Bitcoin Ordinals creator proposes ‘Runes’ as alternative to BRC-20 tokens

Bitcoin Ordinals creator proposes ‘Runes’ as alternative to BRC-20 tokens

Bitcoin Ordinals creator Casey Rodarmor has proposed a new Bitcoin-based fungible token protocol called “Runes” as an alternative to the BRC-20 token standard. Rodarmor argues that Runes would not create as much “junk” on the Bitcoin network as BRC-20 tokens, which currently spam the network with unspent transaction outputs. The BRC-20 standard, launched earlier this year, has already reached a market cap of $1 billion, but Rodarmor believes that a UTXO-based protocol like Runes would be a more natural fit for Bitcoin and promote UTXO set minimization. While acknowledging that the majority of fungible tokens are scams and memes, Rodarmor sees the potential for a well-designed protocol like Runes to bring value to the Bitcoin network.

Bitcoin Ordinals creator proposes ‘Runes’ as alternative to BRC-20 tokens

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Overview

In the world of cryptocurrency, innovation and development are constantly taking place. Recently, Casey Rodarmor, the creator of Bitcoin Ordinals, has proposed an alternative to BRC-20 tokens called ‘Runes’. BRC-20 tokens are a fungible token protocol launched by an anonymous developer known as “Domo”. These tokens have seen significant market cap growth, reaching $1 billion within just two months. However, Rodarmor has concerns about the impact of BRC-20 tokens on the Bitcoin network, particularly their contribution to the accumulation of “junk” unspent transaction outputs (UTXOs).

Casey Rodarmor’s proposal

Casey Rodarmor is the mind behind Bitcoin Ordinals, a project that aims to bring new functionality to the Bitcoin network. Rodarmor has proposed a potential alternative to BRC-20 tokens called ‘Runes’. Runes is a fungible token protocol that Rodarmor believes would have a smaller on-chain footprint and promote responsible UTXO management compared to existing protocols. While he remains skeptical about the overall effectiveness of fungible token protocols, Rodarmor recognizes that they are here to stay and believes that a well-designed protocol like Runes could bring value to the Bitcoin network.

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Issues with BRC-20 tokens

The primary concern raised by Rodarmor with regards to BRC-20 tokens is their contribution to UTXO proliferation on the Bitcoin network. UTXOs represent the remaining amount of cryptocurrency in a wallet after a transaction is completed. The accumulation of “junk” UTXOs from BRC-20 tokens can have a negative impact on the Bitcoin network, leading to increased complexity and potential scalability issues. Rodarmor argues that UTXO-based protocols, like Runes, fit more naturally into the Bitcoin ecosystem and promote UTXO set minimization by avoiding the creation of unnecessary UTXOs.

Introduction to Runes

Runes is a proposed alternative fungible token protocol that aims to address the issues posed by BRC-20 tokens. As an UTXO-based system, Runes would offer a simpler and more streamlined approach compared to BRC-20. Rodarmor believes that a well-designed protocol like Runes, which emphasizes responsible UTXO management and has a smaller on-chain footprint, could serve as harm reduction compared to existing protocols.

Benefits of UTXO-based protocols

UTXOs play a crucial role in cryptocurrency transactions, including those involving fungible tokens. UTXO-based protocols leverage the UTXO model in Bitcoin to ensure auditable and transparent transactions. By preventing the double-spending problem, UTXOs enhance the security and integrity of the Bitcoin network. Additionally, UTXO-based protocols, like Runes, promote UTXO set minimization, which can help mitigate scalability concerns and ensure the efficient operation of the network.

Problems with existing fungible token protocols

While fungible token protocols offer new possibilities for innovation and utility, they are not without their challenges. Existing protocols like Really Good for Bitcoin, Counterparty, and Omni Layer have faced issues of their own. These problems include scams and memes dominating the market, lack of scalability, and complexity. Rodarmor acknowledges the existence of these problems and believes that developing a well-designed fungible token protocol could address these issues and bring significant benefits to the Bitcoin network.

Potential value of a good fungible token protocol

A well-designed fungible token protocol can bring enormous value to the Bitcoin network. Some potential benefits include increased transaction fee revenue, greater developer mindshare, and widespread user adoption. By offering new functionality and utility, fungible tokens can attract more users and developers to the Bitcoin ecosystem. This increased activity and engagement can lead to further growth and innovation in the space.

The Runes idea

Despite his initial skepticism, Rodarmor recognizes the potential value that Runes could bring to the Bitcoin network. He believes that a successful implementation of Runes could serve as harm reduction compared to existing protocols. However, it is important to consider the challenges and considerations that come with implementing a new fungible token protocol like Runes. Careful planning, responsible UTXO management, and thorough testing would be essential for the success of such an endeavor.

Offer from the Bitcoin Frontier Fund

Shortly after Rodarmor’s proposal for Runes, Trevor Owens, co-host of The Ordinals Show, floated the idea of offering $100,000 from the Bitcoin Frontier Fund to developers who can get a Rune application up and running. This offer aims to support the further development and implementation of Rodarmor’s proposal. It provides an opportunity for talented developers to contribute to the advancement of the Bitcoin ecosystem and potentially bring Runes to life.

Conclusion

Casey Rodarmor’s proposal for an alternative fungible token protocol called Runes presents an intriguing possibility for the Bitcoin network. By addressing the issues posed by BRC-20 tokens and leveraging the benefits of UTXO-based protocols, Runes could bring significant value to the ecosystem. While challenges and considerations exist, the offer from the Bitcoin Frontier Fund demonstrates the potential support and interest in further developing Runes. As the cryptocurrency space continues to evolve, innovative proposals like Runes contribute to the ongoing growth and advancement of the Bitcoin network.

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