What are Runes? What is the difference between Runes and BRC-20 tokens?

Runes is a new homogeneous token protocol built on Bitcoin. The launch of the Runes protocol is regarded as a new driving force in the Bitcoin ecosystem. It may not only change the way tokens are issued and traded. , and may also attract more developers and users to join the ranks of Bitcoin. This innovative token protocol is expected to increase Bitcoin’s transaction activity and market status, thereby bringing broader participation and richer application scenarios to the entire ecosystem. Briefly introduce what are Runes? There may still be people who don’t understand, so I’ll explain it in detail below.

What are Runes?

Runes is a protocol for issuing fungible tokens based on UTXO on the Bitcoin network. It simplifies the creation and management of Token and improves the efficiency of Bitcoin. Runes does not rely on Ordinals and adopts Bitcoin's UTXO model and OP_RETURN opcode. It is called a healthy and efficient token standard that can narrow the fungible market capitalization gap between Bitcoin and other blockchains.

Runes, also known as rune stones, allow users to attach additional information to Bitcoin transactions and split UTXOs into multiple new ones. Runes are designed for ease of use and are expected to bring some impactful changes to the Bitcoin token ecosystem. By following Bitcoin’s UTXO model, Rune provides a form of “harm reduction” by reducing unnecessary bloat of the UTXO set, a significant issue with existing protocols such as BRC-20 and Stamps.

Its simpler design can attract more developers’ interest and participation, potentially accelerating innovation in the Bitcoin development community. A seamless user experience can attract more mainstream adoption because users don’t need to deal with native tokens or deal with off-chain complexities.

This allows for flexible allocation and transfer of rune balances, and invalid protocol messages will cause runes to burn as a safeguard for future upgrades. In addition, Runes can issue specific human-readable symbols and decimal configurations, and their issuance and transfer do not require the use of native tokens, making the protocol less cumbersome and more user-friendly. Overall, Runes provides a simpler and more intuitive way to handle fungible tokens on the Bitcoin blockchain.

What is the difference between Runes and BRC-20 tokens?

The difference between Runes and BRC-20 tokens is mainly the difference in model and casting. The Runes protocol adopts Bitcoin’s UTXO model, which improves upon the Ordinals-based BRC-20 token standard. This enables it to run on Bitcoin’s Layer 1, the basic blockchain, and reduces the generation of unnecessary UTXOs. As a result, the runes have a very small footprint on the chain, greatly improving overall efficiency.

In contrast, BRC-20 is based on ordinal theory, which is not a native part of Bitcoin. The token issuance mechanism of this protocol will also lead to a surge in the number of UTXOs and network congestion.

Another key difference between the two protocols is that Rune will destroy tokens minted due to transaction errors or using cenotaphs, which encourages users to manage UTXO more correctly. The BRC-20 protocol allows users to try again after making a mistake.

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