{"id":225520,"date":"2024-04-22T11:29:21","date_gmt":"2024-04-22T11:29:21","guid":{"rendered":"https:\/\/www.techopedia.com\/?p=225520"},"modified":"2024-04-22T11:29:21","modified_gmt":"2024-04-22T11:29:21","slug":"bitcoin-runes-new-fungible-token-standard-to-power-bitcoin-defi","status":"publish","type":"post","link":"https:\/\/www.techopedia.com\/bitcoin-runes-standard-to-power-bitcoin-defi","title":{"rendered":"Bitcoin Runes: New Fungible Token Standard to Power Bitcoin DeFi"},"content":{"rendered":"<p>Runes, an improved fungible token protocol for <a href=\"https:\/\/www.techopedia.com\/definition\/27193\/bitcoin-btc\">Bitcoin<\/a> (BTC), launched on April 20, 2024, as the Bitcoin blockchain underwent its fourth <a href=\"https:\/\/www.techopedia.com\/definition\/halving\">halving<\/a> event.<\/p>\n<p>There are a lot of expectations from Runes. The chief among them is the hope that the Runes will power the Bitcoin <a href=\"https:\/\/www.techopedia.com\/definition\/34630\/decentralized-finance-defi\">decentralized finance<\/a> (DeFi) ecosystem in the near future.<\/p>\n<p><strong>Lucas Outumuro, Head of Research at IntoTheBlock<\/strong>, said on April 21:<\/p>\n<blockquote><p>\u201cIt&#8217;s been less than 48 hours since the launch of Runes and it has already made an impact of historic proportions. We&#8217;ll see how much of the early momentum will persist, but so far, it seems like $BTC&#8217;s long-term security problem is getting solved by sh*tcoins.\u201d<\/p><\/blockquote>\n<blockquote class=\"twitter-tweet\" data-width=\"550\" data-dnt=\"true\">\n<p lang=\"en\" dir=\"ltr\">The launch of Runes on <a href=\"https:\/\/twitter.com\/hashtag\/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw\" target=\"_blank\">#Bitcoin<\/a> has been absolutely insane<\/p>\n<p>A quick thread diving into the record-breaking onchain metrics<\/p>\n<p>1\/7 Daily fees set an all-time high of over $80M <a href=\"https:\/\/t.co\/JImTxhTczP\" target=\"_blank\">pic.twitter.com\/JImTxhTczP<\/a><\/p>\n<p>&mdash; Lucas (@LucasOutumuro) <a href=\"https:\/\/twitter.com\/LucasOutumuro\/status\/1782089893327388711?ref_src=twsrc%5Etfw\" target=\"_blank\">April 21, 2024<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<div class=\"su-note\"  style=\"border-color:#e5e54c;border-radius:\u201c3\u201dpx;-moz-border-radius:\u201c3\u201dpx;-webkit-border-radius:\u201c3\u201dpx;\"><div class=\"su-note-inner su-u-clearfix su-u-trim\" style=\"background-color:#FFFF66;border-color:#ffffff;color:#333333;border-radius:\u201c3\u201dpx;-moz-border-radius:\u201c3\u201dpx;-webkit-border-radius:\u201c3\u201dpx;\">\n<h2><span id=\"key_takeaways\">Key Takeaways<\/span><\/h2>\n<ul>\n<li aria-level=\"1\">Runes was created by Ordinals creator Casey Rodarmor.<\/li>\n<li>Runes improves on existing Bitcoin fungible token standards such as BRC-20.<\/li>\n<li>Franklin Templeton said Runes could help Bitcoin close the gap on more established fungible token marketplaces such as Ethereum and Solana.<\/li>\n<li>24 hours after the Bitcoin halving, transaction fees spiked 1,200% due to Runes.<\/li>\n<li>Miners made a record $100 million+ in revenue on April 20, 2024.<\/li>\n<\/ul>\n<\/div><\/div>\n<div>\n    <section class=\"toc-sticky w-100 bg-white \">\n        <div class=\"toc-sticky__container container\">\n            <div class=\"toc-sticky__open d-flex align-items-end\" data-bs-toggle=\"collapse\"\n                 aria-controls=\"multiCollapse1\"\n                 data-bs-target=\"#multiCollapse1\">\n                <button\n                        class=\"btn btn-primary collapse-action-btn p-1 rounded-circle\"\n                        type=\"button\"\n                >\n                    <i class=\"icon-chevron-up\"><\/i>\n                <\/button>\n                <span id=\"toc-current-title\" class=\"d-flex align-items-center\">\n                    Table of Contents\n                <\/span>\n                <span class=\"toc-main-title-permanent\">Table of Contents<\/span>\n            <\/div>\n            <div\n                    class=\"collapse my-3\"\n                    id=\"multiCollapse1\"\n            >\n                <ol class=\"StepProgress\">\n                                                                        <li class=\"StepProgress-item current\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"key_takeaways\"\n                               onclick=handleScrollToTitle(\"key_takeaways\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">Key Takeaways<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"what_is_bitcoin_runes_protocol\"\n                               onclick=handleScrollToTitle(\"what_is_bitcoin_runes_protocol\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">What Is Bitcoin Runes Protocol?<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"why_should_you_care_about_runes\"\n                               onclick=handleScrollToTitle(\"why_should_you_care_about_runes\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">Why Should You Care About Runes?<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"why_was_runes_created\"\n                               onclick=handleScrollToTitle(\"why_was_runes_created\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">Why Was Runes Created?<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"understanding_utxo\"\n                               onclick=handleScrollToTitle(\"understanding_utxo\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">Understanding UTXO<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"runes_potential_for_investors\"\n                               onclick=handleScrollToTitle(\"runes_potential_for_investors\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">Runes Potential for Investors<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"the_bottom_line\"\n                               onclick=handleScrollToTitle(\"the_bottom_line\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">The Bottom Line<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"faqs\"\n                               onclick=handleScrollToTitle(\"faqs\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">FAQs<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                                                        <li class=\"StepProgress-item\">\n                                                <div class=\"StepProgress-item__group\">\n                            <a data-id=\"references\"\n                               onclick=handleScrollToTitle(\"references\")\n                               class=\"StepProgress-item__link\" data-level=\"2\">References<\/a>\n                                                    <\/div>\n                                                <\/li>\n                                    <\/ol>\n                <div class=\"toc-sticky__container__disperse\"><\/div>\n                <div class=\"toc-sticky__btn-top justify-content-center\">\n                    <button class=\"btn btn-link d-flex align-items-center\" onclick={btnTop()}><p>Show Full Guide<\/p><img decoding=\"async\"\n                                src=\"\/wp-content\/plugins\/table-of-contents\/assets\/images\/arrow-up-circle.svg\"\n                                alt=\"arrow-up-circle\">\n                    <\/button>\n                <\/div>\n            <\/div>\n        <\/div>\n    <\/section>\n    <div class=\"toc-sticky-list\">\n        <div class=\"toc-sticky__container container\">\n            <div class=\"toc-sticky__open d-flex align-items-end\" data-bs-toggle=\"collapse\" aria-controls=\"multiCollapse2\" data-bs-target=\"#multiCollapse2\">\n                <button class=\"btn btn-primary collapse-action-btn p-1 rounded-circle\"\n                        type=\"button\">\n                    <i class=\"icon-chevron-up up\"><\/i>\n                <\/button>\n                <span id=\"toc-current-title\" class=\"d-flex align-items-center\">\n                    Table of Contents\n                <\/span>\n            <\/div>\n            <div  class=\"collapse my-3\" id=\"multiCollapse2\">\n                <ol class=\"StepProgress\">\n                    \t\t\t\t\t \t\t\t\t\t                                                     <li class=\"StepProgress-item current \">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"key_takeaways\"\n                                   onclick=handleScrollToTitle(\"key_takeaways\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">Key Takeaways<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t                                                     <li class=\"StepProgress-item \">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"what_is_bitcoin_runes_protocol\"\n                                   onclick=handleScrollToTitle(\"what_is_bitcoin_runes_protocol\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">What Is Bitcoin Runes Protocol?<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t                                                     <li class=\"StepProgress-item \">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"why_should_you_care_about_runes\"\n                                   onclick=handleScrollToTitle(\"why_should_you_care_about_runes\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">Why Should You Care About Runes?<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t\n\t\t\t\t\t\t <span class=\"show_moretoc\">Show Full Guide<\/span>\n\t\t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"why_was_runes_created\"\n                                   onclick=handleScrollToTitle(\"why_was_runes_created\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">Why Was Runes Created?<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"understanding_utxo\"\n                                   onclick=handleScrollToTitle(\"understanding_utxo\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">Understanding UTXO<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"runes_potential_for_investors\"\n                                   onclick=handleScrollToTitle(\"runes_potential_for_investors\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">Runes Potential for Investors<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"the_bottom_line\"\n                                   onclick=handleScrollToTitle(\"the_bottom_line\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">The Bottom Line<\/a>\n                                                            <\/div>\n                                                    <\/li>\n                    \t\t\t\t\t \t\t\t\t\t \t\t\t\t\t\t  \t\t\t\t\t                                                      <li class=\"StepProgress-item ms_hidetoc\">\n                                                    <div class=\"StepProgress-item__group\">\n                                <a data-id=\"faqs\"\n                                   onclick=handleScrollToTitle(\"faqs\")\n                                   class=\"StepProgress-item__link\"\n                                   data-level=\"2\">FAQs<\/a>\n                       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https:\/\/stackoverflow.com\/questions\/17893771\/javascript-sticky-div-after-scroll\n         *\/\n        (function (header, pageLegendCollapse) {\n            \/\/ set everything outside the onscroll event (less work per scroll)\n            const target = document.querySelector(\".toc-sticky\");\n            const targetListStatic = document.querySelector(\".toc-sticky-list\");\n\n            if (!target || !header) return;\n\n            const headerHeight = header.getBoundingClientRect().height;\n            const targetHeight = targetListStatic.getBoundingClientRect().height;\n\n            \/\/ -headerHeight so it won't be jumpy\n            const stop = targetListStatic.offsetTop + headerHeight + targetHeight;\n            const docBody =\n                document.documentElement || document.body.parentNode || document.body;\n            const hasOffset = window.pageYOffset !== undefined;\n\n            const applySticky = function () {\n                \/\/ cross-browser 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When the user clicks on the button, scroll to the top of the document\n    function btnTop() {\n        const pageLegend = document.querySelector('#multiCollapse1');\n        document.querySelector('html').classList.remove('overflow-hidden');\n        pageLegend.classList.remove('overflow-auto');\n        pageLegend.style.height = 'auto';\n        window.scrollTo({\n            top: 0,\n            behavior: 'smooth'\n        });\n    }\n\n    const handleScrollToTitle = (id) => {\n        const el = document.getElementById(id);\n        const headerHeightDifference = window.innerWidth < 992 ? -30 : -15;\n        window.scrollTo({\n            top: el.offsetTop - 60 - headerHeightDifference - 10,\n        });\n    }\n<\/script>\n\n<h2><span id=\"what_is_bitcoin_runes_protocol\">What Is Bitcoin Runes Protocol?<\/span><\/h2>\n<p><a href=\"https:\/\/rodarmor.com\/blog\/runes\/\" target=\"_blank\">Runes<\/a> is a token protocol that allows the creation of <a href=\"https:\/\/www.techopedia.com\/definition\/unspent-transaction-output-utxo\">UTXO<\/a>-based fungible tokens on the Bitcoin blockchain.<\/p>\n<p>It is an improvement on the popular <a href=\"https:\/\/www.techopedia.com\/definition\/brc-20\">BRC-20 token standard<\/a>. The latter has been criticized for its complexity and non-UTXO design.<\/p>\n<p>Runes was created by Casey Rodarmor in September 2023. Rodarmor is also the developer behind a Bitcoin numbering technique called <a href=\"https:\/\/www.techopedia.com\/definition\/bitcoin-ordinals-ordinal-nfts\">Ordinals theory<\/a>, which enabled the creation of <a href=\"https:\/\/www.techopedia.com\/definition\/34529\/non-fungible-token-nft\">non-fungible tokens<\/a> (NFT) for the first time on Bitcoin in December 2022.<\/p>\n<h2><span id=\"why_should_you_care_about_runes\">Why Should You Care About Runes?<\/span><\/h2>\n<p>To understand the importance of Runes, we need to talk about the history of Bitcoin.<\/p>\n<p>When the pseudonymous <a href=\"https:\/\/www.techopedia.com\/news\/reddit-floats-new-theory-about-true-identity-of-bitcoin-creator-satoshi-nakamoto\">Satoshi Nakamoto<\/a> published the <a href=\"https:\/\/bitcoin.org\/bitcoin.pdf\" target=\"_blank\">Bitcoin white paper<\/a> in 2008, the paper spoke of a <a href=\"https:\/\/www.techopedia.com\/definition\/31702\/peer-to-peer-p2p\">peer-to-peer<\/a> (P2P) payment system free from the control of centralized intermediaries.<\/p>\n<p>To this day, a strong number within the Bitcoin community believe that the Bitcoin network must adhere to its original vision and should only be used for decentralized P2P payments.<\/p>\n<p>When the Ordinals theory was introduced in December 2022, it added a new functionality to Bitcoin by allowing the creation of NFTs on the blockchain.<\/p>\n<p>Ordinals NFTs became so popular that weekly sales of NFTs on Bitcoin <a href=\"https:\/\/beincrypto.com\/bitcoin-nfts-shatter-records\/\" target=\"_blank\">surpassed<\/a> those on NFT hotbeds such as <a href=\"https:\/\/www.techopedia.com\/definition\/32571\/ethereum-cryptocurrency\">Ethereum<\/a> (ETH) and <a href=\"https:\/\/www.techopedia.com\/definition\/solana-sol\">Solana<\/a> (SOL). Additionally, <a href=\"https:\/\/www.techopedia.com\/definition\/erc-20\">ERC-20-equivalent<\/a> tokens called BRC-20 tokens were introduced on the Bitcoin blockchain.<\/p>\n<p>Not only did Ordinals create a whole new industry on top of the Bitcoin blockchain, but it also showcased its potential to play a crucial role in <strong>maintaining the security of Bitcoin by increasing <\/strong><a href=\"https:\/\/www.techopedia.com\/definition\/32530\/mining-blockchain\"><strong>miner<\/strong><\/a><strong> revenue<\/strong>.<\/p>\n<p>You see, Bitcoin is designed to cut block rewards by half every four years in a process called halving. In 2140, <a href=\"https:\/\/www.techopedia.com\/cryptocurrency\/next-bitcoin-halving\">Bitcoin is expected to undergo its last halving<\/a>, following which no new Bitcoin will be rewarded to miners for securing the blockchain.<\/p>\n<p>Bitcoin miners will then have to rely solely on transaction fees for their revenue.<\/p>\n<div class=\"su-note\"  style=\"border-color:#e5e54c;border-radius:3px;-moz-border-radius:3px;-webkit-border-radius:3px;\"><div class=\"su-note-inner su-u-clearfix su-u-trim\" style=\"background-color:#FFFF66;border-color:#ffffff;color:#333333;border-radius:3px;-moz-border-radius:3px;-webkit-border-radius:3px;\">\n<p>The spike in on-chain activity following the introduction of Ordinals resulted in a surge in transaction fee revenue for miners.<\/p>\n<p>The increased transaction fees generated from Ordinals-related activity are expected to make Bitcoin more sustainable over the long run.<\/p>\n<\/div><\/div>\n<p><strong>IntoTheBlock\u2019s Outumuro <\/strong>said:<\/p>\n<blockquote><p>\u201cMiners are now earning more than before the halving. 24 hours after the halving, inflationary rewards have dropped by 50%, but transaction fees spiked 1,200% due to Runes. Miners made a record $100M+ in revenue on 4\/20.\u201d<\/p><\/blockquote>\n<figure id=\"attachment_225525\" aria-describedby=\"caption-attachment-225525\" style=\"width: 1200px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/04\/Miner-Rewards-Chart-300x149.jpg\" alt=\"Miner Rewards on April 20, 2024.\" width=\"1200\" height=\"597\" class=\"wp-image-225525\" srcset=\"https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/04\/Miner-Rewards-Chart-300x149.jpg 300w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/04\/Miner-Rewards-Chart-1024x510.jpg 1024w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/04\/Miner-Rewards-Chart-768x382.jpg 768w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/04\/Miner-Rewards-Chart-83x40.jpg 83w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/04\/Miner-Rewards-Chart-1536x765.jpg 1536w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/04\/Miner-Rewards-Chart-2048x1019.jpg 2048w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/04\/Miner-Rewards-Chart-1200x597.jpg 1200w, https:\/\/www.techopedia.com\/wp-content\/uploads\/2024\/04\/Miner-Rewards-Chart-1980x986.jpg 1980w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption id=\"caption-attachment-225525\" class=\"wp-caption-text\">Miner Rewards on April 20, 2024. Source: IntoTheBlock<\/figcaption><\/figure>\n<h2><span id=\"why_was_runes_created\">Why Was Runes Created?<\/span><\/h2>\n<p>Not everyone is happy about the emergence of Ordinals.<\/p>\n<p>Many have berated Ordinals for straying away from Bitcoin\u2019s original mission, while others criticized it for bloating the blockchain and causing slower transaction times and gas fee spikes.<\/p>\n<p>Critics also pointed out that the complexity involved in creating Ordinal inscriptions <a href=\"https:\/\/thedefiant.io\/news\/nfts-and-web3\/ordinals-community-grapples-with-numbering-controversy\" target=\"_blank\">led to new challenges<\/a> for the Bitcoin blockchain.<\/p>\n<p>So when the thought of an improved token protocol came to Ordinals creator Rodarmor, he was unsure whether it was a good idea.<\/p>\n<p>\u201cI&#8217;m not sure creating a new fungible token protocol for Bitcoin is a good idea. Fungible tokens are 99.9% scams and memes. However, they don&#8217;t appear to be going away any time soon, similar to the way in which casinos don&#8217;t appear to be going away any time soon. Creating a good fungible token protocol for Bitcoin might bring significant transaction fee revenue, developer mindshare, and users to Bitcoin,\u201d <a href=\"https:\/\/rodarmor.com\/blog\/runes\/\" target=\"_blank\">wrote<\/a> Rodarmor.<\/p>\n<p>On September 25, 2023, Rodarmor introduced the Runes token protocol to the world.<\/p>\n<p>The Runes protocol is designed to be easy to implement, fit more naturally into the Bitcoin blockchain, and minimize on-chain footprint.<\/p>\n<p>Franklin Templeton Digital Assets <a href=\"https:\/\/x.com\/FTI_DA\/status\/1779979775651561691\" target=\"_blank\">explained the Runes protocol<\/a> in a research note:<\/p>\n<blockquote><p>\u201cThe major difference between BRC-20 and Runes is that BRC-20 was designed to leverage pre-existing protocols to fill the need for fungible tokens on Bitcoin, where as, Runes is designed from the ground up specifically built for fungible tokens on Bitcoin.<\/p>\n<p>&nbsp;<\/p>\n<p>\u201cUnlike Runes, BRC-20s are able to create fungible tokens on Bitcoin but the design is account-based similar to Ethereum&#8217;s ERC-20s. The issue with BRC-20s is that through the burn and minting process of fungible tokens, a significant amount of junk UTXOs are created, bloating the blockchain and increasing fees. This is like the idea of a processing plant, where during the operations there is a lot of waste or junk left over that has no use case.\u201d<\/p><\/blockquote>\n<p>According to Franklin Templeton Digital Assets, the main improvements of the Runes token protocol are:<\/p>\n<div class=\"su-note\"  style=\"border-color:#e5e54c;border-radius:3px;-moz-border-radius:3px;-webkit-border-radius:3px;\"><div class=\"su-note-inner su-u-clearfix su-u-trim\" style=\"background-color:#FFFF66;border-color:#ffffff;color:#333333;border-radius:3px;-moz-border-radius:3px;-webkit-border-radius:3px;\">\n<ul>\n<li>Runes prevents the creation of \u201cjunk\u201d UTXO, which can bloat the Bitcoin network and push gas fees higher.<\/li>\n<li>Runes does not rely on off-chain data.<\/li>\n<li>Runes does not require an additional native token.<\/li>\n<li>Runes is compatible with Bitcoin scaling solutions such as the <a href=\"https:\/\/www.techopedia.com\/definition\/33248\/bitcoin-lightning-network\">Lightning Network<\/a>.<\/li>\n<li>Runes increase privacy as data is hidden with UTXOs.<\/li>\n<\/ul>\n<\/div><\/div>\n<h2><span id=\"understanding_utxo\">Understanding UTXO<\/span><\/h2>\n<p>Let\u2019s briefly learn about the UTXO model that Bitcoin uses to track user balances.<\/p>\n<p>The UTXO model that Bitcoin uses is different from the account models used by Ethereum and the majority of other blockchain networks.<\/p>\n<p>The account model is easy to understand. Think of it as your bank account that tracks the amount of money credited and debited from your account.<\/p>\n<p>UTXO model is a little more complex. UTXO model tracks the unspent amount of a Bitcoin transaction.<\/p>\n<div class=\"su-note\"  style=\"border-color:#e5e54c;border-radius:3px;-moz-border-radius:3px;-webkit-border-radius:3px;\"><div class=\"su-note-inner su-u-clearfix su-u-trim\" style=\"background-color:#FFFF66;border-color:#ffffff;color:#333333;border-radius:3px;-moz-border-radius:3px;-webkit-border-radius:3px;\">\n<p><strong>For example:<\/strong><\/p>\n<ul>\n<li>Alice has 5 BTC.<\/li>\n<li>She sends 3 BTC to Bob.<\/li>\n<li>Bob receives a UTXO worth 3 BTC.<\/li>\n<li>Bob then receives a separate UTXO worth 5 BTC from Chad.<\/li>\n<li>In the end, Bob will own 2 UTXOs that allow him to spend 8 BTC.<\/li>\n<\/ul>\n<\/div><\/div>\n<p>Crypto company <a href=\"https:\/\/docs.alchemy.com\/docs\/utxo-vs-account-models#:~:text=Ethereum%20uses%20the%20account%2Dbased,like%20the%20account%20model%20is!\" target=\"_blank\">Alchemy wrote<\/a> in a blog post:<\/p>\n<blockquote><p>\u201cSo when people say: &#8220;I own 3 bitcoins&#8221;, they should really be saying: &#8220;I own some UTXOs that allow me to spend 3 bitcoins.\u201d<\/p><\/blockquote>\n<p>According to Alchemy, each UTXO has a hard-programmed code called script associated with it. The script contains conditions (e.g., <a href=\"https:\/\/www.techopedia.com\/definition\/5426\/digital-signature\">digital signatures<\/a>) based on which the UTXO can be unlocked for further spending.<\/p>\n<h2><span id=\"runes_potential_for_investors\">Runes Potential for Investors<\/span><\/h2>\n<p>Runes, the new, improved fungible token protocol for Bitcoin, is expected to power an ecosystem of Bitcoin-native tokens.<\/p>\n<p>The creation of Bitcoin-based <a href=\"https:\/\/www.techopedia.com\/cryptocurrency\/best-meme-coins\">meme coins<\/a> will be an obvious use case of the Runes token protocol. We could see <a href=\"https:\/\/www.techopedia.com\/definition\/wrapped-crypto-tokens\">wrapped tokens<\/a> that represent cryptocurrencies existing in other blockchains appear on Bitcoin.<\/p>\n<p>With advancements in the Bitcoin <a href=\"https:\/\/www.techopedia.com\/definition\/layer-two-l2#:~:text=Layer%20two%20(L2)%20is%20a,Rollups\">L2<\/a> and Bitcoin DeFi sector, we could even see bitcoin-native tokens that power decentralized applications.<\/p>\n<p>According to Franklin Templeton Digital Assets, \u201cCurrently the fungible token market for Bitcoin is quite small in comparison to ETH and SOL; however, with the launch of more efficient token standard (Runes), Bitcoin is positioned to close the gap between its fungible market cap versus that of other blockchains.<\/p>\n<blockquote><p>\u201cIf DeFi on Bitcoin is to see the exponential growth that many in the industry are forecasting, a widely adopted fungible token standard is a prerequisite \u2026 We are excited to see if Runes can do for Bitcoin&#8217;s Fungible token and DeFi market what Ordinals did for Bitcoin&#8217;s Non-fungible token market.\u201d<\/p><\/blockquote>\n<h2><span id=\"the_bottom_line\">The Bottom Line<\/span><\/h2>\n<p>On X, there are several Bitcoin-based projects that are preparing for the launch of Runes-based meme coins.<\/p>\n<p>While the meme coin season on Ethereum and Solana has mellowed down from their highs, we could be at the start of a meme coin euphoria on Bitcoin.<\/p>\n<h2><span id=\"faqs\">FAQs<\/span><\/h2>\n<div class=\"man_faq_sec\" itemscope itemtype=\"https:\/\/schema.org\/FAQPage\"><\/time><section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">What are Bitcoin Runes?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">Runes is a token protocol that allows the creation of UTXO-based fungible tokens on the Bitcoin blockchain. <\/p>\r\n                <\/div><\/div><\/section>\n<section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">What is the Runes meta protocol?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">The Runes protocol is a token standard for Bitcoin that allows the creation of UTXO-based fungible tokens. It is an improvement on the popular BRC-20 token standard.<\/p>\r\n                <\/div><\/div><\/section>\n<section class=\"ms_faq ms_card \" ><div itemscope itemprop=\"mainEntity\" itemtype=\"https:\/\/schema.org\/Question\"><div class=\"accordionButton\"><h3 itemprop=\"name\">What are Runes Ordinals?<\/h3> <\/div>\n<div class=\"accordionContent\" itemscope itemprop=\"acceptedAnswer\" itemtype=\"https:\/\/schema.org\/Answer\" style=\"display:none;\"><p itemprop=\"text\">Runes is a token protocol that allows the creation of UTXO-based fungible tokens on the Bitcoin blockchain. Meanwhile, Ordinals is a numbering scheme that allows tracking and transferring individual sats (the smallest unit of Bitcoin).<\/p>\r\n                <\/div><\/div><\/section>\n<div class=\"reference-content\">\n<div class=\"reference-heading reference-content-collapsible-heading\">\n<h2><span id=\"references\">References<\/span><\/h2>\n<\/div>\n<div class=\"reference-content-body\">\n<ol>\n<li><a href=\"https:\/\/rodarmor.com\/blog\/runes\/\" target=\"_blank\">Runes \u2013 Casey Rodarmor&#8217;s Blog<\/a> (Rodarmor)<\/li>\n<li><a href=\"https:\/\/bitcoin.org\/bitcoin.pdf\" target=\"_blank\">Bitcoin: A Peer-to-Peer Electronic Cash System<\/a> (Bitcoin)<\/li>\n<li><a href=\"https:\/\/beincrypto.com\/bitcoin-nfts-shatter-records\/\" target=\"_blank\">Bitcoin NFTs Shatter Sales Records: This One Leads<\/a> (Beincrypto)<\/li>\n<li><a href=\"https:\/\/thedefiant.io\/news\/nfts-and-web3\/ordinals-community-grapples-with-numbering-controversy\" target=\"_blank\">Ordinals Community Grapples With Numbering Controversy &#8211; The Defiant<\/a> (Thedefiant)<\/li>\n<li><a href=\"https:\/\/x.com\/FTI_DA\/status\/1779979775651561691\" target=\"_blank\">Franklin Templeton Digital Assets on X: &#8220;Runes \u2013 Bitcoin\u2019s new Fungible Token Standard https:\/\/t.co\/0VmlFbyKPc&#8221; \/ X<\/a> (X)<\/li>\n<li><a href=\"https:\/\/docs.alchemy.com\/docs\/utxo-vs-account-models#:~:text=Ethereum%20uses%20the%20account%2Dbased,like%20the%20account%20model%20is!\" target=\"_blank\">UTXO vs. Account Models<\/a> (Docs.alchemy)<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>Runes, an improved fungible token protocol for Bitcoin (BTC), launched on April 20, 2024, as the Bitcoin blockchain underwent its fourth halving event. There are a lot of expectations from Runes. The chief among them is the hope that the Runes will power the Bitcoin decentralized finance (DeFi) ecosystem in the near future. Lucas Outumuro, [&hellip;]<\/p>\n","protected":false},"author":286557,"featured_media":225543,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_lmt_disableupdate":"","_lmt_disable":"","om_disable_all_campaigns":false,"footnotes":""},"categories":[601],"tags":[],"category_partsoff":[],"class_list":["post-225520","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blockchain"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.2 (Yoast SEO v24.5) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Will Bitcoin Runes Standard Power Bitcoin DeFi in 2025?<\/title>\n<meta name=\"description\" content=\"Runes is an improved fungible token protocol for Bitcoin launched during Bitcoin halving on April 20, 2024. 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