With the 4th Bitcoin halving now behind us, focus is turning to an intriguing development: the launch of the Runes protocol by developer, Casey Rodarmor.
BITCOIN | #Bitcoin Completes its 4th Halving, Miner Rewards Slashed from 6.25 BTC to 3.125 BTC
Despite this reduction, miners still earn transaction fees for each block they mine as usual.https://t.co/l6WX2PYd15 pic.twitter.com/JxhoBkRXYp
— BitKE (@BitcoinKE) April 20, 2024
Runes was slated to go live once Bitcoin completes its halving process on April 20 2024.
reminder to all the degens: runes, ordinals, and inscriptions are a fun sideshow
bitcoin is the main event
stay humble, stack sats
— Casey (@rodarmor) April 20, 2024
The new framework allows for the creation of altcoins directly on the Bitcoin blockchain, a functionality previously limited to networks such as Ethereum and Solana.
According to Rodarmor, Runes is a more efficient method of creating new tokens atop Bitcoin, saying on X that the protocol was ‘built for degens and memecoins.’
Runes were built for degens and memecoins, but the protocol is simple, efficient, and secure. It is a legitimate competitor to Taproot Assets and RGB.
The protocol is self contained and has no dependencies on ordinals or inscriptions, making it extremely simple.
Balances are…
— Casey (@rodarmor) April 1, 2024
Rodarmor introduced the protocol 6 months ago in September 2023 saying it might bring significant transaction fee revenue, developer mindshare, and users to Bitcoin.
“If this protocol had a small on-chain footprint and encouraged responsible UTXO management, it might serve as harm reduction compared to existing protocols,” Rodarmor said.
“At least one of which, BRC20, is already quite popular, and has the undesirable consequence of UTXO proliferation.”
Runes is Bitcoin’s new fungible token standard, like what ERC-20 is to Ethereum [ETH]. This means it can be used to make a wide range of assets from memecoins to governance tokens on the Bitcoin network.
The excitement surrounding Runes originates from the success of Rodarmor’s prior project, the Ordinals protocol. Ordinals brought NFT-like ‘inscriptions’ to Bitcoin, increasing innovation and boosting mining revenue within the Bitcoin community.
[EXPLAINER] What Are Bitcoin Ordinals (NFTs on the Bitcoin Blockchain) and How Do They Work
Are #Bitcoin Ordinals an upgrade to #NFTs on the Ethereum Network due to their true on-chain nature?https://t.co/WnKUyasPm0 pic.twitter.com/71rT3Vekhz
— BitKE (@BitcoinKE) March 12, 2023
The increased on-chain activity from ordinals however came with trade-offs, including network congestion and soaring user fees.
Ordinals allowed attaching pieces of data known as ‘inscriptions’ to Satoshis, the smallest denomination of BTC – effectively allowing for non-fungible tokens (NFTs) to be minted and traded on Bitcoin, an activity that was previously only available on other blockchains.
Shortly thereafter, another developer named Domo introduced ‘BRC-20,’ a standard for generating fungible or tradable tokens, marking another capability previously absent from the Bitcoin ecosystem.
According to Rodarmor, Runes as a protocol and token standard can make improvements on BRC-20, including being a more efficient way for generating fungible tokens on Bitcoin. He also says it will offer greater simplicity and security to users than the current BRC-20 standard does.
EXPLAINER: A Look at the Popular Bitcoin BRC-20 Token Standard Inspired by Ordinal NFTs
BRC-20 tokens don’t make use of smart contracts. The token standard also requires a Bitcoin wallet to mint and trade these tokens.https://t.co/3Kfs4oL444 #BRC20
— BitKE (@BitcoinKE) May 21, 2023
While there is no technical reason to launch the protocol alongside the halving, according to its founder, Runes could play a role in increasing fees by generating demand for block space after the halving when miner block rewards have dropped from 6.25 BTC to 3.125 BTC.
The Runes protocol is primarily designed to create memecoins and bring ‘degens’ to the Bitcoin network. It is close to how meme mania ignited Solana’s network activity. However, it remains to be seen how the community reacts to it and whether Bitcoin’s value will appreciate after the halving.
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