Franklin Templeton, an asset manager, anticipates that Bitcoin’s forthcoming “Runes” token standard will bring the premier cryptocurrency network up to speed with its competitors in the DeFi sector, as stated in a report released on Monday.
The firm shared a detailed fact sheet on the upcoming technology via Twitter, revealing that it is slated to launch concurrently with the Bitcoin halving event.
“Runes introduces a novel token standard on Bitcoin’s layer 1, enhancing the existing fungible token standards on Bitcoin (BRC-20s),” Franklin elaborated.
Tokens, distinct from a blockchain’s native currency like BTC on Bitcoin or ETH on Ethereum, were previously unattainable on Bitcoin’s primary blockchain until 2023. This limitation prevented Bitcoin from accessing various applications available on other chains, including NFTs, stablecoins, and DeFi.
However, the advent of Ordinals in early 2023, spearheaded by Casey Rordamor, changed the landscape. The protocol enabled users to assign unique identification numbers to individual satoshis, embedding them with arbitrary data to facilitate NFTs.
Bitcoin NFTs distinguished themselves from Ethereum and Solana NFTs by embedding image data directly into Bitcoin’s blockchain, rather than relying on a centralized server.
The Potential of Runes
As of present, Bitcoin boasts a larger NFT market than both Ethereum and Solana, recording $462 million in NFT trading volume over the past 30 days, compared to Ethereum’s $296 million, according to Cryptoslam.
Subsequently, a developer named Domo expanded on the Ordinals protocol to enable BRC-20 tokens, albeit acknowledging their inefficiency.
Now, Runes—once again developed by Rordamor—are anticipated to be significantly more efficient, requiring less blockchain-based data for transactions than BRC-20 tokens or Ethereum’s ERC-20 tokens. Notable benefits of Runes include compatibility with the lightning network and enhanced transaction privacy.
“Bitcoin is well-positioned to narrow the gap between its fungible market cap and that of other blockchains,” Franklin asserted.
While Bitcoin’s total market cap currently stands at $1.2 trillion, its fungible token cap is just $600 million. In contrast, Ethereum boasts a market cap of $378 billion, with a fungible token market cap of $499 billion.
“We eagerly anticipate witnessing if Runes can replicate the success Ordinals brought to Bitcoin’s NFT market within its fungible token and DeFi sector,” the report concluded.