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Ordinals Creator introduces new type of token for Bitcoin

The programmer who created the Ordinals protocol, Casey Rodarmor, introduced a new token standard for the Bitcoin network, which he called Runes. This protocol could lead to the issuance of fungible tokens, which its creator describes as “more efficient and simpler” than ordinals.

The essence of runes lies in their simplicity and adaptability, explains Rodarmor in one Article published on his personal blog. This new standard enables the issuance of fungible tokens in Bitcoin using an approach based on the Unspent Transaction Output (UTXO) model. The fungibility of the tokens refers to the fact that they are identical among those of their kind and therefore interchangeable with each other.

Rodarmor explains that compared to existing fungible token protocols such as BRC-20, RGB, Counterparty, Omni Layer and Taproot Assets Runes stands out for its simplicity and organic integration into the Bitcoin UTXO model. These factors could attract developers and users looking for a simpler and more efficient approach to creating tokens in Bitcoin, he says.

From this developer’s perspective, “creating a good fungible token protocol for Bitcoin could generate significant revenue from transaction fees and attract developers and users to Bitcoin.” In addition, he asserted that Runes can promote responsible use of UTXOs, which is consistent with the BRC 20 tokens, the creation of which is attributed to a developer named Domo, has not been reached.

As reported in CriptoNoticias at the time, Both the Ordinals protocol and the BRC-20 tokens based on it resulted in major congestion on the Bitcoin network in the first half of 2023.

As the Ordinals Wallet team reports, the first Bitcoin transaction involving a Rune token was mined on September 26th. Source: X @ordinalswallet.

How does the Runes token standard work?

The Rodarmor blog details that a Bitcoin transaction contains a Runes protocol message “if it contains an output whose pubkey script contains an OP_RETURN followed by an ASCII data push with the letter R in uppercase.” The Protocol message is composed of all data pushes after the first, explains the creator of this standard.

If a transaction involves a second transfer of data containing two integers, SYMBOL and DECIMALS, it is considered an issuing transaction for that token type. Unlike Ordinals, a protocol where each token requires a UTXO, A single spending transaction can produce any number of runes.

Likewise, Rodarmor explains that “rune tokens entered in a transaction with an invalid protocol message will be burned.” This means that these tokens cannot be recovered or used in the future.

The reason for this measure is to allow for future updates to the protocol that may change the way tokens are allocated or created. This prevents old or outdated clients from making mistakes by incorrectly allocating or calculating rune credits according to the new rules.

When it comes to displaying a balance on a UTXO, the creator of Runes explains that “the native Bitcoin balance can be displayed with a specific Rune ID, which is equal to zero, and represented with the symbols BITCOIN, BTC or can.” XBT.

The possible introduction of the Runes standard in Bitcoin

The question arises as to whether Runes will manage to attract enough Bitcoin users and developers. Rodarmor comments on this as follows:

I’m not sure if creating a new fungible token protocol for Bitcoin is a good idea. Fungible tokens are mostly scams and memes. However, it looks like they aren’t going away anytime soon, much like casinos seem to be doing too. Creating a good fungible token protocol for Bitcoin could generate significant revenue from transaction fees and attract developers and users to Bitcoin. Additionally, if this protocol had a small footprint on the blockchain and promoted responsible UTXO management, it could help mitigate damage compared to existing protocols. At least one of them, BRC-20, is already quite popular and has the unintended consequence of spreading UTXO.

Casey Rodarmor, creator of the Ordinal Protocol and the Runes Standard.

Beyond this public presentation of his idea, Casey Rodarmor has not yet submitted a draft of the Runes Standard. Despite it, The Ordinals Wallet team has already tested and used the protocol for the First broadcast a rune token in the Bitcoin network, more precisely at block height 809385.

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