- Runes is a new protocol for creating fungible tokens on the Bitcoin blockchain .
- By using Bitcoin's UTXO model and OP_RETURN opcode, Runes will simplify the creation and management of fungible tokens.
- Runes will increase Bitcoin's efficiency in terms of fungible tokens, while expanding the utility of the Bitcoin network to appeal to a wider audience by making it easier to create meme coins and other community-based projects on the blockchain.
- At the time of writing, the Rune with the largest market capitalization is RSIC•GENESIS•RUNE, with a market capitalization of over $325 million.
Understanding Bitcoin Runes
Casey Rodarmor, creator of the Ordinals protocol that allows users to create NFT-like inscriptions on the Bitcoin blockchain , launched Runes, a new protocol that allows users to easily create tokens on top of Bitcoin like Solana and Ethereum.
Although the BRC-20 and SRC-20 token standards already exist, they are based on the theory of Ordinals, which can lead to the proliferation of spam-filled UTXOs on Bitcoin.
In an effort to create a healthier way to create tokens on the Bitcoin network, Rodarmor announced Runes in September 2023 and has been working on it ever since.
Also read: Runes Protocol Will Spark a New Era of Bitcoin
Bitcoin Runes Launch
Bitcoin Runes will launch on Block 840,000, following the Bitcoin halving in April 2024. The creator clarified that the setting has no significance for the operation of the protocol, although it does add to the excitement that follows the fourth Bitcoin halving.
Rodarmor stated that the simplicity and overall architecture of Bitcoin Runes will help the main reason for its development - the creation of fungible tokens on the Bitcoin blockchain.
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There was much anticipation surrounding Runes, with Franklin Templeton stating:
“Currently, the fungible token market for Bitcoin is quite small compared to ETH and SOL; however, with the launch of a more efficient token standard (Runes), Bitcoin is well positioned to close the gap between its fungible market cap versus other blockchains.”
How Bitcoin Runes Work
Two terms are important to understand how the Bitcoin Runes protocol works:
- Bitcoin UTXO transaction model
- Opcode OP_RETURN
UTXO Transactions (Unspent Transaction Output)
In the UTXO transaction model, the total assets held in the user's ledger are used for each transaction, where the algorithm calculates a new balance after transferring the desired number of tokens to the recipient. Each UTXO can hold any number of tokens.
Opcode OP_RETURN
The OP_RETURN opcode allows users to attach additional information to Bitcoin transactions without affecting network efficiency.
The OP_RETURN opcode allows Bitcoin users to add up to 80 bytes of data to non-spendable transactions.
This data includes information about the token, including name, ID, symbols, commands for certain actions, and other necessary data.
Runes protocol messages stored in the OP_RETURN area of a Bitcoin transaction can also be referred to as Runestones.
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Each Rune transaction can determine several operations on different Runes. In case of token transfer, the Runes protocol will split the UTXO into several new UTXOs based on the instructions in the OP_RETURN data. Each UTXO represents a different number of tokens, which are then sent to the recipient.
If a Rune transaction fails due to an invalid protocol message, the Rune will be burned to prevent accidental Rune creation.
Use of Runes in Bitcoin
The process of creating new Runes is known as Etching. Users who want to create new Runes specify the name, symbol, ID, supply amount, share, and parameters related to Rune creation and distribution in the OP_RETURN output.
Creators may also include a "premine" in the etching process, where a certain number of runes are allocated to the creator before they are made available to the public.
After etching, runes can be minted via open mint or closed mint. Open minting allows anyone to mint Runes after the initial etching, where anyone can create a mint transaction to mint a fixed number of new Runes.
Closed mints only allow the creation of new tokens when predetermined conditions are met, such as a certain period of time, after which the minting process ends, limiting the supply of tokens.
Edicts determine how Runes can be transferred after etching or minting. Using the edict function, batch Rune transfers, airdrops and transfers of all minted Runes to one account can be performed.
Possible Squatting Symbols on Bitcoin Runes
The Runes Protocol will not regulate symbol squatting to keep the protocol simple. This means that the squatter can use the desired symbols, which can be of any length
How to Buy Bitcoin (BTC) on Bittime
You can buy and sell Bitcoin (BTC) in an easy and safe way via Bittime . Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappebti.
Bitcoin (BTC) is available on Bittime with the market pair BTC/IDR . To be able to buy BTC IDR at Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds into your wallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.
Learn the complete guide on how to buy Bitcoin (BTC) on Bittime .
Monitor price chart movements of Bitcoin (BTC) , Ethereum (ETH) , Solana (SOL) and other cryptos to find out today's crypto market trends in real-time on Bittime.
Also Read:
BRC-20 Token: Definition, Advantages and Disadvantages
Get to know what the SRC-20 Token is and its features
What is a Genius Dog (GENDOG)? New Crypto with an Innovative Approach
DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
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