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In two weeks, Ordinals founder Casey Rodarmor will launch Runes, his protocol for fungible tokens that use Bitcoin’s blockchain. Runes will launch on the day of Bitcoin’s halving: currently scheduled for April 20.
Bitcoin’s mining reward halves every four years. After April 20, miners will receive just 3.125 instead of the current 6.25 bitcoin in guaranteed income for every new block they mine.
Runes is so widely anticipated that Bitcoiners are already predicting a torrent of transactions. Bids from Runes users could spike fees over 1,000 satoshis per vByte. For context, current transaction fees on Bitcoin are below 10 sat/vByte.
Rodarmor is a Bitcoin developer and founded Ordinals, a protocol that allows participants to create NFT-like Inscriptions within Bitcoin transactions. Despite Rodarmor’s repeated admonishments and pleas for patience, his Ordinals software also enabled unauthorized, BRC-20 fungible tokens like ORDI.
Rodarmor’s motivation for Runes is somewhat fatalistic and defeatist. “Fungible tokens are 99.9% scams and memes. However, they don’t appear to be going away any time soon.” Yes, that is his primary, verbatim justification for launching Runes.
Read more: Bitcoin ordinals creator causes outcry for wanting to enforce renumbering
Runes ticker symbols will start at 13 characters
In particular, he is launching Runes because he hates the unauthorized version of fungible tokens on Bitcoin, BRC-20s. Rodarmor claims non-Runes fungible token protocols like BRC-20 are inferior; he’s asked Ordinals fans to wait until April 20 for his superior version.
Rodarmor has made a curious choice in launching his BRC-20 competitor. Runes will impose a 13-character limit on ticker symbols. In other words, no one may claim desirable three or four-letter ticker symbols like PEPE. Shorter ticker symbols will progressively unlock on distant future dates.
Runes’ first ticker symbol will be UNCOMMONGOODS. The maximum ticker symbol length is 28 characters.
One of the ways that Runes will be superior to BRC-20, he claims, is that Runes will require fewer on-chain minting transactions. The BRC-20 token ORDI, for example, generated thousands of minting transactions when it launched.
Rodarmor’s Runes protocol will consolidate these minting transactions using alternative techniques, reducing Runes’ on-chain footprint. Ordinals also used sophisticated techniques to consolidate data and reduce on-chain footprint.
‘Digital commodities’ but of course
In his marketing material, Rodarmor is naturally quick to claim that he’s merely launching a platform for ‘digital commodities.’ This is a fantastic claim given that similar platforms like ERC-20 and ERC-721 have been platforms for many, many unregistered securities.
Former Securities and Exchange Commission (SEC) officials have estimated that thousands of ERC-20 ICOs were unregistered securities offerings. That is, in the words of a former SEC Chairman, “every ICO I have seen.” In court filings, SEC Commissioners have already explained why dozens of ERC-20 token offerings were unregistered securities as mere examples of the rampant evasion of securities regulations by ERC-20 creators.
Read more: Explained: Crypto assets deemed as securities by the SEC
In any case, Rodarmor certainly has many fans. By introducing numismatic value to the smallest denomination of BTC called satoshis, he has made many Bitcoiners rich. It’s worked even though Ordinals, in his own words, simply pretends that satoshis persist across most multi-output transactions — a story for another day.
Inadvertently or not, he created a system for users to resell profile pictures of stolen and copyrighted images. He endowed early Ordinals users with special numismatics like ‘Sub10k’ (the first 10,000 Inscriptions that used Rodarmor’s protocol) and promised to protect collectors’ numbering system.
Runes to be popular for meme coin traders
Rodarmor is a celebrity among meme coin traders. There are countless Runes-themed copycats on alternate blockchains and second layers. Yesterday, for instance, someone launched an unauthorized RUNES meme coin on Solana. Even though it has nothing to do with Rodarmor nor the real Runes project, the doppelgänger rallied thousands of percentage points within hours anyway.
Naturally, Runes will require a Bitcoin wallet and node that supports Ordinals’ ORD software, which isn’t a part of Bitcoin Core software. Some Bitcoin node operators, like Luke Dashjr, strongly oppose Ordinals transactions and filter them as spam.
Not everyone is fan of Ordinals and Runes
Ordinals are controversial, not only because they’ve enabled a host of degenerate activity on Bitcoin’s blockchain, but also because they exploit a combination of Taproot and SegWit incentives in a way that the authors of those Bitcoin upgrades didn’t originally intend.
Conservative Bitcoiners view Ordinals-based Inscription transactions of spam because of two qualities. First, Inscriptions stuff large amounts of data into fee-discounted storage space. Therefore, Ordinals users are ‘underpaying’ for data storage within Bitcoin blocks via Rodarmor’s recently-invented exploit of Taproot and SegWit fee structures.
Second, Ordinals users are often paying for non-financial transactions, such as saving image pixels. This violates conservative Bitcoiners’ desire to advance Bitcoin as a monetary network, not as data storage.
Rodarmor has cited the complexity of BRC-20, the existing fungible token standard on Bitcoin, and claims it increases the number of ‘junk’ transaction outputs. Even Taproot, which underpins Ordinals, has limitations like dependence on off-chain data. Rodarmor’s desire to avoid unnecessary transaction outputs might be a tacit acknowledgment of a common criticism of Ordinals: that they drove up Bitcoin’s transaction fees by creating yet another digital asset-themed craze.
Rodarmor thinks current protocols for creating Bitcoin-based fungible tokens are not good enough. He has mostly deflected debates on whether fungible tokens even belong on Bitcoin in the first place. If they do, in his opinion, they should use his Runes protocol that will launch on April 20. His primary motivation seems to be creating a competing protocol to the BRC-20 standard that he doesn’t control.