As the Bitcoin community braces for the much-anticipated halving event on April 19th, a new token system called Runes has captured the imagination of enthusiasts and developers alike. Invented by the creator of ordinals, @rodarmor, Runes are set to introduce a novel way of creating tokens on the Bitcoin network, akin to the ERC20 tokens on Ethereum.
Unlike ERC20 tokens, which rely on smart contracts and developers, Runes offer a more accessible approach, allowing anyone to easily create a token without the need for complex programming. This democratization of token creation could potentially open up new avenues for innovation and participation within the Bitcoin ecosystem.
However, it’s important to clarify that Runes are distinct from other concepts such as Runestones, Rune Stars, or other Ordinals that claim to be related to Runes or offer airdrops of Runes. Many of these are part of pump-and-dump schemes, with only a few legitimate projects in the mix. Additionally, Runes have no connection to THORChain.
The activation of Runes is scheduled to coincide with the Bitcoin halving on April 19th, at block 840,000. Until then, the hype surrounding Runes is just that—hype. No one can mint or etch (create) any Runes until the activation date, although testing on the testnet/signet is encouraged.
The initial hours and days following the activation are expected to be chaotic, with a rush to mint the first Runes, website crashes, technical glitches, and unfortunately, scams and rug pulls. Preparing for this chaos is crucial, and @TO is offering workshops on running your own node, a valuable skill in navigating the upcoming turbulence.
The process of creating a Rune, known as “Etching,” involves setting rules for the Rune in a runestone. These rules include the name, symbol, supply, minting permissions, minting limits, cap on the number of mints, and time limits on minting. Once etched, these rules are permanent and cannot be changed.
Minting a Rune is open to anyone if it’s an open mint or fair launch. This can be done by creating a special transaction on Bitcoin using Rodarmor’s rune software (ord) or through a service provided by a website or wallet. With caps on the number of mints, some minting opportunities will be highly competitive, especially in the initial days.
The introduction of Runes is expected to drive Bitcoin transaction fees to unprecedented levels due to the demand for rare minting opportunities. Estimates suggest that the cost of a Bitcoin transaction to mint a Rune could range from $33 (at 300 fee rate) to $140 (at 1000 fee rate), assuming a mint transaction size of 200 virtual bytes on the chain.
In anticipation of these costs, it’s advisable to prepare a wallet with several 100-200k SAT UTXOs. For those unfamiliar with this process, seeking guidance or tutorials is recommended to ensure readiness for the minting frenzy.
As the halving approaches, the excitement around Runes continues to build. This new token system represents a significant development in the Bitcoin ecosystem, offering a more accessible and democratic way of creating tokens. However, the road ahead is fraught with challenges, from technical hurdles to potential scams. Navigating this landscape requires caution, preparation, and a keen eye for identifying genuine opportunities amidst the hype.
