Bitcoin, Solana, Ethereum, and even Cardano prices are slowing down after sharp price declines in the past few days. The falling prices mean that the enthusiasm has dried up, which negatively affects on-chain activity.
Runes dominate Bitcoin
However, as the cryptocurrency market recovers from last week’s shock, it has emerged that the Runes protocol is taking control of the Bitcoin network. Its creator claims that Runes, which is issuing a new standard for minting tokens on the Bitcoin network, is responsible For 69.1% of total transactions in the last 24 hours.
This means that only about 40% of all other transactions were from users keen to move capital from one address to another. In fact, Bitcoin is designed to enable the borderless transfer of money at low cost and high efficiency.
This was the case until the Taproot update, which meant that Bitcoin’s network was expanded and transactions were made more private. However, the update also introduced a bug that opened the way for users to store files, including images or audio, on the chain.
For this reason, the number of Runes on the network has increased dramatically in 2021, coinciding with the NFT boom. Since the Bitcoin split on April 20, more Runes have been “minted” on the chain, despite the number of transactions processed declining over the past three months.
Users can mint non-fungible tokens (NFTs)-like inscriptions stored on-chain via Runes. This is possible because the standard leverages the network architecture.
The protocol leverages Bitcoin’s UTXO model and introduces improvements that allow users to mint and manage tokens efficiently. It enhances the BRC-20 standard by introducing a 13-character limit for tokens. And reducing the number of steps users take to mine tokens. Because of this, there is much less “on-chain footprint”, which results in less spam.
Higher Bitcoin Transaction Fees Benefit Miners
But it remains unclear whether more runes will be minted in the future. The high transaction fees have been blamed on the rise in the number of runes, especially on platforms like Bitcoin, which inherently lack smart contracts.
According to spot market prices, average transaction fees have decreased but are still above $1. Blockchain.comIt has been falling since April 20, when users rushed to write their own items on the halving block, pushing transaction fees above $50.
Despite the disapproval in some quarters, the rise of runes and inscriptions on Bitcoin is welcomed by miners now that revenues are set to be cut in half after April 20. The more transactions are published, the more revenue they earn because every block, regardless of the density of inscriptions, is confirmed and added to the longest chain.
Featured image from Canva, chart from TradingView
