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Casey Rodarmor, the creator of Bitcoin Ordinals, has introduced an innovative method for creating and transferring fungible tokens on the Bitcoin network. This new approach, called Runes, is proposed as a superior alternative to the existing BRC-20 token standard.
A New Bitcoin Token Protocol- RUNE
BRC-20 tokens have gained rapid popularity, with tokens like PEPE and ORDI reaching a combined market value of $1 billion within two months. By leveraging the Ordinals protocol, BRC-20 allows for the creation and transfer of fungible tokens on Bitcoin.
However, Rodarmor highlights a significant drawback: excessive generation of “junk” UTXOs (unspent transaction outputs) within the Bitcoin network. These UTXOs represent remaining balances stored in wallets after transactions and are essential for future transactions being recorded in the UTXO database.
Unfortunately, such proliferation of BRC-20 tokens results in unnecessary cluttering and expansion of the network’s size. To circumvent this issue, Rodarmor proposes Runes as a UTXO-based alternative that minimizes UTXO clutter while seamlessly integrating into Bitcoin’s framework.
Rodarmor further explains how UTXO-based protocols align with Bitcoin’s principles and discourage “junk” UTXO creation while advocating for responsible network management.
UTXO Model Benefits and Challenges in Bitcoin Ecosystem
The use of UTXOs is crucial for the integrity and transparency of the Bitcoin ledger by preventing double-spending. In the UTXO model, each transaction consumes existing UTXOs as inputs and generates new ones as outputs.
The UTXO model facilitates verification of transaction validity and coin ownership while enabling parallel processing for improved scalability and efficiency. However, adopting the UTXO model also presents challenges such as network size increase, storage space, and bandwidth for tokens protocol.
According to Rodarmor, It is important to minimize the creation of unnecessary UTXOs to minimize storage issues. Additionally, Rodarmor highlights concerns surrounding fungible token protocols like Really Good for Bitcoin, Counterparty, and Omni Layer in his blog post.
Skepticism and Potential of Bitcoin Fungible Tokens
Rodarmor also expresses skepticism towards fungible tokens on Bitcoin, as he thinks that most are scams or memes. However, he acknowledges the enduring presence of these tokens and recognizes the possibility of a beneficial fungible token protocol enhancing the advantages for Bitcoin.
“Creating a good fungible token protocol for Bitcoin might bring significant transaction fee revenue, developer mindshare, and users to Bitcoin,” he said.
Trevor Owens, the Ordinals Show co-host, showed keen interest in Runes and even extended an offer of $100,000 from the Bitcoin Frontier Fund to developers capable of constructing a functional Rune application. This opportunity could serve as a means to validate Rodarmor’s idea and determine its effectiveness.
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