Learn Live ICYMI: Decrypting the Next Era of Bitcoin With Bitcoin Runes

In the third episode of our Learn 101 livestream, we delved into the transformative world of Bitcoin Runes, a new development that promises to enrich the Bitcoin ecosystem by enabling the creation of fungible tokens directly on Bitcoin's blockchain. This session arrived at a critical time — shortly after the recent Bitcoin halving, a pivotal event in the cryptocurrency world that has set the stage for significant changes within the Bitcoin network.

Our new series, Learn Live ICYMI, aims to provide a recap of our Learn 101 livestreams, providing you with comprehensive expertise and insights from leading figures in the crypto industry in case you miss the livestream.

Joining the livestream on May 16, 2024 were two distinguished guests: V, the Marketing Lead from Uncharted.gg, and Shash, CEO and founder of Altcoin Buzz. Under the moderation of Sabrina Chua, Crypto Evangelist and SEO Editor at Bybit, this episode explores the functionality, impact and future of Bitcoin Runes in the cryptocurrency landscape.

Key Takeaways:

• Launched alongside the recent Bitcoin halving — a key event that reduces the reward for mining new blocks — Bitcoin Runes arrives at a time when the network is looking for new ways to incentivize miners and enhance blockchain functionality.

• Bitcoin Runes aims to offer a more resource-efficient way of token creation as compared to predecessors such as BRC-20.

Understanding Bitcoin Runes and Its Challenges

The session kicked off with a comprehensive overview of Bitcoin Runes, its inception following the Bitcoin halving and its role in adding a new layer of functionality to the Bitcoin network. Bitcoin Runes aims to offer a more resource-efficient way of token creation, as compared to predecessors like BRC-20, focusing on minimizing the blockchain's load and integrating smoothly with the existing UTXO model.

V dove deep into the technical essence of Bitcoin Runes: "Bitcoin Runes utilizes the UTXO model as well as the OP_RETURN output to insert arbitrary data into transactions.” This facilitates the creation of tokens without bloating the network, a critical improvement over previous standards like BRC-20, which contributed to unnecessary UTXO proliferation. He also commented on what excites him about Runes — namely, that it’s “one sign of all the innovation that’s happening on Bitcoin at the moment. So it shows what’s coming and what is going to become possible in the near future.”

Addressing potential challenges, such as whether Bitcoin Runes will provide sustainable revenue for miners, Shash shared that miners tend to know what they’re getting into before they spend money buying equipment to run the network. However, “[A]dding more miners and making sure that the network stays decentralized is very important.” He shared that Runes does generate more mining fees on UTXO, and it “allows for the miners to be able to sell Bitcoin if they have to at a lower price,” although they do “congest the network sometimes” as well. He offered the possible solution of scaling to a Layer 2 or a centralized system.

V agreed with this, stating that Bitcoin Runes does provide “significant incentives for miners.” Touching on the high transaction fees, he shared that he was one of the first people to mint Runes, just “five minutes after it launched,” and spent “$3,000 minting 61 runes.” While the “fees were insane,” this incident demonstrated to him that the “demand is there for chain bloat to occur” — and he doesn’t think that demand will go away. 

Market Impact and Current Adoption of Bitcoin Runes

In the next segment of the livestream, the panel addressed the efficiency and broader market implications of Bitcoin Runes, comparing it to other token standards such as BRC-20. 

Shash highlighted the differences between Bitcoin Runes and BRC-20: "Bitcoin Runes launched in April 2024 represent a new fungible token issuance system that uses a ‘one transaction per transfer’ model over the Bitcoin network. They’re working on making it compatible with the Lightning Network, which would be a huge advantage. In contrast, BRC-20, launched in March 2023, is a less efficient system, and not compatible with Lightning."

Expanding on the conversation, Shash mentioned other relevant developments: "Taproot assets by Lightning Labs are also significant as they share many similarities with Bitcoin Runes, but focus on a better indexer system and Lightning integration. This shows a trend toward enhancing the functionality and efficiency of tokens on the Bitcoin blockchain."

Shash then elaborated on the benefits that Bitcoin Runes brings to the Bitcoin blockchain: "Bitcoin remains decentralized and immutable. As an open-source network, if people can build on it and use it for various applications, it will continue to grow. Bitcoin Runes makes the network more interesting and exciting, and the technology is built to survive chaos. We must be observant, understand and stay curious before jumping to conclusions."

Vtook the opportunity to discuss new opportunities emerging from Bitcoin Runes, particularly focusing on how Bitcoin Runes offers “an additional way we can have fun on the chain and experiment with different airdrops or payment systems.” 

He explained the concept of pre-Runes and Runes: "Pre-Runes are essentially Rune miners that were airdropped to Ordinal holders of certain communities or projects, with counters attached, tallying how many Runes would be airdropped once the Runes protocol launched. For instance, RSIC Metaprotocol was the first pre-Rune miner launched, involving a gamified airdrop that included some level of randomization, which not everyone felt was fair."

Expanding further, he shared details about subsequent initiatives that aimed to improve fairness in distribution: "As a response to RSIC, Leonidas launched Runestones [NFTs], which were basically supposed to be a fairdrop.”

The discussion underscored the transformative potential of Bitcoin Runes, not just for the mining community but also for end users, by providing new ways to interact with the Bitcoin ecosystem and enhancing the network's commercial and social utility.

Closing Thoughts

This session of Learn 101 livestream has not only illuminated the technical and economic aspects of Bitcoin Runes, but has also sparked conversations about the future trajectory of Bitcoin in the evolving digital asset landscape. For those interested in deeper dives and more technical discussions, you can also check out Bybit Learn for more guides on Bitcoin Runes.

As part of the livestream, Bybit is holding an exclusive event that offers you a chance to participate in our pop quiz and earn a share of a 100,000 BOME prize pool. The event period is through May 23, 2024, 12PM UTC.

Stay tuned for more discussions on the dynamic world of cryptocurrencies — and don't miss our next session on Jun 6, 2024, 8AM UTC, where we delve into trading meme coins!

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