The inventor of Bitcoin Ordinals is proposing a new Bitcoin-based fungible token protocol as a potential alternative to the BRC-20 token standard.
The BRC-20 standard was launched in March by an anonymous developer “Domo.” Within two months, the BRC-20 market cap reached $1 billion, with PEPE and ORDI among the most notable BRC-20 tokens created on Bitcoin.
New terrible idea just dropped: Runes.
A worse-is-better fungible token protocol for Bitcoin.https://t.co/TPVrUvWxm8
— Casey (@rodarmor) September 25, 2023
BRC-20 enables the minting and transfer of fungible tokens via the Ordinals protocol on Bitcoin. But the issue with BRC-20 tokens is that they spam Bitcoin with “junk” Unspent Transaction Outputs or UTXOs, argued Rodarmor.
BRC-20 tokens have the “undesirable consequence of UTXO proliferation,” he explained in a Sept. 25 post, proposing Runes as a UTXO-based alternative.
“Protocols that are UTXO-based fit more naturally into Bitcoin and promote UTXO set minimization by avoiding the creation of “junk” UTXOs.”
TLDR on Runes – A potential fungible token protocol for Bitcoin
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– Casey remains skeptical, citing “99.9% are scams and memes,” but recognises they don’t appear to be going away.
– Employs a UTXO-based system, notably simpler than BRC-20.
– Uses the letter ‘R’ in the… https://t.co/zYP43f70gh— Franken (@ItsFranken) September 25, 2023
“If this protocol had a small on-chain footprint and encouraged responsible UTXO management, it might serve as harm reduction compared to existing protocols,” Rodarmor added.
UTXOs represent the amount of cryptocurrency left in a wallet following a completed transaction, where the balance is used in subsequent transactions and is stored in the UTXO database.
Bitcoin’s UTXO model plays a role in making Bitcoin an auditable and transparent ledger by preventing the double spending problem.
Rodarmor said other fungible token protocols on Bitcoin, such as Really Good for Bitcoin, Counterparty and Omni Layer have problems of their own.
While Rodarmor admitted 99.9% of fungible tokens are filled with scams and memes, he believes the right fungible token protocol can add value to the Bitcoin network:
“Creating a good fungible token protocol for Bitcoin might bring significant transaction fee revenue, developer mindshare, and users to Bitcoin.”
Related: Ordinals still make up majority of Bitcoin txs despite price collapse
In a Sept. 25 Twitter Spaces with The Ordinals Show co-host Trevor Owens, Rodarmor said he came up with the Runes idea last week and that he wasn’t sure whether he would pursue it any further.
Shortly after the call, Owens floated offering $100,000 from the Bitcoin Frontier Fund to prospective developers that can create a Rune application up and running as a means to further Rodarmor’s proposal.
Open $100k investment offer in upcoming @BTCFrontierFund accelerator for first team who can get a working (not terrible) Rune indexer, issuance and/or transfer app, up live and running
Don’t make the tickers required to be unique, will be a shit show
DM me. Serious offer. pic.twitter.com/6W0IwlhB9x
— trevor.btc (@TO) September 26, 2023
Cointelegraph reached out to Rodarmor for comment but did not receive an immediate response.
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