What is the Bitcoin protocol “Runes”?
The Bitcoin halving, which took place over the weekend (20th), can be considered one of the biggest events in the crypto world this year. The block rewards for miners have been reduced from 6.25 bitcoins (BTC) to 3.125 bitcoins.
In addition to the Bitcoin halving, the Bitcoin homogenous token protocol “Runes” also went live over the weekend, attracting market attention and causing a frenzy of token minting, which has led to a significant increase in Bitcoin transaction fees.
The goal of Runes is to solve the problem of slow and expensive transactions on the Bitcoin blockchain. It was launched by Casey Rodarmor, the founder of Ordinals, and provides a simpler and more efficient system than BRC-20.
The Ordinals protocol, launched in December 2022, allows users to store images, audio, and other content on the Bitcoin blockchain, bringing about an unprecedented revolution in the Bitcoin blockchain, also known as the “second phase” of Bitcoin.
Shortly after the launch of Ordinals, users utilized the protocol to issue BRC-20 tokens, which added many applications and possibilities to the Bitcoin blockchain.
Further reading: Can Bitcoin issue NFTs? The key protocol Ordinals behind the surge in token minting and transaction fees.
Since the launch of Ordinals, these Ordinals assets have been transferred over $3 billion on the chain in just over a year. There have been nearly 600,000 related wallets and 2.5 million on-chain transactions, indicating significant interest from users.
However, while Ordinals and BRC-20 bring more interesting applications, they have also made the already expensive and slow Bitcoin blockchain even more costly and slow.
If Ordinals is considered “Bitcoin 2.0,” then BRC-20 and Runes can be seen as the “2.1 version” and “2.2 version” of new applications on the Bitcoin blockchain.
Further reading: The rise of Bitcoin “inscriptions” frenzy! What are the reasons? You must know these three projects and controversies.
What does the community think about the surge in Bitcoin transaction fees?
With the launch of the Runes protocol following the halving, many on-chain investors rushed in to see who could issue the first token and secure the “best token name.” The influx of users caused a massive network congestion in Bitcoin, leading to a significant increase in transaction fees.
According to mempool data analysis, the average Bitcoin transaction fee on April 20th was $127.97, seven times higher than the previous day’s average fee, setting a new record. The fee for high-priority transactions even exceeded 2,000 Sat (approximately $200) at one point.
Although the Bitcoin halving also affected miners’ income, the Runes protocol caused a surge in Bitcoin transaction fees, resulting in a daily increase of $107.8 million in total income for Bitcoin miners (including block rewards and transaction fees), also setting a new record.
The community’s opinion on the newly launched Runes protocol is similarly divided as it was when the Ordinals protocol was launched. Some netizens believe that the Runes protocol not only allows for more interesting applications and asset classes for Bitcoin but also continues to support miners’ operations with transaction fees after the halving.
Traditional supporters of Bitcoin, on the other hand, believe that these applications are simply “messing around” and have made the Bitcoin blockchain expensive and slow, tarnishing the traditional and classic image of Bitcoin.
Regardless, the Ordinals and Runes protocols have officially opened the second phase of Bitcoin and have made a significant milestone in the history of Bitcoin development. With more and more exchanges starting to trade Runes tokens, the future development of the Bitcoin blockchain seems promising.
References: coindesk, cointelegraph