Bitcoin Runes vs BRC-20
To reiterate, Runes are completely unrelated to Ordinals, Inscriptions, and BRC-20 tokens, and are, in fact, direct competitors to BRC-20s. Bitcoin Runes rely on a separate protocol from BRC-20 tokens, resulting in some key technical and practical differences:
Runes do not require a Taproot-enabled wallet: Unlike BRC-20 which needs a Taproot-enabled wallet or access to Bitcoin Layer 2 networks, Runes are completely native to the Bitcoin mainnet.
Runes are Lightning Network-compatible. You can bridge Runes to and from the Lightning Network and spend them on the network in the same way as BTC.
Runes use block space far more efficiently than BRC-20 tokens: BRC-20 token transfers require two on-chain transactions, while Runes only require one. This means we can expect less blockchain bloat from Runes, leading to a less crowded mempool and a lower likelihood of spiking fees.
Runes are transferred across UTXOs: Runes are transferred in the usual way Bitcoin transfers happen. This means that any protocol that works with Bitcoin, whether it's a wallet, a bridge, the Lightning Network, or other Layer 2 solutions, should (in most likelihood) work with Runes. This is not necessarily the case with BRC-20 tokens, which require additional infrastructure to support Ordinals before they can support BRC-20s.
| Feature | BRC-20s | Runes |
|---|---|---|
Design | BRC-20 is a meta-protocol on top of Ordinals. This adds complexity. | Runes are specifically tailored for fungible tokens and designed to be very simple. They do not inherit the complexities of Ordinals. |
Tech | BRC-20 was released as an experimental specification. Implementation was done by the community. | Runes has been released with a detailed specification and a reference implementation. |
Data Storage | Use of witness data (up to 4MB) leads to a higher on-chain storage. | Use of the OP_RETURN field (80 bytes) is more efficient. |
Efficiency | Requires two on-chain transactions for every transfer. | Users can transfer Runes via normal Bitcoin transactions - just one transaction per transfer needed. |
Distribution | Open Mint: Once created, anyone can mint. | Greater flexibility as it supports various forms of distribution, incl. open-mints, pre-mining, delayed mints etc. |
Compatibility | Ordinals-supported wallets only. | UTXO support gives Runes greater compatibility with wallets, L2s, bridges and DeFi apps. |
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