DeutschBitcoin Runes are currently attracting a lot of attention. What is behind the new protocol, which starts punctually with the halving, and why it could have a significant impact on the further development of BTC and the price of the largest cryptocurrency.
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Bitcoin Runes: how Important could the New Protocol be for BTC?
Bitcoin Runes could become the trend in the crypto scene this spring. A new protocol is intended to expand Bitcoin’s functionality. Behind the development is none other than the well-known programmer Casey Rodarmor.
Rodarmor is a former developer of Bitcoin Core – the essential software behind the Bitcoin blockchain. Rodarmor eventually gave up this work and devoted himself to his own projects. Nevertheless, he remained loyal to Bitcoin.
The developer gained particularly great attention at the beginning of 2023 when he published the Ordinals protocol. In the spring of 2023, euphoria surrounding Ordinals drove up the Bitcoin price and became the biggest trend around the blockchain at the time.
The US American now wants to build on this success. While Ordinals was designed to create non-fungible digital content on Bitcoin, the new Runes protocol is intended to do the exact opposite.
Thanks to Runes, users should now be able to create their own fungible tokens on Bitcoin. The protocol could have the potential to popularize a new application for BTC. The result could then be a growing price again.
The rush for BTC could grow as a result. Due to increasing demand, not only the BTC price should grow, but also the network fees. Rising fees could in turn promote miners.
The enthusiasm surrounding BRC-20 and ORC-20 tokens has now subsided. Ordinals are also no longer shining in their old glory. It is therefore also conceivable that the market will react indifferently to the publication.
What Exactly is Runes on Bitcoin?
Runes is the name of a new protocol that Casey Rodarmor presented on April 1st. In the jargon typical of the scene, he describes it as geared towards “Degenerates and Memecoins”.
Memecoins typically arise as user-generated tokens on an already existing blockchain. The fun projects do without any real benefit – and that is exactly what Runes should now also enable on Bitcoin.
Users should be able to create their own tokens based on the ERC-20 standard on Ethereum. Rodarmor recognized the need for Runes through the creation of the BRC-20 standard. The token type was based on Rodarmor’s Ordinals protocol and caused a lot of buzz in 2023.
However, BRC-20 is not very optimal due to the way Ordinals works. The programmer wants to eliminate the existing weaknesses there with Runes. Runes was written from scratch and is not based on Ordinals.
Runes is just software, rather than a cryptocurrency. A direct investment in the new technology is therefore not possible. Users should therefore not be fooled by coins that are available under the same name.
The protocol does not use any data that lies outside the blockchain. A transfer via the Lightning Network is therefore also possible.
What are the Advantages over BRC-20?
Since Runes focuses on the creation of fungible tokens, the new protocol is much simpler than Ordinals. It therefore offers users more convenience. At the same time, it can be used more cost-effectively. These advantages can also be seen in comparison to BRC-20 tokens.
Due to the way Ordinals works, three transactions are required to transfer a BRC-20 token. You need two transactions to create these inscriptions and one to transfer the resulting inscription to the recipient.
To create Runes, users have to make two transactions. After creation, however, only one transaction is required for a simple transfer of the tokens.
When Will the New Protocol be Public?
The developer has come up with a very special date for the start of the new protocol. It should go public directly after the halving, which is expected to take place on Saturday, April 20th at 2:53 a.m. Swiss time. Users can then mint a token created by Rodarmor himself.
This bears the name Uncommon Goods and should be freely available until the next halving. Users will therefore probably have four years – until 2028 – to create these tokens. There does not appear to be a predefined maximum supply.
In order to carry out transactions with the new token standard, the user must use a wallet that supports it. Xverse has already announced its support.
How You Can Benefit from Runes
In order to benefit from the start of the Runes, it may be worthwhile to get in as an early investor. The Magic Eden marketplace has already announced its support for the new protocol.
The tokens created by Runes can therefore be traded on Magic Eden. The digital assets could become the target of strong speculation and thus achieve significant price gains.
Volatility is often particularly extreme, especially with novel investments. Users should therefore exercise caution with their investments. In the event of unexpectedly low demand, a total loss cannot be avoided, especially with tokens without an underlying function.
Are User-Generated Tokens Harmful to BTC?
In his Twitter announcement, Rodarmor mentioned that Runes is a serious competitor to RGB and Taproot Assets. Both projects aim to allow users to create their own tokens.
“I am very skeptical that serious tokens will emerge from this, but Runes is without a doubt a serious token protocol”, Rodarmor wrote on Twitter.
Nevertheless, he considers the protocol to be a gimmick. However, the possible effects it could have on Bitcoin should not be underestimated. In 2023, Ordinals led to heated debates that could now flare up again.
No software update is required on the part of Bitcoin for the introduction of Runes. Instead, the new protocol builds on a similar principle to Ordinals – it uses free space within the Bitcoin function OP_Return to store data that defines the tokens.
This approach already caused harsh criticism in 2023. Critics consider this use of the function to be abusive. OP_Return is usually used to mark a transaction as invalid and send it back to its starting point.
Critics also repeatedly point to an unnecessary bloating of the Bitcoin blockchain.
