Bitcoin is front and center again, and orange coin lovers everywhere have plenty to be excited about: new all-time high prices, the upcoming halving, rising demand for Ordinals—and soon, something totally new called Runes.
And while Runes won’t hit Bitcoin until the halving, when the supply of newly minted BTC is once again cut in half by slashing miner rewards, the project is already getting a lot of hype and attention. Here’s what you need to know.
What are Runes?
Runes is a new protocol from the mind behind Ordinals, Casey Rodarmor. With Ordinals, the Bitcoin developer made it possible to create NFT-like “inscriptions” on the Bitcoin network—and this, in turn, made it possible to trade jpegs for magic internet money right on the grandaddy chain.
Rodarmor, in an interview with TechCrunch, described his Ordinals “theory” as a “lens that you can view the Bitcoin blockchain through, and when you view it through that lens, these trackable satoshis pop into view like Pokémon in the tall grass.” So, in this sense, Runes similarly represent a new lens through which to view Bitcoin—but this time, with shitcoins.
The Runes protocol picks up where BRC-20s left off. BRC-20 is a fungible token standard, which itself makes use of the Ordinals protocol and was developed by the pseudonymous dev domo. Runes is an attempt to make the process of creating fungible tokens on Bitcoin more efficient.
How do Runes work?
Whereas Ordinals or inscriptions are non-fungible tokens—unique identifiers meant to house data like collectibles, art, or trading cards—BRC-20s and Runes are fungible tokens. Fungible simply means they’re interchangeable, like the dollar bills you no longer have in your wallet because all money is digital now anyway.
Like BRC-20s, Runes will use Bitcoin and pay fees in Bitcoin to create new tokens. The key difference between Runes and BRC-20s is that Runes, like Bitcoin itself, uses an Unspent Transaction Output (UTXO) model, as opposed to an account model—the same model used by some layer-1 chains such as Ethereum.
Many Bitcoiners believe the UTXO model to be superior, and that using the account model is one of the reasons Ethereum falls short. Rodarmor himself believes the UTXO model to be superior because, among other reasons, other token standards tend to rely on off-chain data, whereas Runes will be completely on-chain.
With Runes, the issuer creates a token and sets a limit for how many someone can mint in a transaction. This way, the creator of the token as well as the community of would-be buyers all get an equal chance to access and buy the tokens at the same time.
When does the Runes protocol launch on Bitcoin?
Rodarmor has timed the launch of Runes to the Bitcoin halving. This means that both the Runes protocol and the various “runes” tokens being built on the protocol will go live when Bitcoin reaches a block height of 840,000. This is currently expected to happen on or around April 20, though estimates will vary.
The “halving” refers to an event that’s hard-coded into the Bitcoin protocol and occurs roughly every four years. It’s meant to keep Bitcoin’s inflation rate in check, and historically, this event has been viewed as a bullish indicator and often brings a lot of eyes to Bitcoin. After all, a shrinking supply and growing demand is how “number go up.”
And while Runes and the halving are still more than 30 days away, several projects are already building around Runes in anticipation.
What projects are building on Runes?
Ever since Rodarmor first announced the plan for the Runes protocol back in September, there’s been a rush of activity in the Ordinals scene to prepare.
The first and arguably most prominent project to start making noise is RSIC. RSIC is a collection of 21,000 Ordinals that plans to launch a token called RUNE—which is like launching an ERC-20 token called ERC-20, and is sure to cause some confusion. The RSIC Ordinals were airdropped to wallets that owned certain other Ordinals inscriptions, such as Ordinal Maxi Biz.
RSIC is a play on the term ASIC, a type of Bitcoin miner. Users who own the RSIC Ordinals inscription can use it to start “mining” their upcoming token.
Other notable projects have since followed in RSIC’s footsteps.
Runestone is an Ordinals project created by the pseudonymous NFT and Ordinals connoisseur Leonidas. The project consists of 112,383 Runestone Ordinals that have been airdropped to every Ordinals wallet that held at least three inscriptions prior to the cutoff date of January 20, 2024—the one-year anniversary of the Ordinals protocol launch.
That airdrop began on Thursday, and Leonidas previously told Decrypt that each Runestone will “convert” into a Runes token once the protocol is live.
Node Apes is another pre-Runes project, which combines a NodeMonkes-inspired profile picture (PFP) with a “Runic Miner” Ordinal (sold separately, some assembly required). Together, the Node Ape and runic miner Ordinal promise to “mine” runes if held in the same wallet.
RuneX is a project that claims to be building a decentralized exchange for Runes on Bitcoin, and also has its own Ordinals collection.
Lastly, the popular Bitcoin wallet Xverse announced Thursday that it has added testnet support for Runes, with plans to support the fungible token standard on mainnet as soon as it goes live.
There are many, many other projects currently in the Ordinals space doing something or other with Runes, but there’s one important thing to remember: There is Runes, the protocol, and then there are “runes”—the tokens built on the protocol that anyone with the know-how can create.
Crucially, Rodarmor hasn’t yet released any information about the technical framework around Runes. So any project that claims to be the “first” to launch runes tokens is making a pretty big assumption at the moment. To say you’re launching a Runes-based token right now is a little like saying you’re going to remix a song that hasn’t been released yet.
Projects that claim to be mining runes right now are essentially running a “points program”—but on Bitcoin. Hold the Ordinal in your wallet, and you can start earning points… er, mining runes.
What’s the point of Runes?
Rodarmor is refreshingly candid about his reasons for launching Runes. In a recent conversation on his “Hell Money Podcast” on YouTube, the developer made his intentions very clear: “If Runes are successful, they’ll drain liquidity, technology, and attention away from other cryptocurrencies, and bring it back to Bitcoin,” he said.
“The moment you realize this is a gambling and entertainment industry, everything makes sense and everybody can approach it in a more honest way,” he added.
Runes, as far as its creator is concerned, isn’t meant for anything more than to create speculative assets, plain and simple. There’s no lofty talk of facilitating teams with runways or funding developers for projects building “the future of finance.” Just fair token launches that allow people to get into a speculative asset while minimizing the risk of being rugged.
Of course, what other developers do with the Runes protocol is out of Rodarmor’s hands once it’s in the wild.
“I’m not creating a shitcoin,” Rodarmor said during the interview. “I’m creating a venue for people to create shitcoins, which is possibly worse and more dangerous. We’ll see.”
Edited by Guillermo Jimenez and Andrew Hayward
