BRC-20 and Its Impact on Bitcoin
The BRC-20 token standard, pioneered in March by an anonymous developer named Domo, stormed the crypto scene, boasting a market cap of $1 billion in just two months. Highlight tokens like PEPE and ORDI illustrated the potential of BRC-20 tokens created on Bitcoin. However, their downside? They clutter Bitcoin with unnecessary unspent transaction outputs (UTXOs).
Rodarmor’s UTXO-Based Proposal: Runes
Casey Rodarmor, the mind behind Bitcoin Ordinals, has voiced concerns over the implications of BRC-20 tokens. In his recent blog post dated Sept. 25, he emphasized that BRC-20 tokens led to a troubling rise in “junk” UTXOs. He remarked, “Protocols that are UTXO-based fit more naturally into Bitcoin and promote UTXO set minimization by avoiding the creation of ‘junk’ UTXOs.”
In a bid to alleviate this problem, Rodarmor unveiled Runes—a new protocol designed to be UTXO-based, ensuring the Bitcoin network remains cleaner and functions efficiently.
UTXO and Its Significance
For those unfamiliar with the term, UTXOs essentially denote the remaining amount of cryptocurrency in a wallet after a transaction has been executed. These balances are crucial as they are used for succeeding transactions, and they’re stored in the UTXO database. Furthermore, Bitcoin’s UTXO model ensures Bitcoin’s reputation as an auditable, transparent ledger, safeguarding against the infamous double-spending problem.
The Promise of an Effective Fungible Token Protocol
Despite the skepticism surrounding fungible token protocols—with Rodarmor himself acknowledging that 99.9% of them are riddled with scams and memes—he stands firm in his belief. Rodarmor is confident that the right fungible token protocol can significantly bolster the Bitcoin network, potentially ushering in substantial transaction fee revenue, developer engagement, and an influx of users.
However, it remains to be seen if Rodarmor will further develop the Runes concept. But with Bitcoin Frontier Fund’s Trevor Owens hinting at a $100,000 incentive for developers to kickstart a Rune application, Rodarmor’s vision might soon come to fruition.