Franklin Templeton, an asset manager, forecasted in a report on Monday that Bitcoin’s upcoming “Runes” token standard will enable the leading cryptocurrency network to compete with its counterparts in the DeFi space.
The Promise Of Runes
Prior to 2023, it was impossible to create tokens directly on Bitcoin’s primary blockchain, distinguishing it from other chains like Ethereum or Solana where such functionality existed. This limitation prevented Bitcoin from accessing various applications such as NFTs, stablecoins, and DeFi. However, this landscape changed with the emergence of Ordinals in early 2023, introduced by Casey Rordamor. This protocol empowered users to assign unique identification numbers to individual satoshis and imbue them with arbitrary data, thus facilitating the creation of NFTs.
Bitcoin NFTs differed from those on Ethereum and Solana in a significant way: the image data of Bitcoin NFTs was embedded directly into Bitcoin’s blockchain, rather than being stored on a centralized server.
How Large Could Runes Become?
According to Cryptoslam, as of today, Bitcoin boasts a larger NFT market compared to both Ethereum and Solana. Over the past 30 days, it has facilitated approximately $462 million in NFT trading volume, while Ethereum recorded $296 million.
Following the Ordinals protocol, developer Domo extended its capabilities to introduce BRC-20 tokens. However, the creator acknowledged the inefficiency of such tokens.
Today, Runes, once again developed by Rordamor, aim to address these inefficiencies. They are designed to be significantly more efficient, requiring less blockchain-based data for transactions compared to BRC-20 tokens and even Ethereum’s ERC-20 tokens. Additionally, Runes offer benefits such as compatibility with the lightning network and enhanced transaction privacy.
“Bitcoin is poised to narrow the disparity between its total market capitalization and that of other blockchains,” Franklin stated.
Currently, Bitcoin’s total market capitalization stands at $1.2 trillion, whereas its fungible token market cap is only $600 million. In comparison, Ethereum boasts a market cap of $378 billion, with its fungible token market cap reaching $499 billion.
“We eagerly anticipate witnessing whether Runes can replicate for Bitcoin’s fungible token and DeFi market what Ordinals achieved for Bitcoin’s non-fungible token market,” concluded the report.
