A New Horizon in Bitcoin-Based Fungible Tokens

Introducing Runes Protocol

The creator of Bitcoin Ordinals is introducing a novel protocol for Bitcoin-based fungible tokens, positioning it as a potential substitute for the BRC-20 token standard.

The BRC-20 standard was unveiled in March by the enigmatic developer known as “Domo.” In a mere two months, the market cap of BRC-20 touched the $1 billion mark, with PEPE and ORDI emerging as prominent BRC-20 tokens, developed on Bitcoin.

BRC-20 facilitates the creation and transfer of fungible tokens through the Ordinals protocol on Bitcoin. However, Rodarmor contends that BRC-20 tokens clutter Bitcoin with “junk” unspent transaction outputs (UTXOs).

In a blog post dated September 25, Rodarmor elucidated the “undesirable consequence of UTXO proliferation” associated with BRC-20 tokens and introduced Runes as a UTXO-centric alternative. He emphasized that UTXO-based protocols align more seamlessly with Bitcoin’s architecture and mitigate the generation of “junk” UTXOs, thereby promoting responsible UTXO management and potentially serving as a harm-reduction mechanism compared to prevailing protocols.

New terrible idea just dropped: Runes.

A worse-is-better fungible token protocol for Bitcoin.https://t.co/TPVrUvWxm8

— Casey (@rodarmor) September 25, 2023

UTXOs denote the residual cryptocurrency in a wallet post-transaction, which is utilized in ensuing transactions and preserved in the UTXO database. The UTXO model of Bitcoin is instrumental in maintaining an auditable and transparent ledger by averting double-spending issues.

Rodarmor acknowledged the prevalent issues in other Bitcoin fungible token protocols like Really Good for Bitcoin, Counterparty, and Omni Layer. He conceded that a vast majority of fungible tokens are riddled with scams and memes but asserted that an apt fungible token protocol could enhance the value of the Bitcoin network by attracting transaction fee revenue, developer engagement, and users to Bitcoin.