Bitcoin is set to launch a new token standard called “Runes” that will allow the premiere crypto network to catch up to its rivals in the realm of DeFi, according to a report by asset manager Franklin Templeton. The technology is expected to go live at the same time as the Bitcoin halving and will introduce a new token standard on Bitcoin layer 1, improving upon the current fungible token standards on Bitcoin. Tokens are blockchain-based assets that are different from the blockchain’s native currency and until recently, there was no way to mint tokens on Bitcoin’s main blockchain. This limited its use in applications such as NFTs, stablecoins, and DeFi. Runes are designed to be more efficient than previous token standards, requiring less blockchain-based data to move around.
Ordinals, developed by Casey Rordamor in 2023, allowed users to inscribe individual satoshis with unique identification numbers and embed them with arbitrary data, enabling the creation of NFTs on the Bitcoin blockchain. Bitcoin NFTs stood out from Ethereum and Solana NFTs as their image data was embedded directly into the blockchain rather than on a centralized server. A developer named Domo built on the Ordinals protocol to enable BRC-20 tokens, but these were deemed highly inefficient. Runes, created by Rordamor, are designed to be much more efficient than BRC-20 tokens or even Ethereum’s ERC-20 tokens. They also offer compatibility with the lightning network and increased transaction privacy.
Despite Bitcoin hosting a larger NFT market than both Ethereum and Solana, its fungible token market cap is significantly lower. Currently, Bitcoin’s total market cap is $1.2 trillion, while its fungible token cap is just $600 million. In comparison, Ethereum’s market cap is $378 billion, while its fungible token market cap is $499 billion. Franklin Templeton believes that Runes has the potential to bridge this gap and boost Bitcoin’s fungible token market, similar to how Ordinals impacted its NFT market. The firm is optimistic about the potential of Runes to enhance Bitcoin’s DeFi market and increase its competitiveness in the cryptocurrency space.
The launch of Runes is expected to bring significant advancements to the Bitcoin network, allowing it to expand its capabilities and compete more effectively in the DeFi sector. The new token standard is poised to improve the efficiency of token transactions on the Bitcoin blockchain, making it easier to mint tokens and engage in various decentralized finance activities. With Runes, users will have access to a more streamlined and secure way of interacting with fungible tokens, opening up new possibilities for innovation and growth in the Bitcoin ecosystem.
Overall, the introduction of Runes is a promising development that could potentially revolutionize the Bitcoin network and bring it closer to its competitors in the realm of DeFi. By enhancing the fungible token market cap and improving the efficiency of token transactions, Runes has the potential to bolster Bitcoin’s position in the cryptocurrency market and attract more users to the network. With its compatibility with the lightning network and focus on transaction privacy, Runes represents a significant step forward for Bitcoin and the broader blockchain industry as a whole.
