading platforms.


Bitcoin Ordinals vs Bitcoin Stamps: Key Differences

In March 2023, Mike In Space launched the Bitcoin Stamps system on Counterparty, an L2 Bitcoin platform existing since 2014. Initially a proof-of-concept, it transitioned entirely to Bitcoin with the recent introduction of the SRC-20 protocol.

Mike initially designed Stamps for creating permanent Bitcoin NFTs but expanded its capabilities to encompass BRC-20-like tokens, inspired by the growing popularity of Bitcoin Inscriptions initiated by Casey Rodarmor's Ordinals in January 2023.

A key distinction between Stamps and Ordinals lies in their architectural designs: Stamps use multi-signature UTXOs for metadata storage, ensuring permanence but at a higher creation cost, while Ordinals employ the witness segment of Bitcoin transactions, offering a more economical but potentially pruneable option.