Bitcoin Runes 101: What exactly is this protocol?

Bitcoin was developed to be a decentralized and secure platform that would offer a great alternative to traditional platforms, and for a very long time, it managed to do that. However, recently, the Bitcoin platform has expanded and introduced innovations that extend its use cases. Individuals have seen that blockchain has a lot of advantages, which could change the traditional landscape forever. So, to keep up with customers' demands, digital currencies have started implementing new protocols and measures that will expand their usability. For example, Ethereum integrated Ethereum virtual machine, which encouraged the creation of decentralized apps, smart contracts, and non-fungible tokens, greatly increasing the platform's popularity. 

However, Bitcoin's infrastructure differs, as it doesn't support smart contracts or use a virtual machine. This is why Bitcoin needed to come up with other solutions to offer the resources that other cryptocurrencies have started providing. This is why Bitcoin has implemented many protocols that have enhanced users' experience. The Bitcoin Ordinals protocol is an example of this new innovation that has been created to provide the possibility of creating NFTs directly on the Bitcoin platform. This protocol has brought a lot of advantages, as it has led to stunning collections. You can see and buy NFTs,  and Ordinals on dedicated marketplaces.

Soon after the Ordinal protocol came the BRC-20, Bitcoin stamps protocols, and Bitcoin Runes. This article will explore Bitcoin Runes, so keep reading to learn more. 

What are Bitcoin Runes?

Bitcoin Runes functions with the help of the Runes protocol, representing fungible assets built on Bitcoin. Runes offers some features similar to the fungible tokens that already exist on the Bitcoin network, but they are more immutable and efficient. Bitcoin developers announced the Bitcoin Runes protocol in September 2023 but launched it on April 20th, alongside the Bitcoin halving. Developers decided to implement this new protocol to offer better advantages to those who wanted to create fungible tokens on Bitcoin. You can buy rune tokens on dedicated marketplaces like runes magic eden.

Cassey Radarmor created this protocol and is also the man behind the idea of Bitcoin Ordinals. Ordinals are another great plus of the Bitcoin blockchain, which improves the world of non-fungible tokens by allowing people to invest or create unique pieces of work. After the Bitcoin protocol had been implemented, another developer called Domo tried to come up with another solution and use the ordinals protocol to launch another protocol named BRC-20 that would create fungible tokens. However, this protocol presents some downsides, as it can consume much energy and be costly. 

This is why Casey Rodarmor also decided to launch something else that would offer the same characteristics as the BRC-20 but with improved features, being less expensive and more efficient. 

What are Bitcoin Runes used for?

Bitcoin Runes can be used for numerous purposes, as exactly like the ERC-20 tokens on Ethereum, they can support any fungible token project. The only difference between the ERC-20 tokens and Bitcoin Runes is that Bitcoin doesn't use smart contracts. Meme coins may be the most exciting project that could be integrated thanks to the Bitcoin Runes protocol. The memes that come in the NFT form have become very popular and have attracted people's attention worldwide. This is why some digital coins like PEPE and DOGE have been created using memes. At the same time, the Bitcoin memes made on SRC-20 and BRC-20 protocols have experienced great success, so people also have firm beliefs that this will happen with all the projects that would be created using the Bitcoin Runes protocol. This is why, in the future, we will surely see a lot of Bitcoin meme coins that will be launched as runes. 

DeFi is another application that the Bitcoin Runes protocol could bring. Runes have fungibility features, meaning that they can be split into pieces, and the Bitcoin Runes are also compatible with the Lightning network and the Bitcoin mainnet, which means that they can also be integrated into lending and borrowing platforms. This could offer many advantages to the Bitcoin platform, as the Runes provide cheaper and more efficient alternatives.

What is the difference between BRC-20 and Bitcoin Runes?

Bitcoin Runes differ from the BRC-20 protocol, as they are separate parts, meaning they have some practical and technical discrepancies. So, let's explore the main differences between these two protocols. The BRC-20 implies a Taproot-enabled wallet, which is not needed in the case of the Runes protocol, as you can access Runes without this type of wallet. Plus, compared with the BRC-20 tokens, Runes is compatible with the Lightning network from Bitcoin. 

Additionally, another great difference that separates the two of them is the fact that Runes handles data more efficiently than the BRC-20 tokens. Furthermore, BRC-20 tokens are less immutable than Runes because they use off-chain data storage options, while Runes stores data on-chain. 

Last Words

Bitcoin Runes protocol could bring many advantages to the blockchain, especially if the project becomes as successful as the Bitcoin Ordinals. Ordinals have been appealing to individuals worldwide, as they offered something else that didn't exist on Bitcoin up to that moment. This is why the Runes protocol has raised much interest from the beginning, and people pay close attention to see how these new tokens will evolve. Even if this infrastructure is still new, it has attracted the interest of companies looking to see the fungible asset landscape on Bitcoin. 

Even though Bitcoin was initially only seen as a cryptocurrency and a way of transfer, developers have started to implement more innovations on the blockchain. The fungible assets landscape on Bitcoin will surely improve with the help of Bitcoin Runes, as they offer great advantages, including accessibility and immutability.