Casey Rodarmour, the mad genius creator behind Bitcoin Ordinals, has largely avoided the spotlight since March. A month and a half after its launch, the Ordinals Protocol had surpassed any developer’s wildest dreams of adoption, long before it reached the current stats of 32 million inscriptions, 180,000 unique users, and $550 million in trading volume, nine months later. In September, Casey began working in the Ordinals community again, attending the Ordinals Summit in Singapore and resuming his popular podcast Hell Money Pod.
But on Tuesday of this week, Casey’s warm-up came to an end. He unveiled a blog post presenting the idea of “Runes,” an alternative fungible token protocol on Bitcoin. As he put it, Runes mitigate the spread of UTXO and provide significant user experience benefits compared to other fungible token protocols on Bitcoin.
“Runes It is damage discount. BRC-20s generate a lot of unused UTXOs. In order to spend runes, you have to destroy UTXOs, which is good for the system as a whole. It is also beneficial for users, as it enables simpler swaps based on PSBT. Since UTXO can only be spent once, you can create a pool of transactions and then from those transactions, you can guarantee that only one of them can be mined. BRC-20 transactions cannot do this. – Casey Rodarmour on Twitter Spaces
What are runes?
Runes is a fungible token protocol for Bitcoin, designed to be an alternative to BRC-20, Taproot Assets, RGB, Counterparty, and Omni Layer. In my case Blog post Explains in detail the differences with runes and these protocols. Basically, it has to do with the fact that all others either work off-chain or depend on the address (account).
According to Casey, off-chain fungible token protocols require you to reconcile off-chain data with the blockchain, which creates a strange user experience. Those that rely on addresses do not play well with Bitcoin’s UTXO-based approach, resulting in similar complexities for end users.
Track UTXO-based fungible tokens
Here lies the magic of the Rune Protocol. Instead of linking the history of balances to wallet addresses, it places the records in the UTXOs themselves. The new rune starts with an issue transaction, specifying the width, symbol, and number of decimals, and setting that width to a specific UTXO. Any amount of rune tokens can be present in UTXO, regardless of their size. UTXOs are only used to track balances. The transfer function then uses that UTXO, splitting it into several new UTXOs of arbitrary size, containing different amounts of runes, to send the records to other people.
For example, if you use a UTXO with ten thousand (random) satoshis, it can have a million (any number) runes in it. If I want to send 100k runes to two friends each, I put the custom set where these runes go to OP_RETURN for a Bitcoin transaction. I put in one UTXO, and out came three UTXOs; Two with 100,000 runes each for my friends and one with 800,000 runes for myself.
Casey decided to use OP_RETURN, rather than the witness portion of the transaction, as he did with the Ordinals protocol, because using a witness can make swaps and PSBTs difficult. For example, if you have a transaction that has two entries, each of those entries has a signature, and additional data can be added to the witness by each of them. So, if you sign a transaction, another person signing the same transaction can add their witness data. This means that you can sign it with one set of transfer instructions, and the other user can also sign it. This cannot happen with OP_RETURN.
This also means that the runes are separate from the ordinal protocol. This is useful in some ways; Separating ordinals and runes makes development easier without them being dependent on each other. The downside is that Runes cannot leverage the already existing user base and Ordinal’s decentralization, making it more difficult to start a base of nodes. Conversely, if runes become more popular than ordinals – since BRC-20 currently makes up the majority of inscriptions – this could lead to existing BRC-20 Ord node runners switching to runes.
Standard rules are for prostitutes
An interesting issue with Runes is that some transactions will break Bitcoin Core’s “standard” rules by having OP_RETURNs larger than 80 bytes or by using two batches of data. In response, Casey stated that these standard rules do not define what makes it a block and what is valid within a block. If a non-standard transaction is converted into a block, it will also be processed. These rules only specify what Bitcoin Core will transfer once your transaction is broadcast. If miners can make money from the fees generated by runes, nothing will stop them from accepting OP_RETURN transactions larger than 80 bytes. In essence, if Bitcoin Core is The Matrix, then Casey is like the bald little kid telling you, the Rune user, that the key to bending the spoon is to understand that it didn’t actually exist to begin with.
Benefits of Bitcoin
When revealing the runes, Casey noted his belief that 99.9% of fungible tokens are nothing more than scams and memes, expressing his disdain for their existence. However, he also admits that he does not expect them to disappear, just as casinos are here to stay. Instead, he suggests it would be beneficial for a “Shitcoin Casino” to contribute fees to staking Bitcoin while attracting more users and developers who are interested in other blockchains. He designed the runes to have a minimal footprint on the string and to promote UTXO-aware management. True to his rough style, he likened the runes to providing clean needles to street drug addicts.
Lightning compatibility and downloadable content (DLC).
It’s important to highlight an important feature of the runes: fungible tokens will be compatible with both Lightning and DLCs. This is a distinct advantage over BRC-20, attributed to the UTXO-based Runes style. Essentially, this means that you can integrate runes into multi-signature wallet configurations and settle their balances to a variety of parties. Competition always benefits users, and Runes may compete with Taproot Assets for its turf, all while introducing new use cases, developers, and users to the Lightning Network.
The Ordinals community goes wild
Casey revealed the runes in a blog post at 6:39 PM ET, calling it a “terrible idea” and a “worst-to-best fungible token protocol for Bitcoin.” Within an hour, the processing was finished 400 people in X SpacesHe described it as “not even a partially formed idea.” However, the excitement within the Ordinals community was unmistakable. I personally extend Open investment offer From 100 thousand dollars on our website Upcoming accelerator program To the first team running the indexer, release, or transfer application. By 1:12 a.m., The first rune token $RUNE has been released And it was confirmed in the Bitcoin block. The journey from startup blog post to implementation by an independent developer unfolded in less than 7 hours – a pace rarely seen on any blockchain, and certainly exceptional for Bitcoin.
This is a guest post by Trevor Owens. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
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