Bitcoin, Solana, Ethereum and even Cardano are slowing down after sharp price drops in recent days. The price drop means that enthusiasm has been punctured, which has a negative impact on on-chain activity.
Runes Take Over Bitcoin
As the crypto market recovers from last week’s pain, it’s becoming clear that the Runes Protocol is taking over the Bitcoin network. Its creator claims that Runes, which sets a new standard for minting tokens on the Bitcoin network, responsible for 69.1% of all transactions in the past 24 hours.
This means that only about 40% of all other transactions came from users who were eager to move funds from one address to another. Bitcoin was designed to enable the borderless transfer of funds cheaply and efficiently.
This was the case until the Taproot upgrade, which was intended to scale the Bitcoin network and make transactions more private. However, the update also introduced a bug that opened a vector for users to store files, including images or audio, on-chain.
For this reason, the number of subscriptions to the network has exploded in 2021, coinciding with the NFT boom. Since the Bitcoin Halving On April 20, more Runes were “minted” on-chain, despite a decrease in the number of transactions processed over the past three months.
Users can mint non-fungible tokens (NFT)-like inscriptions, which are stored on-chain via Runes. This is possible because the standard leverages the structure of the network.
The protocol uses Bitcoin’s UTXO model and introduces improvements that allow users to efficiently create and manage inscriptions. The standard improves on BRC-20 by introducing a 13-character limit for ticker symbols and reduce the number of steps for users who want to mint tokens. For this reason, there is a significantly lower “on-chain footprint”, which leads to less spam.
Rising BTC transaction fees benefit miners
Whether more Runes will be minted in the future remains to be seen. The spike in inscriptions, especially on platforms like Bitcoin that inherently lack smart contracts, has been blamed on rising transaction fees.
According to spot rates, the average transaction cost is lower, but still higher than $1. Blockchain.nl. It has been declining since April 20, when users rushed to write their items onto the Halving block, pushing transaction fees above $50.
While frowned upon in some quarters, the rise of Runes and inscriptions on Bitcoin is being welcomed by miners as revenues halved after April 20th. The more transactions posted, the higher their revenue, as each block, regardless of inscription density, is confirmed and added to the longest chain.
Main image from Canva, chart from TradingView