Key Takeaways:
- Explore what the Runes token protocol on Bitcoin is and the buzz generated around it for a long time.
- Check out the possibilities fungible tokens on Bitcoin based on Runes could bring to the legacy blockchain.
- Discover how you can become part of the brewing community through a carefully planned Bitcoin Runes development project.
The Bitcoin blockchain is no newcomer to amusing innovations, with the network itself being a pathbreaker when it came into existence in 2008. The 2020s have been a busy period for the legacy blockchain, with the arrival of the Ordinals protocol that enabled the presence of fungible and non-fungible tokens inscribed onto individual satoshis. The revolution has gone a step further with Runes, a token protocol built to make fungible tokens efficient on Bitcoin compared to its predecessor – BRC-20. This blog delves into the buzz around Bitcoin Runes development and the business prospects it brings to the global blockchain ecosystem.
The Present Fungible Token Scene on Bitcoin
Currently (essentially until the recently concluded Bitcoin Halving event), fungible tokens on Bitcoin are based on the BRC-20 standard that taps into the Ordinals protocol. Here, fungible tokens are inscribed on individual satoshis, resulting in their inclusion in the blocks on the Bitcoin network.
- Ever since they arrived in 2023, BRC-20 tokens have garnered over $2.537 trillion in market capitalization, indicating a sumptuous rise. With the crypto market rebounding in an awe-inspiring manner over the last year, the emergence of BRC-20 tokens put Bitcoin in contention for topping the Web3 market charts. While they could make Bitcoin top the charts, BRC-20 transactions made the blockchain among the top 5 networks.
- However, the BRC-20 token standard did not work without flaws. The standard left a massive impact on the Bitcoin network, as transactions left a lot of unnecessary (or junk) Unspent Transaction Outputs (UTXOs) on the blockchain. Leaving a large volume of UTXOs resulted in reduced efficiency for Bitcoin, resulting in its slower functionality.
- The process involved in creating and storing BRC-20 tokens was not also friendly for most users, as even the fundamental steps looked too technical. The token standard’s complex nature, alongside its not-so-user-focused nature, played an important role in hindering its evolution in the wider Web3 market.
Bitcoin Runes: A Solution Promising Efficiency
To address the issues people and the blockchain faced due to the BRC-20 standard, Casey Rodarmor, the mastermind behind the Ordinals protocol, came up with Bitcoin Runes. Bitcoin Runes is a protocol that allows people to create fungible tokens etched directly on the legacy blockchain.
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- While Rodarmor introduced the standard back in September 2023, the first tokens based on Runes were officially included in Bitcoin after the landmark Halving event that occurred on April 19, 2024. These tokens were created right after block #84,000 was created, making them the first tokens to be created after the Bitcoin Halving event.
- Given a relatively large time window between the protocol’s introduction and realization, numerous projects based on Bitcoin Runes have already got themselves going. Most projects included those originally based on digital asset collections created using Ordinal inscriptions. In a curious case, holders of Ordinal tokens from various high-profile projects were airdropped pre-Runes tokens, which they can use to get their hands on Runes tokens after launch.
- The longer countdown also permitted the Bitcoin community to get ready with the necessary clarity, as several communities released token-gated guides depicting how one can etch and mint Runes tokens. There are free resources available, though, that have played their part in fuelling hype for Bitcoin Runes development.
Do You Want to Launch Fungible Tokens on Bitcoin With the Utmost Efficiency?
The Working of Runes Token Standard
As we saw before, the Runes token standard taps into Unspent Transaction Outputs (UTXOs) created during Bitcoin transactions. UTXOs form the basis for Bitcoin’s functioning as they utilize on-chain processes compared to the Account model used by networks like Ethereum. Each UTXO can hold a different number of Runes tokens, enabling effective balance and transfer management.
- Token Issuance: Issuing is the first part of Bitcoin Runes development, where one should define the token’s characteristics, such as symbol, total supply, and decimal places. This information is sent to a specific UTXO that could contain any number of Runes fungible tokens.
- Token Minting: After the initial issuance of Runes tokens through etching, they can be minted by people through two methods. Open Minting lets anyone who meets the predefined criteria mint Runes, facilitating open participation to build a diverse community. Closed Minting allows only individuals who meet a specific set of preset rules to mint tokens, which is helpful for exclusive communities.
- Token Transfer: The transferring process in the Bitcoin Runes protocol functions by dividing a single UTXO into multiple new unspent transaction outputs, each representing a different number of tokens. Compared to conventional off-chain provisions, these tokens are sent to the necessary recipients through on-chain transactions.
Why is the Runes Protocol Unique?
The Runes protocol has arrived as an innovative solution aiding in bringing fungible tokens to Bitcoin in an efficient way. It has several unique facets that make these tokens function seamlessly on the blockchain. Below, let us see the top points that make Bitcoin Runes a pioneering token protocol.
- Increased Efficiency: Runes tokens use the existing UTXO model on Bitcoin, unlike other fungible tokens that add extra data to the blockchain. Such a working approach reduces the data footprint created by Runes, ensuring the Bitcoin blockchain does not struggle with lowered performance.
- Higher Security: Since these tokens function on Bitcoin, they have backing from the blockchain for security. Using the UTXO model makes Runes capable of enjoying the same level of safety as the main Bitcoin network.
- Seamless Experience: Creating and transferring fungible tokens based on the Runes protocol is easier than existing pathways that demand a higher level of technical knowledge from people. By enhancing accessibility, the Runes protocol could have greater attention from developers and common Bitcoin enthusiasts.
- Compatibility with Infrastructure: Since it directly functions on the Bitcoin network, unlike Ordinals-based tokens, Runes tokens are compatible with existing Bitcoin infrastructure, including wallets and exchanges. Providing easy access to these tokens could make them the de facto fungible token standard on Bitcoin.
Conclusion
Therefore, we have discussed Bitcoin Runes development in detail by exploring the issues of the current Bitcoin token ecosystem and how this protocol resolves them. We also saw how the Runes protocol works and what makes it unique in the first place. With the first projects based on Runes already live on the Bitcoin network, the markets have witnessed a drastic rise in interest, shown by large trading volumes. If you want to launch a fungible token on Bitcoin, it is better to opt for the Runes protocol, as it promises a whole new level of efficiency. Our experts at Blockchain App Factory can assist in realizing your dream Bitcoin Runes project at the highest quality possible. Contact one of our professionals now to delve into the magical Bitcoin market!
