Runes (Bitcoin)
Runes is a fungible token protocol on Bitcoin, designed as a more efficient alternative to BRC-20. It uses Bitcoin's native UTXO model to track token balances directly, without requiring inscriptions or off-chain indexers to interpret JSON.
✦ Key Insight
Runes activated alongside the 2024 Bitcoin halving and quickly captured significant trading volume. For traders, it created another Bitcoin-native asset class with different fee dynamics and wallet support than BRC-20 — and a more efficient design that became the de-facto standard.
✕ Common Misconceptions
Spending a UTXO containing runes from a non-rune-aware wallet, accidentally treating them as ordinary sats.
Mixing runes and ordinary BTC in a wallet without UTXO control.
Ignoring Bitcoin fee spikes during high rune activity.
Detailed Explanation
How It Works: A "rune" is etched into the Bitcoin chain with a unique identifier, supply, and divisibility. Token balances live inside specific UTXOs, marked via the OP_RETURN field. Transfers happen through standard Bitcoin transactions that split or combine those UTXOs, with rune-aware wallets interpreting the balances.
FAQs:
Is Runes a replacement for BRC-20? Many traders treat it that way; BRC-20 still has its own market.
Do Runes inflate Bitcoin's data footprint? They use existing block space; impact depends on demand.
In Practice
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