Just what is Bitcoin Runes?
Happy Post Halvening Everybody! The Bull Market is Back!
BTC has come a long way. Since its inception in 2009, it has gone through some ups and downs.
Now awakened from its slumber, the new buzz in town is something called Runes which has gone live on the Bitcoin network after the 840,000th block (20th April 2024).
So what are Runes ?
Runes is the brainchild of Bitcoin OG, Casey Rodarmor. Casey had huge success in 2023 where he created the Ordinals protocol (similar to NFT-like “inscriptions” on BTC). This was made possible after Bitcoin’s taproot upgrade in November 2021.
“Runes were built for degens and memecoins” — Casey Rodarmor
Wait hold up…Memecoins on BTC?? You’re joking right?
Nope. Don’t believe me? Refer to what the man himself tweeted below.
Rightttt so you must be wondering is there even more to this “Runes”?
Let’s break it down.
Runes were implemented to make fungible tokens on Bitcoin more practical and efficient.
The Bitcoin network had experimental BRC-20 fungible tokens before which also exploded last year during the Ordinals craze.
However, due to BRC-20’s complexity, limitations, dependency on ordinals and ability to accumulate unused / abandoned UTXOs (Unspent Transactions Output) this caused huge network congestions.
(Runes and Bitcoin network are both UTXO based contrary to Ethereum’s account-based model).
Here are the key differences:
The current features of Runes are that they can be minted, etched(created) and transferred. (Similar to an ERC-20 token on the Ethereum network.)
What this essentially means is that anyone will be able to create a token or a memecoin as what we have seen exploding on Base and Solana recently. This can drive innovation, liquidity, DEFI applications, DAPPS to be built on top of the Bitcoin network which was not possible before.
As a result, some projects have already released their rune tokens to take advantage of the hype.
This hyped narrative also caused a spike in transactions and network fees within the first week since runes inception.
The introduction of runes has brought much hype and attention to the mama bear of cryptocurrency where its main utility was a store of value up till this point.
The crypto community has embraced this much needed vigor injected into the BTC ecosystem to scale in a similar manner to L1 chains such as Ethereum, Solana, Avalanche, etc.
The potential is clearly there but since this is still experimental, only time will tell if runes will be a success or another ponzi.
Written by:
B Kaths aka KryptoKaths
Web3 Analyst
https://www.linkedin.com/in/kaths7/
Adjunct Research Writer
DEFI Singapore
Links:
https://www.nervos.org/knowledge-base/utxo_vs_account_based
https://cryptorank.io/news/feed/609d4-runes-protocol-launch-as-bitcoin-halving-nears
https://dune.com/cryptokoryo/runes
IMPORTANT DISCLAIMER
THIS IS NOT FINANCIAL ADVICE
Cryptocurrencies like NFTs are nascent and in very early-stage startups. They are heavily subjected to speculation on the secondary markets and should never be treated as a form of investment.
Our write-up is a humble attempt to show the technological advancements and innovation that the blockchain technology possesses.
Readers are advised to engage their own financial advisors and do their own due diligence before making their first purchase.
All information expressed here are in the views of the writer based on the date of article.