Innovative Approach to Creating and Transferring NFTs on the Bitcoin Network - COINTURK NEWS
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Innovative Approach to Creating and Transferring NFTs on the Bitcoin Network

8:36 am (65 days ago)
September 27, 2023

Casey Rodarmor, the creator of Bitcoin Ordinals, has proposed an innovative method for creating and transferring NFTs on the Bitcoin (BTC) network. This new approach, called Runes, is being suggested as a superior alternative to the existing BRC-20 token standard.

New Bitcoin Token Protocol: RUNES

BRC-20 tokens have gained popularity rapidly with tokens like PEPE and ORDI reaching a total market value of $1 billion within two months. BRC-20 enables the creation and transfer of NFT tokens on the Bitcoin network by utilizing the Ordinals protocol. However, Rodarmor highlighted a significant disadvantage, emphasizing the excessive generation of “insignificant” UTXOs (unspent transaction outputs) on the Bitcoin network. These UTXOs represent the remaining balances stored in wallets after transactions and are necessary for recording future transactions in the UTXO database.

Unfortunately, the proliferation of BRC-20 tokens in this manner leads to unnecessary clutter and growth in the size of the network. To overcome this issue, Rodarmor proposed Runes as a UTXO-based alternative that minimizes UTXO clutter while seamlessly integrating into the framework of Bitcoin.

Rodarmor also explained how UTXO-based protocols align with Bitcoin’s principles and advocate for responsible network management by preventing the formation of “unnecessary” UTXOs.

Benefits and Drawbacks of the UTXO Model in the Bitcoin Network

UTXOs are crucial for the integrity and transparency of the Bitcoin ledger as they prevent double spending. In the UTXO model, each transaction uses existing UTXOs as inputs and generates new ones as outputs.

The UTXO model facilitates the validation of transactions and ownership of coins while enabling parallel processing for enhanced scalability and efficiency. However, the adoption of the UTXO model also brings challenges such as increased network size, storage requirements, and bandwidth for token protocols.

According to Rodarmor, minimizing the creation of unnecessary UTXOs is necessary to reduce storage issues. Rodarmor also highlighted the problems surrounding interchangeable token protocols like Really Good for Bitcoin, Counterparty, and Omni Layer in his blog post.

Furthermore, Rodarmor expressed skepticism towards NFTs in Bitcoin, considering many of them to be scams or memes. However, while acknowledging the permanence of these tokens, he acknowledged the possibility of a useful token protocol that enhances Bitcoin, stating, “Creating a good interchangeable token protocol for Bitcoin can bring significant transaction fee revenue, developer mindshare, and users.”

Trevor Owens, the co-host of Ordinals Show, showed great interest in Runes and even offered a $100,000 proposal from the Bitcoin Frontier Fund to developers who can create a functional Runes application. This opportunity could serve as a validation and assessment tool for Rodarmor’s idea.

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