Bitcoin Ordinals Creator Suggests New Fungible Token System as Alternative to BRC-20
Bitcoin Ordinals' creator suggests an alternative token protocol, addressing BRC-20’s inefficiencies.
Thu, 28 Sep 2023, 08:45 am UTC
The mind behind Bitcoin Ordinals has introduced the idea of a new token protocol based on Bitcoin, which could serve as a replacement for the BRC-20 token model. This comes as an answer to some challenges associated with BRC-20, which was initiated in March by a developer only known as “Domo.” Surprisingly, in just two short months, BRC-20's market valuation skyrocketed to $1 billion. Some of its standout tokens include PEPE and ORDI.
The purpose of BRC-20 is to allow the creation and transfer of fungible tokens on Bitcoin through the Ordinals system. However, a flaw is seen in how BRC-20 results in an excess of “junk” unspent transaction outputs, commonly referred to as UTXOs. This was keenly pointed out by Rodarmor, who finds this overload to be problematic.
In a recent blog article dated September 25, Rodarmor introduced Runes, his UTXO-centric alternative. He believes that if this new protocol maintains a low on-chain presence and motivates users toward a more prudent UTXO handling, it might alleviate the issues seen in the existing systems.
UTXOs are essentially the residual cryptocurrency amount in a user’s wallet after a transaction. This balance is then utilized for future transactions and is kept in the UTXO database. One significant feature of Bitcoin's UTXO system is its contribution to the transparency and accountability of the Bitcoin ledger, ensuring transactions aren’t duplicated.
Rodarmor's observations also extended to other fungible token protocols present on Bitcoin. He pointed out issues in protocols like Really Good for Bitcoin, Counterparty, and Omni Layer. Though he acknowledged the prevalent use of fungible tokens for less credible purposes, he’s optimistic about their potential. Rodarmor stated that a well-crafted fungible token system could amplify the Bitcoin network's worth by attracting more developers, users, and transaction fee revenue.
On September 25, during a conversation on Twitter Spaces with The Ordinals Show’s Trevor Owens, Rodarmor revealed that the concept of Runes was a recent brainchild of his, and he's still contemplating its future direction. Reacting to this, Owens mulled over allocating $100,000 from the Bitcoin Frontier Fund to any developers capable of operationalizing a Rune application, furthering Rodarmor’s innovative idea.
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