Bitcoin Ordinals’ Creator Proposes “Runes” as an Alternative to BRC-20 Tokens

Casey Rodarmor, the creator of Ordinals, has recently introduced a new Bitcoin-based fungible token protocol called “Runes.” This proposal aims to tackle the challenges presented by the BRC-20 token standard, particularly its ramifications for the Bitcoin network. Although Runes could offer benefits, its future remains uncertain.

The BRC-20 standard debuted in March, developed by an anonymous individual referred to as “Domo.” Within just two months, the market cap for BRC-20 tokens skyrocketed to $1 billion, prominently featuring tokens like PEPE and ORDI. However, the rise of these tokens has raised alarms about the accumulation of “junk” unspent transaction outputs (UTXOs) on the Bitcoin network.

UTXOs represent the remaining balance of cryptocurrency in a wallet following a transaction, which is subsequently utilized in future transactions and recorded in the UTXO database. Bitcoin’s UTXO model is designed to ensure transparency and prevent double-spending. Nevertheless, Rodarmor has argued that BRC-20 tokens contribute to an undesirable increase in UTXOs, ultimately cluttering the network.

On Monday, Rodarmor proposed “Runes” as a UTXO-centric alternative to the BRC-20 standard. He contends that UTXO-based protocols better align with Bitcoin’s foundational infrastructure and can help minimize the UTXO set by discouraging the generation of unnecessary outputs. Rodarmor noted, “If this protocol possesses a small on-chain footprint and promotes responsible UTXO management, it could serve as a harm reduction strategy compared to existing protocols.”

Rodarmor also recognized the challenges posed by other fungible token protocols on Bitcoin, such as Really Good for Bitcoin, Counterparty, and Omni Layer. He remains optimistic about the potential of a thoughtfully designed protocol, believing that an effective fungible token standard could attract significant transaction fee revenue, engage developers, and expand Bitcoin’s user base. Despite acknowledging that many fungible tokens are often associated with scams and memes, he maintains that the right design could cut through this noise.

Nonetheless, the trajectory of Runes is still unclear. In a recent conversation on Twitter Spaces with The Ordinals Show co-host Trevor Owens, Rodarmor disclosed that he conceived the idea for Runes just a week prior and was uncertain about the next steps. Despite this ambiguity, the proposal has captured interest. Following their discussion, Owens suggested a $100,000 incentive from the Bitcoin Frontier Fund for developers who can create a functional application for Runes.

While the future of Runes is yet to be determined, its potential to resolve issues linked with the BRC-20 standard has certainly intrigued the cryptocurrency community.