After the highly anticipated Bitcoin halving, the cryptocurrency world was introduced to a new concept known as “Runes”. Bill Barhydt, CEO of cryptocurrency company Abra, shed light on this interesting development.
According to Barhydt, Runes is defined as a newly introduced token standard in Bitcoin that simplifies and improves the efficiency of creating fungible tokens on the blockchain. This standard was specifically designed for the launch of fungible tokens on Bitcoin, unlike Ordinals that allow the creation of NFTs.
Runes use “edicts,” which are small, lightweight transactions that can transfer ownership of tokens without straining the Bitcoin network. It leverages Bitcoin's UTXO model and OP_RETURN transaction code to facilitate the creation and management of non-fungible tokens. According to Barhydt, each Rune operation can describe multiple operations between different Runes.
With Runes, users can create multiple tokens and easily manage them on-chain without having to rely on off-chain data or native tokens or generating significant amounts of “junk” UTXO, the famous CEO said.
Runes were released in block 840,000 Bitcoin on April 20, coinciding with Bitcoin's halving.
Runes are similar to Ordinals in that they allow investors to mint tokens on-chain, the main difference between them is that Ordinals are “non-fungible” (i.e. one of a kind) while Runes are more like the ones that have recently taken the crypto markets by storm. It will function like memecoins.
Why Are Bitcoin Transactions Suddenly So Expensive?
According to Barhydt, Bitcoin fees are rising because Runes transactions occur directly on the Bitcoin blockchain. Runes transactions use Bitcoin's UTXO model; In this model, each transaction consumes the total assets held on the user's ledger, and the algorithm calculates the new balance after transferring the desired amount of tokens to the buyer.
Barhydt predicts that very soon the Bitcoin Ordinal/Runes community will ask for the block size to be increased, and then the “same discussion” will begin again.
*This is not investment advice.