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As <a href="https://news.todayq.com/bitcoin-struggles-with-rising-fees-and-congestion/" rel="noopener noreferrer nofollow">Bitcoin’s fourth halving</a> turns out to be a successful event for the digital assets industry, it has given rise to much hyped Runes protocol. It is expected that the new protocol will re-ignite interest in Bitcoin, just like Ordinals did. Let’s dive into the world of Bitcoin protocols and see what potential Runes holds. Can Runes be a game changer? 
Bitcoin Runes is a protocol for creating fungible tokens on the Bitcoin network. One can compare it to what ERC-20 is to the Ethereum network. It aims to bring high transaction fee revenue, developer mindshare, and users to the BTC ecosystem.&nbsp;
By using the Unspent Transaction Output (UTXO) model and incorporating Lightning compatibility, Runes looks to reduce transaction times and fees. This will help the network to become more efficient.&nbsp;
The protocol looks to simplify the fungible crypto issuance with its native UTXO transaction model. It gives out a new approach to Bitcoin tokenization. This also means that it can be used to build a good number of meme coins to governance tokens.
Runes are basically a set of algorithms or scripts that are embedded within the Bitcoin blockchain. These runes allow the execution of smart contracts, decentralized applications (DApps), and the automation of various transactions.&nbsp;
In layman’s terms, they expand BTC’s capabilities beyond just a digital asset and allow it to perform more complex operations. How does it work? 
The protocol uses a scripting language that allows users to define some specific conditions and actions within a transaction. However, these scripts are written in a stack based language. This makes them compact and efficient.&nbsp;
When a BTC transaction happens the script is then executed by the nodes on the network to check its validity. Benefits of Runes 
There are numerous amount of benefits of Bitcoin Runes. Firstly, it promises to bring transaction fee revenue, developer interest, and more users to the network. The protocol holds the ability to reduce transaction times and fees can attract users who value faster and cheaper transactions.&nbsp;
The other main feature it provides is that it enables the creation of fungible tokens on the Bitcoin network. It directly expands the possibilities for tokenization as Runes allows for representing various assets and use cases.&nbsp;
This hopefully opens up new avenues for innovation and economic activity within the biggest crypto asset linked ecosystem. What it can do? 
Runes have several noteworthy implications. The protocol’s ability to generate transaction fee revenue can add to the sustainability and growth of the Bitcoin network. Moreover, by purifying the issuance of fungible tokens, simplifies the process for developers and users. This move can potentially encourage for wider adoption of tokenized assets on the blockchain.&nbsp;
It is expected that the protocol could lead to increased liquidity and utility for these tokens. It will further enhance the overall ecosystem.
One notable use case is the ability to pay for Bitcoin transaction fees using Runes is grabbing experts’ attention. This concept allows users to use their Runes tokens to cover the costs of their BTC transactions. It eventually reduces the need for external payment methods. This feature can streamline the user experience and provide added convenience for the users.
When it comes to fees and transaction costs, Bitcoin Runes aims to reduce both by leveraging the UTXO model and Lightning compatibility. A threat to the Ordinals? 
Reports signal that Bitcoin Ordinals’ market cap has surged past $2 billion. This marked a big shift in the network’s plans. However, not everyone is on board. Some, like Bitcoin developer Dashjr, label ordinals and inscriptions as “spam” to the network.&nbsp;
Despite this, market observers have remained optimistic about the influence of Runes on the original crypto. Conversely, others see Runes as part of an emerging Bitcoin Layer 2 (L2) ecosystem, poised to challenge Ethereum and Solana in the DeFi sector. What’s the Runes vision? 
Casey Rodarmor, the creator of Ordinals and Runes, anticipates mixed reactions from Bitcoin maximalists post-halving, highlighting Bitcoin’s status as “money for enemies.” Runes aims to introduce meme coins and attract a new demographic to Bitcoin. This is the same as the meme frenzy on Solana’s network.
Rodarmor’s vision for the protocol includes promoting direct trading among users. This can potentially reduce the dependency on centralized exchanges (CEX) as it addresses the Replace-By-Fee (RBF) issues.&nbsp;
The RBF feature involves replacing an unconfirmed transaction with a higher fee version. It is done to incentivize miner priority. However, it is anticipated that by bridging Runes tokens to Layer 2 networks once the OP_CAT Bitcoin Improvement Proposal (BIP) is approved. This can be done within a year.&nbsp;
Despite security concerns surrounding the OP_CAT upgrade, developers have also argued that it could enhance Bitcoin’s functionality by enabling cross-chain bridging. The proposal seeks to restore an opcode disabled by Satoshi Nakamoto to prevent potential DoS attacks. Bitcoin halving done right? 
The recent halving event, occurring every four years, slashed the mining reward, reducing the release of new Bitcoin into circulation. This deliberate adjustment, predetermined by Bitcoin’s code, aims to maintain a capped supply of 21 million coins, preventing inflation.&nbsp;
Despite the anticipated positive impact on Bitcoin’s value, market analysts, including those from JPMorgan Chase &amp; Co. and Deutsche Bank AG, suggested the event was largely factored into the market beforehand.&nbsp;
While Bitcoin’s price remained stable near $64,000, the average transaction fee soared over 730% to $250 post-halving before retracting to $164. Observers now await potential price rallies amid sustained institutional interest. Its backers highlight Bitcoin’s superiority over fiat currencies in terms of inflation vulnerability and its status as a store of value.

Bitcoin Runes, How it is changing the DeFi game

Todayq News

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