Thorough analysis of Runes (Part 1)

Explaining the necessity and merits of Runes from the reason for the birth and evolution of Ordinals/BRC-20

Good morning.
This is mitsui from web3researcher.

Today we researched the recent topic of "Runes".

🪨What is Runes?
📕What is Ordinals/Inscription/BRC-20?
🧱What is UTXO model?
✨Runes is UTXO based for easy FT issuance and transfer
💬Summary and Recap

⚠️Preface

Two preliminaries before the article.

• Part 1 and Part 2
  The first part, today's article, is an overview of Runes, comparing it to Ordinals and BRC-20, while the second part, to be released tomorrow, will introduce the Runes ecosystem, including specific projects and the surrounding infrastructure. The second part will conclude with a look ahead and some discussion.

• A Scratchy Explanation
  To understand Runes, you need to understand the history of the bitcoin ecosystem. Therefore, I will explain the background history of "Runes," but I will also provide a very brief explanation, and some parts will be translated into English for easier understanding.

The above is similar to my other articles, but I am not a researcher with an engineering background, so I try to provide explanations that can be understood in outline rather than in technical details. On top of that, I wrote this as a preface because bitcoin in particular has a long history and there are many different schools of thought, and history also changes depending on one's point of view.

I hope this article will help you understand "Runes."

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🪨What is Runes?

So let's get right to the point.

Runes" is anew token standard that allows users to more easily and efficiently create substitutable tokens (FTs) on Bitcoin.

The FT standard we are familiar with is ERC-20 on Ethereum, but the new standard (standard) that allows FT issuance on Bitcoin in the same way is "Runes".

What is of interest here is the existence of the "BRC-20".

"Hey, weren't Ordinals, Inscription, BRC-20, etc. already issued FTs on Bitcoin?" Many people may think "Hey, weren't Ordinals, Inscription, BRC-20, etc. already issued on Bitcoin?

In conclusion, FT issuance has already been and can be done on Bitcoin by utilizing "BRC-20". However, there are several issues with "BRC-20," and "Runes" is a new standard newly proposed to solve these issues.

Runes" uses Bitcoin's UTXO model and OP_RETURN for more efficient and secure FT issuance.

I'm sure you don't really understand what I'm talking about, so I'll give you the prerequisite knowledge, "What are Ordinals? What is BRC-20? What is the UTXO model? I will explain step by step.

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📕What is Ordinals/Inscription/BRC-20?

Ordinals" are a way to add digital items to on-chain bitcoin transactions, announced in January 2023 by Casey Rodarmor, a former contributor to Bitcoin Core.

Bitcoin has limited capabilities to support smart contracts, so until now we have been utilizing L2 solutions and sidechains.(Counterparty,Stacks, etc.)

Unlike those solutions, Ordinal allows assets such as NFTs to be stored directly on the Bitcoin blockchain. Adding content to the chain is called inscription, and the added data is described as "digital artifacts" rather than NFTs. (However, since it is often referred to as an NFT in practice, it will henceforth be referred to as a Bitcoin NFT.)