You might’ve heard about Ordinals, which are Bitcoin NFTs.
Recently, however, a new trend has overtaken them: Bitcoin Runes.
What are Bitcoin Runes? And how do they differ from Ordinals, Stamps, and BRC-20 tokens?
Don’t worry, we got you covered.
In this guide, we’ll cover everything you need to know about Bitcoin Runes to help you get up to speed on all the latest developments from the Bitcoin ecosystem.
Bitcoin history: Fungible and non-fungible tokens
Compared to proof of stake blockchains such as Solana and Ethereum, the Bitcoin blockchain doesn’t allow smart contracts.
As a result, the Bitcoin network can’t support decentralized apps (dapps) such as Jupiter or Tensor.
Having said that, there are a number of protocols on the Bitcoin blockchain offering ways to create both fungible and non-fungible tokens.
Here are the most relevant Bitcoin protocols:
- Bitcoin Ordinals are a recent innovation that embeds arbitrary data directly onto individual satoshis, the smallest unit of Bitcoin. This capability turns these satoshis into unique digital artifacts known as “inscriptions”. Unlike traditional Bitcoin transactions, which involve the transfer of monetary value, Ordinals allow each satoshi to carry distinct data like images, text, or code, effectively enabling the storage and transfer of non-fungible tokens (NFTs) within the Bitcoin network.
- Bitcoin Stamps, also known as SRC-20 tokens, are another type of non-fungible token (NFT) that exist on the Bitcoin blockchain. Compared to Bitcoin Ordinals, the Bitcoin Stamps protocol allows for the storage of unique digital art directly within Bitcoin's transaction outputs, making them immutable and preventing any possibility of data pruning. However, this method comes with significantly higher costs and restricts image sizes.
- The BRC-20 standard is a protocol developed for the Bitcoin blockchain, inspired by Ethereum's popular ERC-20 standard. At its core, it facilitates the creation and management of fungible tokens within the Bitcoin network by leveraging the Ordinals protocol. By enabling the minting, transferring, and tracking of fungible tokens, the BRC-20 standard opens up possibilities for developers to create a diverse range of applications and services on the Bitcoin network.
And just recently, Runes joined Ordinals, Stamps, and BRC-20s—elevating the Bitcoin network to a whole new level.
But what are Bitcoin Runes all about? Let’s dive in!
What are Bitcoin Runes?
Don’t be alarmed, it's really quite simple: Bitcoin Runes are an evolution of BRC-20 tokens.
But why do fungible tokens on Bitcoin need a new protocol?
That’s because BRC-20 tokens produce a significant amount of unspent transaction outputs (UTXOs), which clog the Bitcoin network—leading to network congestion.
Bitcoin Runes aim to mitigate UTXO bloat issues by simplifying the minting, transferring, and tracking of fungible tokens on the Bitcoin network.
Another advantage Bitcoin Runes have over BRC-20 tokens is that they are compatible with the Lightning Network.
The Lightning Network is a Layer-2 solution designed to enable faster and more cost-effective transactions on top of the Bitcoin blockchain.
As such, the Lightning Network is particularly beneficial for small, routine transactions, making Bitcoin a more practical medium for everyday use, like buying coffee.
And as adoption grows, the Lightning Network is poised to vastly improve Bitcoin's utility as a digital currency.
Where can I buy, sell, and trade Bitcoin Runes?
There are multiple exchanges and marketplaces that allow you to buy, sell, and trade Bitcoin Runes.
Currently, the largest and most trusted venues are Cube and Magic Eden.
As of now, Phantom hasn't enabled full Bitcoin Runes support, so you might need to use a different wallet to buy, sell, and trade Bitcoin Runes.
Having said that, Phantom fully supports the trading of native BTC, Ordinals, and BRC-20 tokens. Read our guide to learn more.
How to set up a Phantom wallet?
If you’d like a friendly multichain wallet for crypto, DeFi, and NFTs, try us out. We offer browser extensions for Firefox, Chrome, Brave, and Edge, as well as apps for iOS and Android.
First, download Phantom. Then, create a new wallet.
If you’d like to fund, or send funds to, your Phantom wallet, you can do so via the “Buy” button on your asset tab. We offer various funding options, such as MoonPay, PayPal, and Robinhood to make it easy for you to fund your wallet.
Once you do that, you're ready to go.
How to bridge tokens to Solana with Phantom?
If this is your first time using Solana, you might have most of your assets on other blockchains, such as Ethereum and Polygon. With our Cross-Chain Swapper, you can bridge tokens across Ethereum, Solana, and Polygon right in your Phantom wallet. Here’s how:
Disclaimer: This guide is strictly for educational purposes only and doesn’t constitute financial or legal advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
