What is the Bitcoin Protocol “Runes”?
The recent Bitcoin halving, which took place over the weekend on the 20th, can be considered one of the biggest events in the cryptocurrency industry this year. It reduced the block rewards for miners from 6.25 Bitcoin (BTC) to 3.125 Bitcoin.
Apart from the Bitcoin halving, the Bitcoin homogenous token protocol called “Runes” also went live over the weekend, attracting market attention and causing a frenzy in Rune token minting, resulting in a significant increase in Bitcoin transaction fees.
The goal of Runes is to solve the problem of slow and expensive transactions on the Bitcoin blockchain. It was launched by Casey Rodarmor, the founder of Ordinals, and provides a simpler and more efficient system compared to BRC-20.
The Ordinals protocol, launched in December 2022, allowed users to store images, audio, and other content on the Bitcoin blockchain, bringing unprecedented innovation to the Bitcoin blockchain and being hailed as the “second phase” of Bitcoin.
Shortly after the launch of Ordinals, users utilized the protocol to issue BRC-20 tokens, creating numerous applications and possibilities on the Bitcoin blockchain.
Further reading:
Can Bitcoin issue NFTs? Coin minting quantity and transaction fees reach new highs, what is the key protocol behind Ordinals?
Since the launch of Ordinals, these assets have been transferred on the chain for over 3 billion dollars within a short span of one year, with nearly 600,000 related wallets and 2.5 million on-chain transactions, indicating significant user interest.
However, while Ordinals and BRC-20 bring more interesting applications, they also make the already expensive and slow Bitcoin blockchain even more costly and sluggish.
If Ordinals is considered “Bitcoin 2.0”, then BRC-20 and Runes protocols can be seen as “version 2.1” and “version 2.2” of new applications on the Bitcoin chain.
Further reading:
Bitcoin “Inscription” Frenzy Explodes! What are the reasons? These three projects and controversies you must know
How does the community view the surge in Bitcoin transaction fees?
Following the halving, the Runes protocol was also launched. Many on-chain investors rushed in to see who could issue the first token and grab the “best token name”. The influx of users caused a massive network congestion in Bitcoin, leading to a significant increase in transaction fees.
According to data from the analysis website Mempool, the average Bitcoin transaction fee on April 20th was $127.97, seven times higher than the previous day’s average fee, setting a new record. The fee for high-priority transactions even surpassed 2,000 Sat (approximately $200) at one point.
Although the Bitcoin halving affected miners’ income, the Runes protocol caused a surge in Bitcoin transaction fees, resulting in a $107.8 million increase in total miner income (including block rewards and transaction fees) in a single day, setting a new record.
Regarding the newly launched Runes protocol, the community’s opinion remains polarized, just like when the Ordinals protocol was launched. Some netizens believe that the Rune protocol not only allows for more interesting applications and asset types for Bitcoin but also continues to support miner operations with transaction fees after the halving.
Traditional supporters of Bitcoin, on the other hand, believe that these applications are simply “messing around” and not only make the Bitcoin blockchain more expensive and slower but also tarnish the traditional image of Bitcoin.
In any case, the Ordinals and Runes protocols have officially begun the second phase of Bitcoin and have marked a historical milestone in the development of Bitcoin. With more and more exchanges starting to support the trading of Runes tokens, the future development of the Bitcoin blockchain seems promising.
References:
– Coindesk
– Cointelegraph
