At first, Bitcoin was just a regular cryptocurrency that people traded and used for their investments. However, as the crypto environment developed, users started comparing Bitcoin with Ethereum, which had few similarities. Ethereum was more than a digital asset― it was a tool for developers to create further innovations, such as NFTs, dApps, or DAOs.
Lately, however, Bitcoin has caught up with the trend and begun the innovation journey which also had an impact on the Bitcoin price chart. The Lighting Network, for example, was a massive step forward regarding Bitcoin’s potential, as the decentralized network leveraged smart contacts to make payments instantly. From that point on,
Bitcoin became comparable to blockchains like Ethereum.
One of Bitcoin’s team’s latest technological developments is the Runes Protocol, which followed Ordinals, an alternative to buy NFT assets from Ethereum. So, let’s see what Runes are about.
What is the Bitcoin Runes Protocol?
The creator of the Ordinals protocol also developed the Runes project. Casey Rodarmor wanted to design a token standard that would let developers make satoshis inscriptions, establishing the technology needed to buy NFT on the Bitcoin blockchain. The scripting language eventually developed into the Runes standard that allowed the production and management of fungible tokens.
The protocol was possible thanks to the BRC-20 tokens, similar to Ethereum’s ERC-20. The underlying system and code are so well-written that they instruct Bitcoin on how to manage fungible tokens, ensuring freedom of tracking and trading.
3 Technologies Pushing The Standard Forward
Runes are booming due to three important elements. First, the UTXO model contains unspent Bitcoins from previous transactions, which ensures that the algorithm offers the new cryptocurrency balance back after a transaction.
There’s also the OP_RETURN function, which stores information like the Rune’s name or quantity. This helps maintain the system’s integrity and leverages a built-in safety feature. Still, if Runes has errors or invalid instructions, the system removes them by burning them.
Finally, the etching process is where Runes come to life, and developers decide on the name, symbol, and divisibility. The person behind the project can distribute the Rune during pre-mining by airdropping or minting them.
How Do Runes Improve The Bitcoin Network?
Although Runes are still young, they significantly help the blockchain. By creating fungible tokens, they expose the network to global opportunities and ensure safety based on their underlying technological fixtures.
Runes allow developers to power up decentralized organizations and gaming assets or launch meme coins, one of the most popular forms of cryptocurrency. The Runes standard simplifies the creation of decentralized apps, attracts talent, and fosters innovation.
However, we must be wary of challenges because Runes’ newness lives on a blockchain whose scalability is limited. The network cannot sustain an infinite number of transactions per day. At the same time, programmers have to use the Forth language, which is significantly more complex and less user-friendly than JavaScript, for example.
Notable Examples Of Successful Runes
The number of Bitcoin Runes is slowly but steadily increasing, with at least 400,000 on the blockchain right now. Most chose different approaches when releasing airdrop tokens to users, considering the following factors:
- The Runestone Collection took a screenshot of the Ordinal holders and offered tokens after the halving;
- The RSIC collection provided longtime holders with priority at the protocol launch, ensuring them a number of airdropped tokens in relation to the time they held Ordinals;
- The WZRD project offered BRC-20 token holders Runes as they migrated to the latter standard;
The link between Runes and Ordinals helps developers bridge their differences and similarities, but let’s not forget they’re not the same standards on the Bitcoin network.
Runes Or Brc-20 Tokens?
Both Runes and BRC-20 tokens are similar in terms of functionality since they serve as fungible assets. The BRC-2O standard revolutionized the creation of tokens on Bitcoin, but the process generates unnecessary data, junk UTXO. Therefore, creating NFTs with the standard leads to network congestion and high transaction fees, which affects the user experience.
On the other hand, Runes works directly with the UTXO model to minimize the impact on the blockchain, making things easier and faster compared to the BRC-20 standard. Moreover, Runes ensures high-end privacy for customers through the data being embedded within the UTXO.
What’s also interesting is the compatibility between Runes and the Lighting Network, which developers designed for the network to handle transactions quickly and with low fees.
While The Token Was Overhyped, The Technology Changed The Blockchain
Like most innovative tokens on the blockchain, investors overhyped these assets to increase their prices and make them more valuable in the long term. Since Runes appeared at the same time as the fourth halving, the excitement for something new on the market influenced trading and investing.
Still, the launch seems more than unfortunate since it boosted Bitcoin transaction fees and failed to generate profits. On the other hand, the fees provided considerable revenues for miners, whereas investors faced Runes’ poor activity since a significant number were in the red.
Investors look on the bright side and believe Runes won’t experience a bearish moment in the long term, especially since their use cases expand the trading market. While retail users are excited about runes’ potential to improve the meme coin sector, these non-fungible tokens can enter real-world sectors like real estate and the stock market.
Runes can significantly develop the Bitcoin blockchain and make it a true competitor for Ethereum, considering that the problem of network congestion can be solved efficiently. Since Runes don’t take up too much space on the blockchain and can function without affecting prices and speed, their benefits to the community are considerable.
What Do You Think About Bitcoin Runes?
Bitcoin Runes are the latest craze on the crypto market, although they’ve rapidly fallen in popularity after the halving. The technology makes creating NFTs on the Bitcoin blockchain easy without slowing it down or increasing transaction fees. Runes are still in their early stage and pose certain difficulties regarding design and development, but they have a vast potential to improve the network.
