Bitcoin's Epic Convergence: Halving and Runes Protocol Forge a New Era

The 2024 halving and Runes protocol launch on the same day could signify a major event in Bitcoin's history, as the Runes protocol introduces the concept of fungible tokens and ignites a battle for block space and the coveted "Epic Satoshi" worth over $1 million.

Bitcoin's Second Phase: The Convergence of Halving and Runes Protocol

The cryptocurrency world eagerly anticipates the 2024 halving, an event that occurs every four years and reduces the block reward for Bitcoin miners by half. This year, however, the initiation of the Runes protocol, which aims to introduce fungible tokens on the Bitcoin network, coincides with the halving, potentially marking a monumental chapter in Bitcoin's history.

The Dawn of "The Second Phase of Bitcoin"

In December 2022, the Ordinals protocol emerged, bringing a surge of cultural transformation to the Bitcoin blockchain. It enabled users to embed images, audio, and code files directly into Bitcoin blocks, thus initiating "The second phase of Bitcoin." Casey Rodarmor, the developer behind Ordinals, subsequently introduced the Runes token protocol, designed to facilitate the creation of fungible tokens on Bitcoin.

Runes Protocol: A Battle for Block Space

The Runes protocol is set to activate concurrently with the halving. This will trigger an intense competition among players vying to issue the first tokens and secure the most auspicious token names. A secondary battle will ensue as players race to acquire these newly minted tokens.

In anticipation of this event, global exchanges are preparing to list the primary tokens to be launched under the Runes protocol. Marketplaces and decentralized exchanges (DEXes), including Magic Eden and OKX, have already announced their support for tokens created from the Runes protocol from day one.

The Historical Significance of Runes and Ordinals

Historically, Bitcoin has been perceived solely as an asset with no specific purpose, unlike blockchains such as Ethereum and Solana, which serve as platforms for application development and asset issuance. However, the introduction of Ordinals has witnessed thousands of users actively utilizing the Bitcoin network to acquire Bitcoin-priced assets. Within a year of its inception, over $3 billion has been transacted through Ordinals assets, involving approximately 600,000 unique wallets and 2.5 million on-chain transactions.

The cultural impact of Ordinals has revitalized Bitcoin, igniting a surge in innovation and leading to improvements in Bitcoin wallets, nodes, unspent transaction output (UTXO) managers, and the mempool. Discussions regarding decentralized finance (DeFi) and layer-2 solutions for Bitcoin have intensified, attracting significant attention from venture capitalists.

The Next Phase: Runes

The Ordinals protocol has rekindled enthusiasm for Bitcoin, and the Runes protocol represents the next phase in its evolution.

The Epic Satoshi: A Million-Dollar Prize

The halving block itself will be the most fiercely contested block in history, not only for retail participants but also for miners. The miner who secures the halving block will claim an "Epic" satoshi, estimated to be worth over $1 million.

Scalability Solutions

Anticipating network congestion on the Bitcoin network, projects are developing solutions to facilitate scalable trading on the Runes protocol. A successful precedent exists in the form of a bridge that enabled the exchange of Bitcoin assets on Solana. However, more Bitcoin-centric platforms are emerging, such as RuneChain, a Bitcoin layer-2 solution focused on Runes.

Investor Education and Preparation

As the market gears up for the arrival of the first tokens created through the Runes protocol, users are becoming increasingly savvy about Bitcoin. Thousands have begun operating Bitcoin nodes and educating themselves about UTXOs to gain an advantage during token launches. NFT communities like the Pizza Ninjas have played a significant role in disseminating knowledge on these topics.

Pre-Runes Season: Token Distribution

The market is experiencing a "pre-Runes season," characterized by the pre-distribution of Runes-standard tokens through airdrops to Bitcoin NFT holders. Each collection employs its unique distribution model, with some airdropping tokens based on NFT holder snapshots after the halving, while others distribute tokens based on the duration of NFT ownership. Runestone and RSIC exemplify these two distribution models, respectively.

Users also have the option of investing in BRC-20 tokens, such as WZRD and PUPS, which will migrate to the Runes standard.

Runes: A Monumental Shift

Bitcoin's "second season" is approaching its climax. Runes tokens will evoke a spectrum of emotions, from admiration to disdain and everything in between. They are an unstoppable force, poised to transform Bitcoin's landscape forever.

Lugui Tillier, a guest author for Cointelegraph and Business Development Director of Lumx, a Web3 studio in Rio de Janeiro backed by BTG Pactual Bank, the largest investment bank in Latin America, contributed this article, which solely reflects the author's views and not Cointelegraph's.