Runes is a novel protocol developed by Casey Rodarmor, the mind behind Ordinals, another Bitcoin-based protocol. Let’s dive into the details:
1. Background:
Ordinals: Casey Rodarmor introduced Ordinals, which allowed creating NFT-like “inscriptions” on the Bitcoin network. These inscriptions enabled trading digital art and collectibles directly on the Bitcoin blockchain.
Runes: Runes builds upon Ordinals but focuses on creating fungible tokens (unlike non-fungible inscriptions). These fungible tokens operate within Bitcoin’s Unspent Transaction Output (UTXO) model.
2. What Are Runes?:
Definition: Runes are a Bitcoin fungible token protocol designed to compete with existing standards like BRC-20, Taproot Assets, RGB, Counterparty, and Omni Layer.
Purpose: Runes simplify the process of creating native fungible tokens on the Bitcoin network.
3. How Runes Work:
Fungibility: Runes are interchangeable, similar to digital dollars. They can be traded seamlessly.
UTXO Model: Unlike some other chains (like Ethereum), Runes use the UTXO model—the same model as Bitcoin itself. This model is considered superior by many Bitcoiners.
On-Chain: Runes operate entirely on-chain, avoiding reliance on off-chain data.
Creating Tokens:
Issuer: The issuer creates a token.
Minting: The issuer sets a limit for how many tokens someone can mint in a single transaction.
Bitcoin Fees: Runes use Bitcoin and pay fees in Bitcoin to create new tokens.
4. Halving and Hype:
Timing: Runes are set to launch during the Bitcoin halving, which occurs when miner rewards are cut in half (currently scheduled for April 20).
Anticipation: Despite not being live yet, Runes is already generating significant hype and attention.
In summary, Runes provides a more efficient way to create fungible tokens on Bitcoin, leveraging the UTXO model and staying fully on-chain. It’s an exciting development for the crypto community! 🚀🔮