Key Takeaways
Bitcoin Runes is a protocol that allows anyone to create fungible tokens directly on the Bitcoin blockchain using the UTXO (Unspent Transaction Output) model and the OP_RETURN opcode.
The protocol was created by Casey Rodarmor and launched at Bitcoin block 840,000 on April 20, 2024, coinciding with the fourth Bitcoin halving.
Unlike BRC-20 tokens, Bitcoin Runes does not rely on the Ordinals protocol and is designed to leave a smaller footprint on the Bitcoin network.
Creating a Rune is called etching. It involves recording token parameters (name, symbol, supply) in the OP_RETURN output of a Bitcoin transaction.
Introduction
Bitcoin Runes is a protocol for creating fungible tokens on the Bitcoin blockchain. It was designed as a simpler, more efficient alternative to earlier token standards such as BRC-20 and SRC-20. In this article, we explain how Bitcoin Runes works, how tokens are created, and how the protocol compares to BRC-20.
What Are Bitcoin Runes?
Bitcoin Runes is a fungible token protocol built on Bitcoin. It was created by Casey Rodarmor, who also developed the Ordinals protocol. Unlike BRC-20 and SRC-20 tokens, Runes does not depend on the Ordinals protocol. Instead, it uses two native Bitcoin mechanisms: the UTXO transaction model and the OP_RETURN opcode.
The protocol launched at Bitcoin block 840,000 on April 20, 2024, the same block as the fourth Bitcoin halving. This timing contributed to a surge of activity in the days following launch, as users rushed to etch and mint new Runes. Activity declined substantially in subsequent months as initial excitement faded.
How Do Bitcoin Runes Work?
Bitcoin Runes operates through two core Bitcoin mechanisms. The first is the UTXO model. In this model, every transaction produces outputs that represent units of value. To send funds, you reference previous unspent outputs as inputs. Each UTXO can hold different amounts or types of Runes, which makes it straightforward to track and transfer tokens without adding extra complexity to the network.
The second mechanism is the OP_RETURN opcode. This opcode lets users attach up to 80 bytes of extra data to a Bitcoin transaction. The data is stored in a part of the transaction called the Runestone. A Runestone can contain a Rune's name, symbol, ID, supply, and instructions for minting or transferring tokens. Because the data sits in an unspendable output, it does not bloat the UTXO set the way some earlier protocols did.
Etching and minting Runes on Bitcoin
Creating a new Rune is called etching. When etching, the creator specifies the Rune's name, symbol, ID, total supply, divisibility, and other parameters. All of this data is recorded in the OP_RETURN output of a Bitcoin transaction. Creators can also include a premine, which lets them allocate a portion of the supply to themselves before public minting begins.
Once a Rune is etched, it can be minted through an open or closed mint. Open minting allows anyone to generate new tokens at any time after etching. Closed minting only allows new tokens to be created when specific conditions are met, such as within a set block range.
Bitcoin Runes vs. BRC-20
Operation model
Bitcoin Runes uses Bitcoin's UTXO model to track token balances. BRC-20 tokens are based on the Ordinals protocol, which attaches data directly to individual satoshis and requires a separate indexer to track balances.
Token transfer
Runes transfers work by referencing existing UTXOs and creating new ones based on instructions in the OP_RETURN field. BRC-20 transfers require creating a new inscription for every transaction, which increases the data load on the network.
Token minting
Runes support both open and closed minting, and creators can set up premines. BRC-20 minting is limited to an open minting process, which gives creators less flexibility in how they distribute supply.
Wallet and network compatibility
Bitcoin Runes is compatible with the Lightning Network and works with SPV (Simplified Payment Verification) wallets. BRC-20 tokens require wallets that specifically support the Ordinals protocol, limiting the range of compatible software.
Benefits of Bitcoin Runes
Efficiency
Bitcoin Runes stores token data in OP_RETURN outputs, which use at most 80 bytes per transaction. This is significantly smaller than BRC-20 inscriptions, which can use up to 4 MB. Smaller data footprints reduce network congestion and lower the chance of creating unspendable UTXOs that accumulate in the UTXO set.
Simplicity
Runes can be created and managed directly on-chain without off-chain data or a separate indexing system. This makes token management more straightforward for developers and reduces the infrastructure overhead needed to support fungible tokens on Bitcoin.
Potential to expand Bitcoin use cases
Interest in Bitcoin-native tokens has grown in recent years, partly driven by the popularity of meme coins and speculative tokens on other blockchains. Bitcoin Runes provides a native way for users to issue and trade fungible tokens on Bitcoin without relying on external chains or bridges. While activity has moderated since the initial launch, the protocol represents a new category of use case for the Bitcoin network.
FAQ
What are Bitcoin Runes?
Bitcoin Runes is a protocol for creating fungible tokens on the Bitcoin blockchain. It uses Bitcoin's UTXO model and OP_RETURN opcode to store token data efficiently. The protocol was launched by Casey Rodarmor at Bitcoin block 840,000 in April 2024.
How are Bitcoin Runes different from BRC-20?
Bitcoin Runes uses the UTXO model and OP_RETURN opcode, whereas BRC-20 relies on the Ordinals protocol and requires inscriptions for every transaction. Runes are considered more efficient because they produce less on-chain data and do not require a separate indexer to track balances.
How do you create a Rune?
Creating a Rune is called etching. To etch a Rune, you submit a Bitcoin transaction containing a Runestone in its OP_RETURN output. The Runestone specifies the Rune's name, symbol, supply, divisibility, and minting rules. Once etched, the Rune can be minted by anyone (open mint) or under specific conditions (closed mint).
What happened to Bitcoin Runes after launch?
Bitcoin Runes launched with high activity at the April 2024 Bitcoin halving and initially generated substantial transaction fees. Activity declined in the months that followed as the initial wave of interest subsided. As of 2025-2026, the protocol remains operational, and developers continue to explore use cases, though volumes are a fraction of those seen at launch.
Are Bitcoin Runes the same as Ordinals?
No. Ordinals is a protocol that assigns numbers to individual satoshis and enables non-fungible inscriptions on Bitcoin. Bitcoin Runes is a separate protocol designed specifically for fungible tokens. While both were created by Casey Rodarmor, Runes does not depend on the Ordinals protocol and uses a different technical approach.
Closing Thoughts
Bitcoin Runes offers a more efficient way to create and manage fungible tokens on the Bitcoin network compared to earlier approaches like BRC-20. By using Bitcoin's native UTXO model and OP_RETURN opcode, the protocol avoids some of the bloat associated with inscription-based token standards. While activity has slowed since the protocol's launch in 2024, Runes remains an active part of the Bitcoin ecosystem and a useful reference point for understanding how fungible tokens can work natively on Bitcoin.
Further Reading
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