Casey Rodarmor, the founder of Bitcoin Ordinals, has recently proposed a new protocol named RUNES, aiming to provide an alternative to the existing BRC-20 standard. RUNES, the new fungible token protocol for Bitcoin, operates on the premise of breaking away from what Rodarmor perceives as a proliferation of scams and memes within the crypto space.
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The essence of RUNES lies in how it handles balances—UTXOs (Unspent Transaction Outputs) hold the balance of runes. Unlike BRC-20, where each UTXO contains one type of token, RUNES can hold any amount of any number of runes. This setup is designed to combat the issues of UTXO increase, predominantly driven by scams and memes.
Casey expresses skepticism regarding the proliferation of scams and memes. Recognizing their persistence in the market, the proposal for RUNES stems from a strategic standpoint. A well-constructed fungible token protocol for Bitcoin can potentially boost transaction fee revenue, attract developers, and usher in a wave of users to the Bitcoin ecosystem.
Growing need for a new protocol
To substantiate the need for RUNES, Casey compares existing fungible token protocols, focusing on key aspects such as complexity, user experience, state model, and the necessity of a native token for protocol operations.
Protocols like BRC-20, RGB, Counterparty, Omni Layer, and Taproot Assets each have their own characteristics and intricacies, making them suitable for various use cases. However, Casey envisions RUNES as a more straightforward protocol with an improved user experience, further enhancing the Bitcoin ecosystem.
A better future for Bitcoin
RUNES fundamentally operates by assigning rune balances to UTXOs. A transaction involves protocol messages embedded within an output, following specific encoding rules. RUNES allows the creation of symbols using a base 26-encoded human-readable format, akin to ordinal number sat names, and enables issuance transactions to generate a defined amount of the issued rune.
While Casey questions the necessity of another fungible token protocol, RUNES offers a promising approach by addressing the concerns tied to existing protocols. By embracing simplicity, avoiding off-chain data reliance, and sidestepping the necessity for a native token, RUNES could potentially draw developers and users, fostering a more efficient and user-friendly environment within the Bitcoin sphere.