Runes, a protocol for creating altcoins on the Bitcoin network, will be launched immediately after the halving. We tell you how it works and what it all means.
What is Runes Protocol?
Runes is a new protocol developed by Ordinals creator Casey Rodamore. It will allow the creation of fungible tokens on the Bitcoin network without creating additional burden on the ecosystem.
The developers position the protocol as a simpler and more efficient alternative to the BRC20 standard, which will also allow the issuance of fungible tokens based on Bitcoin, but at the same time heavily overloads the network and leads to a sharp increase in transaction fees.
Runes were built for degens and memecoins, but the protocol is simple, efficient, and secure. It is a legitimate competitor to Taproot Assets and RGB.
The protocol is self contained and has no dependencies on ordinals or inscriptions, making it extremely simple.
Balances are…
— Casey (@rodarmor) April 1, 2024
“Runes was created for degens and memecoins, but the protocol is simple, efficient and secure. It’s a worthy competitor to Taproot and RGB.” – Casey Rodamore.
How Does Runes work?
Runes is based on the concept of unspent transaction balances (UTXO). The protocol uses them as a basis for issuing new tokens and storing information about them. Unlike BRC20, it does not clog the network with “junk” UTXOs.
Information about unspent balances is recorded by the OP_RETURN script, which can also be used to store information within a transaction. Moreover, the Runes protocol records in the OP_RETURN of a particular UTXO the supply size and the ID of the issued token. When a user makes a transfer, the original UTXO is split into several with different amounts of Rune tokens.
The process of issuing new Runes tokens is called creating runestones. They define governance rules and assign immutable attributes to tokens.The protocol also supports pre-mining functionality, where the creator receives a certain number of tokens before they are publicly released.
Impact on crypto community
The excitement surrounding the upcoming launch of Runes isn’t just because it was developed by Casey Rodamore, the creator of Ordinals. Although his involvement certainly gives the project a certain amount of credibility. Moreover, It is believed that the ability to create altcoins will attract new users and developers to the Bitcoin ecosystem, as well as expand the functionality of the network.
Community Growth
Unlike BRC20, Runes is much easier to use, and unlike Ordinals, it is more functional and convenient. This means that there will be more developers on the network who are ready to create new projects and new enthusiasts who are ready to use these projects.
Security and Stability
Runes can offer a secure and reliable platform for token creation and transaction processing. By using UTXOs to store data on-chain, tokens issued on the Rune protocol essentially inherit the Bitcoin security model.
Income for miners
New ways to interact with the Bitcoin network automatically increase the income that miners receive for processing transactions.
How to prepare to launch Runes
To prepare for the upcoming launch of the protocol after the Bitcoin halving and be among the first to experience its benefits, it is advisable to take a few key steps. Firstly, install a Bitcoin wallet compatible with Runes, such as Xverse Wallet or Magic Eden Wallet. Next, ensure you have bitcoins in your wallet as Runes operates on the Bitcoin network, meaning that all fees will be paid in this cryptocurrency. However, this preparation will enable many users to seamlessly engage with the new protocol and explore its functionalities right from the start.
