🎟️ ARC-20 Tokens ARC-20 Tokens
A fungible token standard on the Bitcoin blockchain, built on the Atomicals protocol, where every token unit is backed by at least one real satoshi — Bitcoin's smallest unit.
🏷️ The simple version — a sticker on a real coin
Picture satoshis as tiny coins. ARC-20 puts a sticker on a satoshi that says "this coin is now 1 unit of token X." That idea is called colored coins: a satoshi is "colored" to stand for ownership of a token unit. Because the sticker always rides on a real satoshi, the token never floats free — there is always a genuine bit of Bitcoin underneath it. ARC-20 tokens are fungible, meaning one unit is interchangeable with any other unit of the same token.
🔒 Why every token sits on a satoshi (UTXO-bound)
An ARC-20 token is tied to a real, spendable piece of Bitcoin (a UTXO). Because of that link, a token's value can never drop below 1 satoshi by design. This does not mean the token holds its price — it only means the satoshi beneath it keeps its small Bitcoin value. The full transaction history is carried on-chain, so anyone can verify ownership straight from the Bitcoin blockchain, with no central indexer to trust.
⚙️ Two ways ARC-20 tokens get minted
| Method | How it works |
|---|---|
| 🌐 Decentralized minting | The creator sets the rules (total mints, limits, conditions) but not the distribution. Anyone can mint over time, using Proof-of-Work for a fairer, permissionless launch |
| 📦 Direct minting | The entire supply is created in a single transaction. The creator must commit the equivalent BTC (satoshis) upfront |
⛏️ Notice the Proof-of-Work step — minting an ARC-20 token can require computational work, much like Bitcoin mining itself.
🆚 ARC-20 vs BRC-20 — a common mix-up
| 🎟️ ARC-20 | 🔤 BRC-20 | |
|---|---|---|
| Relationship to sat | Backs tokens to satoshis | Inscribes data on satoshis |
| UTXO link | UTXO-bound | Non-UTXO-bound |
| Minting | Proof-of-Work | Taproot outputs |
| Files | Can store multiple files | One inscription per file |
BRC-20 grew out of the Ordinals approach of writing data onto individual satoshis. ARC-20 takes the older "colored coins" route instead, attaching the token to the satoshi rather than inscribing on it.
🚨 Things beginners should know
- 📉 The floor is not a price guarantee — "backed by a satoshi" never means "won't lose value"; demand still sets the price
- 🧪 Still experimental — the ARC-20 ecosystem is young, with limited proven real-world use so far
- 👛 Where you meet it — mostly in Bitcoin-native wallets like Xverse and on Atomicals marketplaces
- 🔍 Verify on-chain — because history lives on Bitcoin, you can check a token's record directly rather than trusting a single platform
❓ FAQ
- Each ARC-20 token is backed by a satoshi — does that mean it can't lose value?
- No. The 1-satoshi floor only means the satoshi underneath has Bitcoin value. The token's own market price still depends entirely on demand and can fall to near-worthless. The peg is to a sat, not to a stable dollar value.
- How is ARC-20 different from BRC-20?
- BRC-20 inscribes data onto satoshis (Ordinals-style) and is minted through Taproot outputs. ARC-20 instead backs tokens to satoshis as 'colored coins' — the token is UTXO-bound, minted with Proof-of-Work, and can store multiple files at mint.
- Where would a beginner come across ARC-20?
- Mostly in Bitcoin-native wallets such as Xverse and on Atomicals marketplaces. The ecosystem is still experimental with limited proven real-world use, so treat any specific token with extra caution.