Runes Protocol Founder: ‘I create a place for people to create shitcoins’

Ahead of Bitcoin halving, Runes Protocol and projects built on it are becoming the focus of attention.

Will this be a sustainable development step for the Bitcoin network or will the “jpeg frogs” once again cause an uproar?

Runes is a new protocol coming from the mind behind Ordinals - Casey Rodarmor. With Ordinals, Bitcoin developers can create NFT-like “inscriptions” on the Bitcoin network. This then allows users to trade the jpegs for money.

In an interview, Rodarmor described his Ordinals “theory” as a “lens through which you can view the Bitcoin network. And when you look at it through this lens, traceable satoshis suddenly appear as clear as Pokémon in tall grass.”

In this sense, we can similarly see Runes as a new lens through which to view Bitcoin - but this time with shitcoins.

Runes is a fungible token protocol for Bitcoin, designed as an alternative to BRC-20, Taproot Assets, RGB, Counterparty and Omni Layer. In his blog post, Rodarmor details the differences between Runes and these protocols. Basically, all of the above protocols operate off-chain or based on addresses (accounts).

According to Rodarmor, off-chain fungible token protocols require you to sync off-chain data with the blockchain, creating a less user-friendly experience. Address-based protocols also do not play well with Bitcoin's UTXO-based approach, leading to similar problems for users.

This is what makes Runes so special. Instead of linking the wallet balance record to the wallet address, the protocol puts the record into a UTXO. A new Rune is initialized with an issuance transaction, identifying the supply, symbol, and decimal number that assigns that supply to a specific UTXO.

For example: If I use a UTXO with 10,000 satoshis, it can contain a million (or any other number) of Runes in it. If I want to send two friends 100,000 Runes each, I put the data set specifying where those Rune tokens go into the OP_RETURN of the Bitcoin transaction. I put in one UTXO and took out three UTXOs; two UTXOs each containing 100,000 Runes for my two friends and the other containing 800,000 Runes for me.

“Runes will help minimize the harm. BRC-20 generates a lot of unused UTXOs. To use Runes, you must destroy the UTXO, which is beneficial to the entire system. It's also good for users, allowing swaps based on PSBT (partially signed Bitcoin transactions) to become simpler.

Since a UTXO can only be used once, you can create a transaction set. Out of those transactions, you can guarantee only one of them will be minted. The BRC-20 transaction cannot do this,” Rodarmor wrote on Twitter.

Since the end of September 2023, community discussions about Runes have become heated.

Runes Protocol will not launch until the official Bitcoin halving event. But since Rodarmor first announced its plans in September 2023, many parties have begun building Runes-based protocols.

However, Rodarmor issued the following warning: "Many people messaged me asking if other Runes services are trustworthy or not.

I have nothing to do with these projects. And when the Runes protocol officially launches, runes tokens launched before this date will not be recognized. If you buy anything now, it will definitely be rekt. (Of course, you can't rule out the possibility of being rekt with real Runes).

Controversy surrounding Runes

Runes' arrival in the Bitcoin community has encountered a number of obstacles, from technical issues to community adoption and other protocol design differences.

Many commentators believe that the main problem is that Runes lacks a unified standard - something that has caused fragmentation and created many paths that led to the emergence of Runestone and PIPE. The lack of a standard set can cause infrastructure difficulties, especially with indexing Runes.

Runes' UTXO-based approach - which gives it compatibility with the Lightning Network - is at odds with BRC-20's widely adopted account model. Runes strives to become more efficient in leaving an on-chain footprint and storing data. However, there are opinions that it is difficult for the project to enjoy solid infrastructure and a warm reception like BRC-20 - especially in Asia.

The level of community engagement and acceptance can also create significant obstacles. BRC-20, when first launched, caused great division in the Bitcoin community. Despite its promises, it's likely that Runes will generate a similar reaction. The fact that Runes will not have a community-driven launch also adds to this concern.

‘Casino for shitcoin’

Not caring much about public opinion at this time, Rodarmor believes 99.9% of fungible tokens are nothing more than scams and memes. However, he admits they won't disappear easily - just like casinos will endure.

Instead, he thinks it would be beneficial if “casino shitcoin” contributed fees to strengthen the Bitcoin network, and attract more users and developers interested in other blockchains to Bitcoin.

“Loyal to his straightforward style, he compared Runes to providing clean needles for drug addicts on the street,” commented Trevor Owens - a Twitter user.

If Runes is successful, the project will pull liquidity, technology and attention away from other cryptocurrencies and bring them back to the Bitcoin network.

Specifically, recently on the podcast "Hell Money" that he founded, Rodarmor said:

“If Runes is successful, the project will pull liquidity, technology and attention away from other cryptocurrencies and bring them back to the Bitcoin network. The moment you realize this is an industry about betting and entertainment, everything becomes understandable and you can approach it in a more honest way,” he said.

Runes, according to their creators, have no meaning other than creating simple and straightforward speculative assets. There is no noble discussion here about enabling project teams or funding developers to build “financial futures”.

This is just a “fair token launch” to help people dabble in a speculative asset while minimizing the risk of being “rugged”.

Of course, when Runes launches, what other developers do with it is beyond Rodarmor's control.

“I didn't create shitcoin,” he said. “I created a place for people to create shitcoins - which is probably worse and more dangerous. We can only wait and see.”