main ideas

  • Bitcoin Runes is a protocol that enables the creation of exchangeable tokens on the Bitcoin blockchain.

  • The Bitcoin Runes protocol uses Bitcoin's Unspent Transaction Output (UTXO) model and the opcode OP_RETURN in order to facilitate the creation and management of exchangeable tokens on the Bitcoin network.

  • Advantages of the protocol include increased efficiency and offering a simple approach to creating exchangeable tokens.

the introduction

Over the years, the Bitcoin ecosystem has expanded to include both fungible tokens and non-fungible tokens (NFTs) within its network, and in this article, we'll highlight the Bitcoin Runes protocol and understand how it works, what its main differences from BRC-20 tokens are, and its potential advantages.

What are Bitcoin Runes?

Bitcoin Runes is a protocol that enables the creation of exchangeable tokens on the Bitcoin blockchain, and unlike BRC-20 and SRC-20 tokens which also operate On the Bitcoin blockchain, Runes does not rely on the Ordinals protocol and is designed to be simpler and more efficient, as it uses models based on the Bitcoin blockchain, such as the UTXO Unspent Transaction Output model. and the opcode OP_RETURN.

How does the Bitcoin Runes protocol work?

The Bitcoin Runes protocol works through two core mechanisms of the Bitcoin blockchain: Bitcoin's Unspent Transaction Output (UTXO) model and the opcode OP_RETURN. 

In the UTXO model, each transaction produces an output that is treated as separate pieces of digital currency. To initiate a transaction, you use these outputs as inputs. The UTXO model makes it possible to track each unit of digital currency. In the context of the Bitcoin Runes protocol, each UTXO can hold quantities of cryptocurrency. Or different types of Runes, which helps make token management easier.

The OP_RETURN opcode allows users to attach additional information to Bitcoin transactions. This opcode makes it easy to insert up to 80 bytes of additional data into a non-spendable transaction. The Bitcoin Runes protocol specifically uses the OP_RETURN opcode to store token data, such as the token name, The ID, token, specific action commands, and other basic data are stored in a message called Runestone inside the OP_RETURN opcode of the Bitcoin transaction.

Engraving and minting Runes on the Bitcoin network

The process of creating a new rune token is referred to as engraving. Engraving involves specifying some basic details that include the name of the rune token, token, ID, stock quantity, divisibility, and other variables. All of this data is recorded in the OP_RETURN output of the blockchain transaction. During the engraving process, the creators also have The option to include “initial mining” allows them to allocate a certain quota of Runes to themselves before making them available to the public.

Once a Rune symbol has been engraved, it can be minted either through open or closed minting. Open minting allows anyone to create new Runes after the initial engraving by creating minting transactions, while coining allows New tokens are minted only after pre-defined conditions are met, such as a specified time period, after which the minting process ends.

Bitcoin Runes vs BRC-20

Operating model

Bitcoin Runes operate based on Bitcoin's UTXO (Unspent Transaction Output) model, and BRC-20 tokens are based on Bitcoin's Ordinals protocol, in which data is attached directly to individual satoshis (sats). .

Convert tokens

Bitcoin Runes use a conversion mechanism whereby transactions generate a new set of UTXOs based on the data stored in the OP_RETURN field of a Bitcoin transaction, while BRC-20 token conversions require the creation of new runes for each transaction.

Minting tokens

Runes can be minted through open or closed minting, with the option of initial mining available to developers, while BRC-20 tokens can only be minted through open minting, restricting flexibility around the initial distribution of tokens.

Administration

The Bitcoin Runes protocol is compatible with Bitcoin Lightning Network and supports both Lightning clients and Wallets SPV (Simplified Payment Verification) and BRC-20 tokens It requires wallets that support the Ordinals protocol.

Advantages of Bitcoin Runes

Efficiency

Bitcoin Runes provide an efficient way to handle tokens on the Bitcoin network through the use of the OP_RETURN model. It prevents the generation of unspendable UTXOs that could clog the network. The OP_RETURN code does not need more than 80 bytes of data, unlike BRC-patterns. 20 which can consume up to 4MB, and this variation in data usage helps reduce the burden on the Bitcoin network, enhancing its performance and reducing the risk of congestion.

Simplicity

The Bitcoin Runes protocol, compared to other alternatives, allows multiple exchangeable tokens to be created and managed directly on-chain, and this is achieved without the need for off-chain data Or create native tokens, so excessive “spammy” UTXOs are not generated. This approach simplifies token management and makes it easier for users.

Possibility of expanding the user base

The Ordinals Protocol and the BRC-20 standard have facilitated the creation of fungible memecoins, attracting more users to the Bitcoin network, and the introduction of the Bitcoin Runes protocol has also sparked interest among the currency communities Although the protocol's activity declined after its launch, it presents a new use case for Bitcoin that could attract more users in the future.

Concluding thoughts

Bitcoin Runes is a protocol that allows the creation of exchangeable tokens on the Bitcoin blockchain. It uses both the UTXO model and the opcode OP_RETURN to improve the efficiency of dealing with tokens on the Bitcoin network. The Runes protocol is expected to attract more users to the Bitcoin network and facilitate the process of creating tokens. New.

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