Ordinals founder launches BRC-20 replacement Runes

Author: Brayden Lindrea, Cointelegraph; Compiler: Songxue, Golden Finance

The inventor of Bitcoin Ordinal proposes 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 anonymous developer “Domo”. Within two months, the market capitalization of BRC-20 reached $1 billion, with PEPE and ORDI being among the most famous BRC-20 tokens created on Bitcoin.

BRC-20 allows for the minting and transfer of fungible tokens through the Ordinals protocol on Bitcoin. But Rodarmor believes the problem with BRC-20 tokens is that they take up Bitcoin network resources by “junking” unspent transaction outputs, or UTXOs.

In a post on September 25, he explained that the BRC-20 token had “undesirable consequences of UTXO proliferation” and proposed Runes as a UTXO-based alternative.

“UTXO-based protocols fit more naturally into Bitcoin and promote UTXO set minimization by avoiding the creation of “junk” UTXOs.”

Rodarmor added: “If the protocol has a smaller on-chain footprint and encourages responsible UTXO management, it may reduce harm compared to existing protocols.”

UTXO represents the amount of cryptocurrency remaining in the wallet after completing a transaction, with the balance used for subsequent transactions and 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 their own issues.

Rodarmor’s summary of issues with Bitcoin’s existing fungible token protocols. Source: Casey Rodarmor.

Golden Finance Note:

Compare Bitcoin’s existing fungible token protocols:

• BRC-20: Not based on UTXO, and quite complex as it requires the use of ordinal theory to perform certain operations.
• RGB: Very complex, relies on off-chain data, has been developed for a long time but has not been adopted.
• Counterparty: Has a native token required for certain operations, rather than being UTXO based.
• Omni Layer: Has native tokens required for certain operations rather than UTXO based.
• Taproot Assets: A bit complicated and relies on off-chain data.

While Rodarmor admits that 99.9% of fungible tokens are riddled with scams and meme coins, he believes that the right fungible token protocol can add value to the Bitcoin network:

“Creating a good fungible token protocol for Bitcoin could bring significant transaction fee revenue, developer attention, and users to Bitcoin.”

In a Sept. 25 Twitter Spaces with The Ordinals Show co-host Trevor Owens, Rodarmor said he floated the idea of Runes last week, but he wasn’t sure if he would follow up on the idea further.

Shortly after the call, Owens offered to provide $100,000 from the Bitcoin Frontier Fund to potential developers who could create and run Rune applications as a means to further advance Rodarmor’s proposal.