Bitcoin: The Rise of Oridinals and Runes
04.22.2024
What If Bitcoin Could Do More Than Just Be Digital Gold? By Shant Ganoumian, Vice President, DeFi
In January of 2023, Bitcoin’s potential quietly expanded beyond its traditional and well-known role as digital gold when a Bitcoin developer by the name of Casey Rodarmor introduced Ordinals. Ordinals is a protocol that allows data such as images, videos, and documents to be embedded, or inscribed onto the Bitcoin network. Ordinals not only facilitated the creation of NFTs, but also paved the way for the creation of fungible token standards on Bitcoin. Since launch, the Ordinals protocol has generated over $400 million in fees for the network.
A few months after the launch of Ordinals, an anonymous developer by the name of Domo released BRC-20 as an experimental fungible token standard on Bitcoin using Ordinals inscriptions. Within a year, the total market capitalization of BRC-20 tokens soared to over $4.3 billion. Despite its success, BRC-20 was meant to be experimental and not designed for widespread adoption. Recognizing that there were evident inefficiencies in the BRC-20 model, Casey Rodarmor developed a new and improved token standard for Bitcoin called Runes. Below are the main differences between the two:
|
Runes |
BRC-20 |
| Model |
UTXO-based |
Ordinal-based |
| Ticker/Symbol |
Up to 28 characters |
4 characters |
| Lightning Network |
Compatible |
Not compatible |
| Token Minting |
More flexible minting parameters |
Requires open minting |
| Data Storage |
OP_Return (more efficient) |
JSON text (less efficient) |
Set to launch on the day of the Bitcoin halving, Runes aims to revolutionize the Bitcoin DeFi landscape. Speculation has intensified within the Ordinals markets in recent months as the launch of Runes approaches, where pre-Rune inscription projects have seen a surge in trading volume. The Bitcoin halving is around the corner (or has already happened depending on when you’re reading this!) and along with it will come the potential birth of a new era of Bitcoin DeFi under Runes.
PS: We didn’t get a chance to talk about OP_CAT, another new Bitcoin token standard. More on that another time!
Sources:
https://dune.com/dgtl_assets/bitcoin-ordinals-analysis
https://coinmarketcap.com/view/brc-20/
https://magiceden.io/
https://watcher.guru/bitcoin-halving
Latest News:
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- Central banks, led by the BIS, are launching Project Agora to explore tokenization for enhancing financial systems. The initiative aims to integrate tokenized central bank money and commercial bank deposits on a programmable platform to improve cross-border payments.
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- Ubisoft teased a new blockchain game at Paris Blockchain Week. The AAA game developer aims to launch its first blockchain-based game by the end of 2024.
- Coinbase is making it easier for UK customers to buy and sell cryptocurrencies with the launch of Apple Pay. The integration, announced on Wednesday April 10th, is part of Coinbase’s efforts to increase crypto adoption in the UK.
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