Apart from the inscription, how does the Rune protocol drive market speculation again?

The recent craze of token minting brought about by the Ordinals protocol has sparked numerous questions and debates. In response, the developers of Ordinals have made a compromise by proposing the Runes protocol, offering speculators a better and more secure token investment option. However, this has led to the emergence of several derivative projects that further fuel the speculative atmosphere.

Introduction of Runes Protocol: Chaos in BRC-20

Large Amount of Junk Data in BRC-20

Bitcoin developer Casey Rodarmor introduced the Ordinals protocol in 2022, initiating the Bitcoin NFT narrative. A later demo launched the BRC-20 protocol based on its protocol, bringing the speculative atmosphere of fungible tokens into the Bitcoin network.

In recent times, the market heat of BRC-20 protocol continues to rise. According to CoinGecko data, the total market value of BRC-20 tokens has reached 3.5 billion USD, with a 24-hour trading volume exceeding 1.4 billion USD, already accounting for more than 80% of the Ordinals protocol's trading volume.

However, BRC-20 has generated many junk UTXOs, causing congestion in the Bitcoin network. The situation has become so severe that Bitcoin core developer Luke Dashjr has threatened to ban BRC-20 and the Ordinals protocol; Casey has also expressed his rejection of BRC-20 multiple times due to this.

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Insufficient Infrastructure of BRC-20

Since the metadata is not recorded in the Bitcoin UTXO ledger, existing BRC-20 relies on chain-based indexers to establish another database to determine the order of token transactions and changes in ownership.

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However, this has brought about many problems, such as the potential double-spending issues due to version discrepancies in various indexes, the inability to natively integrate other functions of the Bitcoin network, and centralization issues of indexers, leading to a chaotic foundation in the industry. Of course, speculation is another matter altogether.

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Founder of Ordinals Protocol's New Concept: Runes

Although Casey does not want everyone to create BRC-20 tokens, the speculative atmosphere that drives the market for profit remains unshaken. Casey decided to propose a compromise solution — designing a better, simpler, and more secure fungible token protocol for the Bitcoin network.

Therefore, in September of last year, Casey announced the redevelopment of a protocol named Runes, aiming to serve as an alternative to BRC-20, ARC-20, and Stamps.

Differing from the Ordinals protocol storing data in segregated witness data, the Runes protocol stores data in Bitcoin's native OP_RETURN.

The Runes protocol is built on top of the native Bitcoin UTXO, making it easier to integrate other Bitcoin infrastructure in the future without having to reinvent the wheel entirely, such as the Lightning Network. This can enhance protocol security and reduce the generation of junk UTXOs.

Projects Derived from the Concept of Rune Protocol

Although Casey proposed the idea of Runes, he is disgusted by the speculative market atmosphere surrounding fungible tokens, so he has not actually implemented the project and has not indicated whether he will promote it in the future.

However, many have sensed the opportunity to make money in the market, and there are already several projects using the concept of Runes appearing in the market.

Pipe

In October of last year, community developers introduced an improved version of the Runes protocol called the Pipe protocol, which adds mint functionality on top of Runes to enhance basic token issuance and exchange functions.

Rune Alpha

In December 2023, Rune Alpha project officially launched, providing blockchain browser services based on the Runes protocol and issuing the first token on the protocol — COOK.

However, Rune Alpha is not directly related to the Runes protocol proposed by Casey but is an independent project that has garnered market attention due to its similar name.

Market Sentiment Drives Developers for Profit

Whether it is the recent BRC-20, ARC-20, SRC-20, or Runes protocol-related projects, they are still developing in a chaotic and speculative environment. For most participants, the evaluation of token value is based on narratives rather than actual impact, leading to a proliferation of similar speculative projects.