The originator of Bitcoin Ordinals is suggesting a novel fungible token protocol based on Bitcoin, as a prospective substitute for the BRC-20 token standard.
The BRC-20 standard, introduced in March by an anonymous developer known as “Domo,” achieved a remarkable milestone within two months, with its market capitalization reaching $1 billion. Notably, PEPE and ORDI emerged as prominent BRC-20 tokens established on the Bitcoin platform during this period.
The BRC-20 protocol facilitates the creation and exchange of fungible tokens through the Ordinals protocol on the Bitcoin network. However, Casey Rodarmor contends that there is a problem with BRC-20 tokens, as they tend to clog the Bitcoin network with what he refers to as “unwanted” unspent transaction outputs (UTXOs).
In a blog post dated September 25, he elaborated on how BRC-20 tokens result in the “undesirable consequence of UTXO proliferation” and put forth Runes as an alternative that operates based on UTXOs.\
“If this protocol maintained a minimal on-chain presence and promoted responsible UTXO management, it could potentially act as a harm reduction measure in comparison to existing protocols,” Rodarmor emphasized.
UTXOs represent the remaining cryptocurrency balance within a wallet after a transaction is completed. This balance is subsequently utilized in future transactions and is stored in the UTXO database.
Bitcoin’s UTXO model is instrumental in maintaining the cryptocurrency’s auditable and transparent ledger by preventing double-spending.
Rodarmor also noted that other fungible token protocols on the Bitcoin network, such as Really Good for Bitcoin, Counterparty, and Omni Layer, have their own set of issues.
Although Rodarmor acknowledged that a significant portion of fungible tokens consist of fraudulent schemes and memes, he maintains that the appropriate fungible token protocol has the potential to enhance the value of the Bitcoin network. During a Twitter Spaces session on September 25 with Trevor Owens, his co-host on The Ordinals Show, Rodarmor disclosed that he conceived the concept of Runes just the previous week and was uncertain whether he would proceed with its development.
Following the session, Owens suggested the possibility of offering $100,000 from the Bitcoin Frontier Fund to aspiring developers who could successfully implement a Rune application, thereby advancing Rodarmor’s proposal.