Every four years, Bitcoin undergoes a programmed event called a halving. This essentially cuts the reward for mining new Bitcoins in half, aiming to control inflation and maintain the scarcity of Bitcoin. 

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The Rune protocol was launched alongside the recent Bitcoin halving event, which took place on April 20, 2024. This protocol, developed by Casey Rodarmor, the creator of the Bitcoin Ordinals protocol, introduces a new standard for issuing fungible tokens directly on the Bitcoin blockchain. 

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Fungible vs. Non-Fungible Tokens

Imagine a collection of baseball cards. Each card is unique (non-fungible), with its own value depending on factors like rarity and player performance. 

Now imagine a stack of $1 bills.  Each bill is identical and worth the same ($1) - that's fungibility.  

Runes create fungible tokens, like those dollar bills, that can be easily traded and used within the Bitcoin ecosystem.

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How Do Runes Work?

To comprehend the processing of Bitcoin transactions, it is crucial to grasp the concept of Unspent Transaction Outputs (UTXOs). Bitcoin transactions involve Unspent Transaction Outputs (UTXOs), which act like little boxes holding your Bitcoin.  

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When making a payment on the network, you essentially send an entire UTXO to the recipient's address and receive a new UTXO in return. The Bitcoin Runes protocol leverages this transaction process to create fungible tokens.

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Similar to the creation of a Bitcoin ordinal being referred to as "inscribing," the process of creating a Bitcoin rune is known as "etching." This entails generating a "genesis" UTXO that includes essential details such as the rune's name, symbol, decimals, and total supply. This information is assigned to a single UTXO.

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Subsequently, sending out transactions leads to the fractionalization of the original UTXO, resulting in the creation of new fungible pieces known as Runes. 

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Why Does Runes Matter? 

One key distinction between Runes and BRC-20 tokens is their underlying transaction model. While BRC-20 tokens, like those on Ethereum, utilize an account model, Runes follow the Unspent Transaction Output (UTXO) model used by Bitcoin and certain layer-1 chains.

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• Native to Bitcoin: Unlike tokens on other blockchains, Runes reside directly on the secure and decentralized Bitcoin network.
• Enhanced Immutability: Unlike BRC-20 tokens that may rely on off-chain data storage methods, Runes offer a higher level of immutability and store all data directly on the blockchain. 
• A Wider Range of Assets: Runes pave the way for a broader variety of digital assets directly on Bitcoin, potentially opening doors for new financial applications.

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Top Rune Projects and Developments

Within the Rune Protocol, two notable projects have emerged: RSIC and DOG. 

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RSIC, the first Pre-Rune, was airdropped to early adopters of Ordinals. Later on, RSIC•GENESIS•RUNE was airdropped, and it currently holds a market cap of $230 million. 

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On the other hand, the DOG project, also known as DOG•GO•TO•THE•MOON, by a known BTC thought leader – Leonidas, is a meme coin that was airdropped to holders of the Runestone Ordinals project on April 24, 2024. 

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Another notable rune is Fehu (Z•Z•Z•Z•Z•FEHU•Z•Z•Z•Z•Z), the first rune etched on Bitcoin, which deserves recognition. It derives its name from the oldest runic alphabet and symbolizes the physical form of wealth acquired through hard work. With a current market capitalization of $2.14 billion, Fehu represents hard-earned wealth within the cryptocurrency ecosystem.

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These recent developments within the Rune ecosystem, including the successful airdrops of RSIC and DOG tokens, as well as the etching of Fehu, demonstrate the growing interest and investment in Bitcoin-native tokens. They highlight the potential of the Runes protocol to reshape the future of the Bitcoin ecosystem.

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Conclusion

Runes have the potential to bring more attention and resources back to the Bitcoin network. Rodarmor views Runes primarily as a tool for creating speculative assets rather than serving broader purposes. The launch of Runes has garnered significant interest, with existing enthusiasm around fungible token protocols like BRC-20 on Bitcoin. 

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Runes is anticipated to emerge as a prominent asset class in 2024. Notably, industry leaders such as Magic Eden and major exchange OKX have already embraced Runes by offering support for Runes trading and establishing dedicated marketplaces for Runes, respectively.

Discover the possibilities unlocked by Runes and other latest technologies. Expand your knowledge and join our vibrant community at bit.ly/Join10XMECommunity.