What Are Bitcoin Runes? Everything You Need To Know

April 21, 2024

In conclusion

One day in crypto can feel like a month. The speed at which this industry travels can make one feel like Bitcoin has actually been around since the vikings themselves. These ax-wielding degenerates spent their time in a similar way to crypto degens today, but instead of pillaging villages, we now pillage the charts (we also seem to retreat pretty quickly once we have made a petty profit!).

So where am I going with all this? Oh yeah, runes.

Not the viking symbols that mythology nerds spend hours theorizing on, but instead Bitcoin runes that are about to become the center of crypto attention, giving a spark to a shitcoin casino on Bitcoin and potentially providing us with the wife-changing gains we have all been dreaming of.

So, for us to make the most of this new narrative, it is important to understand what these runes actually are, how they work, how to access them, and if they are even worth your precious time.

As always, we got you covered.

What exactly are Runes?

If you thought the shitcoin casinos on Solana and Base have been wild then imagine something similar on a network with as much capital on it as Bitcoin. Yes, essentially runes are shitcoins on Bitcoin but there is so much more than that hidden deep in the details.

Ever since the Taproot upgrade and, with it, the birth of the Ordinals protocol, things have really been heating up on the Bitcoin network. BRC-20s and inscriptions have been springing up left, right, and center, giving the ability to inscribe data types like images, audio, text, and video onto Satoshis to forever remain a part of Bitcoin history.

These inscriptions differ from the NFTs and such found on the likes of Ethereum, which are essentially just URLs that point to an image and can be lost or deleted, potentially threatening their long-term existence. Bitcoin inscriptions will be around as long as Bitcoin exists and, therefore, pretty much as long as the internet exists. This is pretty significant stuff!

Now, the thing about inscriptions is that they are all unique, this is where runes differ. Every unit of a rune is the same allowing for real fungibility and the creation of shitcoins as we know them best. These runes use a messaging protocol called Runestones that are stored in Bitcoin transaction output. A transaction can hold at most one Runestone that can contain any number of runes. This allows for the etching, minting, and transfer of runes with ease.

Etching is the name given to the creation of the runes and their properties. Once created, these runes become immutable and will forever remain so as long as Bitcoin exists. A rune's properties consist of its name (currently required to be at least 13 letters long and will decrease over time), its symbol, and its divisibility, which determines how finely it can be divided into its atomic units.  

Minting runes is also an interesting process in itself and the terms of minting are determined by the properties of etching. Having an open mint allows for anyone to create units of a particular rune and as long as the terms are met the minting will remain open. These terms include the number of times a rune may be minted, the start height in the block, the end height in the block and so on.

The first rune or rune 0 will be hard-coded by the runes creator Casey Rodarmor and all runes after that will basically be a free-for-all. This will all occur at halving time.

To gain an even deeper understanding of the sheer magnitude of what this will allow and how these runes came to be, it helps to understand something called Ordinal Theory. Time to dive into some giga-brained Bitcoin action.

Ordinal Theory

You may have always thought that 1 Bitcoin = 1 Bitcoin and 1 Satoshi = 1 Satoshi, but this is not actually the case. Within the world of Satoshis, certain sats are more desirable than others, and this is due to their rarity on the network.

Think about all the different events that take place on Bitcoin over time, and you will get an idea of what I’m talking about. New blocks are mined, difficulty adjustments are made, seriously overpriced pizzas are purchased, halvings occur, and every 24 years, a halving coincides with a difficulty adjustment and is called a cycle. All these events involve specific Satoshis that are seen as rare. The rarest of them all is the OG sat of the genesis block.

The ranking system of rarity can be seen below:

So how would anyone know which Satoshi is which? The answer is Ordinals.

Ordinals are basically a numbering scheme that allows for the tracking of specific Satoshis across the Bitcoin network. These identification numbers are ordinal numbers and can be represented by decimals, integers, degrees, names, and percentages.

The main point here is that you can now inscribe individual Satoshis with data and, by doing so, create Bitcoin-native digital artifacts. Artifacts that can one day, maybe in another million years, be rediscovered by a Bitcoin archeologist who will probably interpret your dog/frog with a sock, hat, melon, or whatever else as some kind of spiritual leader of the times. And it’ll be confirmed in the history books that the ancient race of shitcoin-slinging humans was, in fact, highly retarded.

The big difference between ordinals and runes is that they are embedded in the bitcoin transaction itself. Bitcoin uses a UTXO-based system, which basically means when you transfer BTC, you are effectively taking a lump of bitcoin, inputting it into the transaction, and outputting different lumps of bitcoin at the other end. The runestone messages are embedded in the OP_RETURN section of this transaction and ordinals are inscribed in the witness section of the transaction.

The thing to note here is that the witness section of a transaction is much larger than the OP_RETURN sections meaning that ordinals are far less efficient than runes to move around. This means they are not ideal for the fast-paced and high-frequency trading of shitcoins. Runes, on the other hand, are.

Now that you have a better understanding of all this mumbo-jumbo you will hopefully see why each ordinal is unique and how runes differ by each unit being the same as the other and therefore interchangeable and divisible like any other shitcoin in existence today.

Add to this the smaller size of the transactional data required in a rune, and you have all the ingredients for a highly fungible token type on the Bitcoin network that will satisfy all your gambling desires.

How to get involved in the rune action

As these runes are found on the Bitcoin network you will obviously need some BTC to get amongst the fun and games. Wrapped bitcoin will not cut the cake here.

The easiest way to get your hands on some BTC is on a centralized exchange of your choice. You can either swap some other tokens for it or just on-ramp and buy it with filthy fiat. It's pretty straightforward stuff.

The next step toward rune riches will be getting yourself a compatible wallet. UniSat or Xverse wallets are probably your best bet here, but don’t expect the smooth user experience you are used to with your Solana wallet of choice. It is safe to say the UX here is nothing short of abysmal, which really just means you're early to the party.

Once ready to go, you can jump over to a number of places to mint or purchase the runes themselves. Currently being pre-halving (8 hours to go at the time of writing) you will be looking at getting your hands on some pre-runes. These can be purchased on Magic Eden and resemble any other pre-reveal NFT token you may have seen in the past.

Once the halving has occurred you can expect the market to be flooded with new runes that can be picked up at marketplaces like Ordinals Wallet or Runes Terminal which will provide the ability to mint runes and a launchpad for new projects.

There are a couple of alternatives that could be seen as beta plays for those who don’t want the hassle of dealing with the terrible user experience that awaits them.

The first is to buy bridged runes that have made their way to other chains like Solana and Ethereum. An example of this would be $PUPS on Solana. One could likely expect to see more runes bridge over to more easily accessible chains as time goes on, so keep your eyes peeled for this to occur.

Whales Market also provides a marketplace for speculation on runes that can be purchased using Solana and gives users the option of bypassing the Bitcoin UX issues.

Below is a list of other useful resources to get the most out of the runes casino.

Here we can see the current top ten market cap pre-runes projects listed on Magic Eden. Expect this list to change quickly after the halving and many of these projects are revealed while new runes come online.

So what’s the bear case?

As with anything in crypto it is never up only and there are definitely some considerations to be made in this regard to the rune space. Most of the reasons outlined below are on a shorter time frame as I truly think that this will be big in the longer term and potentially steal a lot of liquidity from other networks in the cryptosphere.

The first short-term con will be the massive spike in fees post-halving. We saw something similar when BRC-20s first hit the market, and this will likely be no different. Such a spike in fees may deter the more faint-hearted degens from diving into the space head first and one could expect a more gradual adoption as these fees start to drop off. I can already hear the miners cheering!

The second thing to consider is that many of the current leading pre-rune projects were airdropped to holders of specific Bitcoin projects; for example Rune Pups were airdropped to Bitcoin Puppet holders, and Runestones airdropped to those who held a minimum of three NFTs on the Bitcoin network.

There is always the potential for these airdrop receivers to sell the news and use the launch excitement to dump their runes at hyped-up prices, potentially buying back lower soon after. We have all seen the typical airdrop chart pattern, and there is a chance this will follow suit.

There is also a chance that some of this post-halving hype has already been priced in, with pre-runes having pumped pretty hard over the past weeks.

The next factor will be the usual issue of dilution and liquidity fragmentation that we have seen in every shitcoin casino to date. One can expect a redacted amount of runes to hit the market, and only the best will do serious numbers while many fade into the abyss. As always, pick your fighters wisely and hold on tight!

The bull case

The bull case here is almost too easy to make. New technology in a bull cycle usually does pretty well and the fact that this is built on the OG crypto network gives it that much more legitimacy.

All runes launched will inherit the underlying fundamentals of decentralization and security that make Bitcoin the king of crypto. Add to this the new institutional involvement in Bitcoin, and you have the makings for some serious speculation.

Just the sheer amount of capital that lives on the network itself is enough to make anyone look twice, and with a bit of luck, the stubborn Bitcoin maxis will end up getting involved in the fun.

The big winners in the race for rune supremacy will likely be those projects that make an effort to improve on the current user experience issues that prove to be a barrier to entry for the average noob. Keep a close eye out for projects that are looking to solve this by bridging over to other chains and those that manage to achieve high-tier CEX listings, as this will allow punters to bypass all the difficulties that currently exist and will make for simple liquidity traps.

If these runes and ordinals can capture even a small percentage of the total Bitcoin market share, there will be some massive gains to be made. It is still very early for all this Bitcoin tech, and as more developers jump ship, things will only get better. The future of a new emerging Bitcoin ecosystem is looking very bright.

Closing thoughts

The runes madness will begin on block 840,000 which is likely to occur on the symbolic date of 4/20. Talk about an awesome coincidence in itself!

With Bitcoins massive amounts of capital and institutionally backed legitimacy as well as its freedom from the beady eyes of Gary Gensler and his goons it could really be a giant leap for crypto-kind.

As Bitcoin protocols improve over time, there will be some serious DeFi migration to the OG crypto chain. With its robust security model and total decentralization, this really has the potential to make much of the current DeFi space somewhat obsolete and turn many Ethereum L2s into ghost networks. Only in time will we know if it actually plays out this way.

We have already seen some big names jump on board, with Wu-Tang Clan’s Ghostface Killah dropping a 10k ordinal collection for exclusive music. We can expect to see much more of this kind of stuff happening as we go forward.

This is really a narrative to keep a very close eye on and one can only hope for the sake of his altcoin bags that it doesn’t end up sending BTC dominance to 100% over time!

Some key people to follow in regards to keeping up with the space are runes creator @rodarmor and his fellow runemaster @LeonidasNFT. Also be sure to check out the Hell Money podcast on Youtube where all things runes, ordinals and Bitcoin are discussed on a regular basis.

For a deeper dive into the tech behind it all, take a look at the Ordinals docs here.

The current connected wallet does not hold a LARP. To get access to the Meal Deal please connect a wallet which holds a LARP. Alternatively, visit Opensea to purchase one or visit Join the Meal Deal to purchase a subscription

Table of contents
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.