Highlights:
- BTC Runes is designed to revolutionize the BTC world.
- It allows developers to explore new ideas within Bitcoin’s secure and decentralised ecosystem.
- It is different from ordinals and has more advanced in features.
Over time, Bitcoin has grown. It now includes both regular tokens and special ones called NFTs. BTC Runes is a new way to make tokens. Casey Rodarmor, who made Ordinals, came up with it. It is the latest improvement in Bitcoin technology. This new introduction to the crypto world has earned the community’s admiration. It is seen as one element that can change the way BTC functions.
Understanding BTC Runes
BTC Runes are designed to work within Bitcoin’s UTXO architecture. What is more interesting is that it uses fewer resources and manages transactions more efficiently than previous token standards like BRC-20. This helps prevent network congestion. The goal of BTC Runes is to provide a better alternative for issuing tokens on Bitcoin without the drawbacks of older standards. This could attract more users and developers, making Bitcoin more useful and appealing.
BTC Runes promote creativity and growth by allowing developers to explore new ideas within Bitcoin’s secure and decentralised ecosystem. It also represents a significant advancement in Bitcoin’s capabilities. It has worked by potentially improving its development and functionality while creating new opportunities for applications and adoption.
Understanding Ordinals
Ordinals transformed how tokens were made on Bitcoin. They were a big deal because they reduced fees, sped up transactions, and helped the environment. This protocol linked the Bitcoin blockchain with NFTs. Therefore, it allowed people to store videos and music on the Bitcoin network.
Bitcoin started in 2008 and had two major changes: SegWit and Taproot. These paved the way for the Ordinals. They let a lot of data be put on the blockchain, improving Bitcoin’s abilities for smart contracts. The data stored in the smallest units of Bitcoin, called satoshis, is called inscriptions. Ordinals changed things by letting data be put on satoshis. This made Bitcoin more useful than just for buying things, and it allowed for Bitcoin NFTs. This made it safer to create, own, and transfer digital assets on the blockchain.
How Runes Differ from Ordinals
Ordinals and Runes differ in how they store data. On one hand, Ordinals keep data in the witness part of a transaction, while Runes put token records directly into Bitcoin’s UTXOs. This fundamental distinction shapes their nature. Runes simplifies the process by integrating token records into UTXOs. Thus, it maintains the integrity of the blockchain and ensures compatibility with existing Bitcoin infrastructure.
Another difference is how they handle transfers. Runes follow a straightforward path, avoiding complex UTXO splitting. This simplicity reduces friction for users, enhancing usability. When transferring Ordinals, a function splits a UTXO into new ones with different numbers of Ordinals, spreading these inscriptions across the UTXO architecture. Lastly, their scalability differs.
Ordinals provide flexibility but may face scalability issues due to storing large data volumes in transaction witnesses. Runes addresses this by directly inserting token records into UTXOs, mitigating scalability and performance concerns. This efficiency ensures the Bitcoin network remains robust as Runes gain traction.
| Aspect | Ordinals | Runes |
|---|---|---|
| Data Storage Method | Data stored in transaction witnesses | Token records inserted into UTXOs |
| Transfer Mechanism | Complex UTXO splitting for transfers | Direct transfer, like any other Bitcoin transaction |
| Scalability | Potential scalability issues due to data stored in transaction witnesses | Addresses scalability and performance concerns by inserting token records into UTXOs |
| Usability | This may involve higher friction for users due to the complexity | Simplifies the transfer process, reducing user friction |
| Impact on Blockchain | May impact scalability and performance | Maintains blockchain integrity and compatibility |
Bitcoin Runes: The Working Principle Explained
The Bitcoin Runes protocol works with two main parts of the Bitcoin blockchain: UTXO transactions and the OP_RETURN opcode. In UTXO transactions, each transaction creates separate pieces of digital currency. Users use these pieces as inputs to start a transaction. This method tracks every unit of cryptocurrency. With Bitcoin Runes, each UTXO can hold different amounts or types of Runes, making token management easier.
The OP_RETURN opcode lets users add extra information to Bitcoin transactions. It allows up to 80 bytes of extra data in an unspendable transaction. Bitcoin Runes uses this opcode to store token data like the token’s name, ID, symbol, commands, and other important information. This data is kept in the Runestone within the OP_RETURN opcode of a Bitcoin transaction.
Here it is essential to know that creating a new Rune is called etching. It involves setting details like the Rune’s name, symbol, ID, supply amount, and other settings. All this info is recorded in the OP_RETURN output of a blockchain transaction. Creators can also include a “premine” during etching to allocate some Rune for themselves before it’s available to the public.
After etching, Runes can be minted through open or closed mints. Open minting lets anyone make new Runes by creating mint transactions. Closed mints only allow minting under specific conditions, like a set time period, after which minting stops.
Bitcoin Runes: The Pros
Simplicity:
Compared to other options, Bitcoin Runes make it easier to create and manage multiple fungible tokens directly on-chain. This is done without needing off-chain data or creating native tokens, avoiding the creation of unnecessary “junk” UTXOs. This approach simplifies token management and makes it accessible to more users.
Potential to Expand User Base:
Ordinals and BRC-20 have previously attracted more users to the Bitcoin network by facilitating the creation of fungible meme coins. The introduction of Bitcoin Runes has generated interest among cryptocurrency communities and meme coin enthusiasts, especially before and after its launch in April 2024. Although activity decreased after launch, it presents a new way to use Bitcoin that could attract more users in the future.
Efficiency:
Bitcoin Runes offer an efficient way to handle tokens on the Bitcoin network using the OP_RETURN model. This prevents the creation of unspendable UTXOs that can slow down the network. The OP_RETURN code only uses 80 bytes of data, unlike BRC-20 inscriptions that can use up to 4MB. This difference reduces the burden on the Bitcoin network, improving its performance and lowering the risk of congestion.
Final Words
Bitcoin Runes is a protocol that lets users create fungible tokens on the Bitcoin blockchain. It uses the UTXO model and the OP_RETURN opcode to handle tokens better on the Bitcoin network. Runes could attract more users to Bitcoin and make it easier to create new tokens.
