The creator of the Bitcoin Ordinals has proposed a novel Bitcoin-based fungible token protocol as a potential alternative to the BRC-20 token standard.
The BRC-20 standard, introduced by an anonymous developer known as "Domo" in March, rapidly gained popularity, reaching a market capitalization of $1 billion within just two months. Notable BRC-20 tokens, like PEPE and ORDI, emerged as prominent assets Within the BRC-20 ecosystem, enabling the minting and transfer of fungible tokens through Bitcoin's Ordinals protocol. However, Casey Rodarmor, the inventor of the Bitcoin Ordinals, argues that BRC-20 tokens pose issues by generating excessive "garbage" unspent transaction outputs ( UTXOs) on the Bitcoin network.
In a blog post dated September 25, Rodarmor explained that BRC-20 tokens result in the "undesirable consequences of UTXO proliferation" and proposed Runes as a UTXO-based alternative. He believes that UTXO-based protocols align better with Bitcoin's nature and encourage responsible UTXO management by avoiding the creation of unnecessary UTXOs.
Rodarmor stated, "If the protocol has a smaller on-chain footprint and encourages responsible UTXO management, it could potentially reduce harm compared to existing protocols." UTXOs represent the remaining cryptocurrency balance in a wallet after a transaction is completed, and this balance is used for future transactions and stored in the UTXO database.
Bitcoin's UTXO model plays a critical role in ensuring the integrity and transparency of Bitcoin's ledger by addressing the double-spend problem.
Rodarmor noted that other fungible token protocols on Bitcoin, such as Really Good for Bitcoin, Counterparty, and Omni Layer, have their own shortcomings. While Rodarmor acknowledges that many fungible tokens are associated with scams and memes, he believes that the right fungible token protocol could bring value to the Bitcoin network by attracting transaction fee revenue, developer attention, and users.
During a Twitter Spaces conversation on September 25 with Trevor Owens, co-host of The Ordinals Show, Rodarmor introduced the Rune concept and expressed uncertainty about its future development. Following the discussion, Owens offered $100,000 from the Bitcoin Frontier Fund to potential developers interested in advancing the Rune proposal.
