🔥🔥What is the Runes protocol for Bitcoin?

The Runes protocol is a mechanism for creating, minting, and transferring fungible tokens directly on Bitcoin. It seeks to be more efficient than the BRC-20 token standard by providing correct UTXO management and lowering the on-chain footprint. The Runes protocol achieves this by leveraging a UTXO-based model that fits naturally into Bitcoin’s architecture. Runes was proposed in September 2023 and already launched today !

🔥Runes vs. #BRC20 Tokens: Similarities and Differences

The Runes protocol improves the Ordinals-based BRC-20 token standard by adopting Bitcoin's UTXO model. This allows it to operate within Bitcoin Layer 1, or the base blockchain, and reduce the production of unnecessary UTXOs. Therefore, Runes has a minimal on-chain footprint and improves overall efficiency. 

On the contrary, BRC-20 is based on Ordinal Theory, which is not native to Bitcoin. The protocol’s token issuance approach also leads to UTXO proliferation and network congestion. 

Another key difference between the two protocols is that Runes burns tokens created or minted using transactions with errors or cenotaphs, motivating users to exercise correct UTXO management. Conversely, the BRC-20 protocol permits users to try again when they make mistakes

Source: xverse

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