What is Runes Protocol?
What is Runes Protocol
Runes Protocol is a token standard that enables the creation of different cryptocurrencies on the Bitcoin blockchain. Cryptocurrencies to be issued thanks to the Runes Protocol can be seen as Bitcoin versions of the ERC-20 standard altcoins that came into our lives with Ethereum.
What is the Difference Between Runes Protocol and Ordinals?
Runes Protocol was developed by Casey Rodarmor, who recently made a name for himself with the Ordinals infrastructure. While the Ordinal infrastructure allows the creation of cryptocurrencies in the form of NFTs in the Bitcoin network, Runes Protocol enables cryptocurrencies issued for various purposes, called altcoins, to be implemented in the Bitcoin network.
Cryptocurrencies in NFT form usually belong to a collection with a limited number of pieces. Cryptocurrencies, called altcoins, can be issued for purposes such as governance tokens of projects, payment instruments, or as meme coins, depending on social values. Therefore, the Bitcoin blockchain, which embraces NFTs thanks to Ordinals, has the opportunity to embrace all altcoins with Runes Protocol.
Runes Protocol uses the OP_Return command within the Bitcoin blockchain to store data regarding transfer and token information in the space provided by this command. In the transfer process, it uses the UTXO (Unspent transaction output) method, which is the balance recording method used by Bitcoin.
Runes Protocol transactions hidden within Bitcoin transactions are called Runestones. There can be one Runestone in each Bitcoin transaction. Runestone may contain data such as creating a new Runes cryptocurrency, interacting with or transferring an existing Runes.
Runestone contains very minimal and space-saving data called Edict. Edict contains main data such as information about the relevant cryptocurrency and the amount of tokens to be interacted with. Thanks to Edict, Runes Protocol aims to take up minimal space on the Bitcoin network and not create an additional load on the network.
How the information in Runestone and Edict will be processed and in what order is determined by the data placed in the OP_Return command.
The process of creating Rune cryptocurrencies is called Etching instead of the frequently used term 'minting'.
What Do Runes Mean?
Rune means old inscription in Turkish.
Runestone can be thought of as the oratory on which these inscriptions are written, which is how it technically works.
Edict in Runestone means edict. Technically, Edict is located within the Runestone. In other words, it can be perceived as an edict within the Address.
Etching, the name given to the formation process of Rune cryptocurrencies, means carving. In other words, it can be thought of as carving a new writing or tablet. As a matter of fact, the user who creates the Rune cryptocurrency is called Etcher, which means engraver.
Why did Runes Protocol become a hot topic?
All cryptocurrencies other than Bitcoin are called altcoins. The demand created for altcoins in the market is generally created by offering services that Bitcoin cannot meet. For example, Ethereum has contributed to the industry by creating a different ecosystem from Bitcoin with its smart contract infrastructure. Bitcoin, on the other hand, has never lost its leadership in this field by focusing on decentralization and security.
While it became possible for the first time for NFTs to work on the Bitcoin blockchain with the Ordinal Protocol, it was made possible for the first time for all altcoins to work on Bitcoin with the Runes Protocol.
Since Bitcoin is the most secure blockchain, the fact that a project works based on Bitcoin can naturally make it prestigious and reliable. However, features such as transaction speed, which Bitcoin had to sacrifice in order to keep its decentralization and security standards at a high level, are still a negative factor. Therefore, while projects such as web3 games that attach importance to speed are not expected to come to the Bitcoin blockchain with Runes Protocol, it can be expected that finance projects, where speed can be relatively secondary and security is the main priority, will start to prefer the Bitcoin network.
While finance-focused innovations are known in the industry under the name and category of Defi, thanks to protocols such as Runes and Ordinals, a new term and sector called BTCFi, which means Bitcoin-centered finance, has emerged. This new trend symbolizes that the high standards offered by Bitcoin have become available for various innovative initiatives by many different projects.
