Bitcoin has a new toy: Runes
Bitcoin’s ‘halving’, ie the rate at which new digital token can be mined, has had a knock-on effect – the popularisation of ‘Runes’, a protocol that alows users to create and manage fungible tokens like cryptocurrencies.
Runes recently became a new token standard on Bitcoin, already covering more than two-thirds of all transactions on the blockchain. The protocol was launched at the time of Bitcoin’s halving, the four-year cycle in which the reward for delvers (miners) is halved to combat inflation.
The new protocol was devised by Casey Rodarmor, the creator of Ordinals – a protocol that allows users to ‘coin’ NFTs (non-fungible tokens) on the Bitcoin blockchain. Unlike Runes, NFTs are unique with a proven ownership and a value that can change.
It was already possible to store tokens on Bitcoin’s blockchain. That was done with the BRC-20 token standard, but Runes is more efficient. It should also save some block space, which may cause Ordinals to lose popularity.
Using Runes requires special software, including wallets suitable for the protocol.
Bitcoin is starting to look more and more like its competitor in the crypto space, Ethereum. That too has a blockchain on which all sorts of things are built.
More than launching tokens and NFTs, Runes has not yet produced anything. It may also result in a new stream of generally worthless memecoins that no one can do anything with. Still, some crypto exchanges are already trading Runes tokens. Because, as has been demonstrated many times before, a digital currency can become a sought-after investment asset with little to no logic or justification.
Runes’ popularity has also led to concerns about blockchain contamination. Because many users wanted to get in right after the halving, Bitcoin transaction fees skyrocketed. Meanwhile, the hype seems to be over, and transaction fees are returning to normal levels.
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