Bitcoin Ordinals and Runes: NFTs and tokens on the Bitcoin blockchain

Bitcoin's Hidden Evolution: Ordinals and Runes

In early 2023, developer Casey Rodarmor did something many thought was impossible and unnecessary: he brought NFTs and fungible tokens to the Bitcoin blockchain. The Ordinals and Runes protocols have been dividing the community ever since, but they undeniably opened a new chapter in Bitcoin's history.

What Are Ordinals?

The Ordinals protocol makes it possible for individual satoshis (the smallest unit of Bitcoin, 1 BTC = 100,000,000 satoshi) to be endowed with unique content:

• Inscription: Images, texts, HTML, even entire applications "inscribed" directly onto the Bitcoin blockchain
• The content stays on the blockchain forever — not on an external server
• The Taproot upgrade (2021) made it technically possible

The "Bitcoin NFT" Storm

In early 2023, Ordinals literally blew up the Bitcoin network:

• The mempool (pending transactions) swelled to record size
• Transaction fees skyrocketed — sometimes $50-100 per transaction
• Bitcoin blocks filled up with inscriptions
• Collections: Bitcoin Punks, NodeMonkes, Bitcoin Frogs, Quantum Cats

What Are Runes?

In April 2024 (exactly on the halving day), the Runes protocol launched — also created by Casey Rodarmor:

• Fungible tokens (like ERC-20 on Ethereum) on the Bitcoin blockchain
• More efficient than the previous BRC-20 token standard
• Meme coins, utility tokens, even stablecoins issuable on Bitcoin

The Impact of Runes

• On halving day, transaction fees temporarily exceeded the block reward
• Meme tokens (DOG, PUPS) generated billions in trading volume
• An important new revenue source for miners

The Bitcoin Community's Division

Arguments of the Supporters

• Fee revenue: After the halving, miners increasingly rely on transaction fees — Ordinals/Runes provide this
• Innovation: Bitcoin cannot remain merely "digital gold" — it needs to evolve
• Security budget: In the long term, fee revenue sustains the network's security
• Developer interest: New developers and users are arriving in the Bitcoin ecosystem

Arguments of the Critics

• Block spam: "Junk" fills the blocks, crowding out real financial transactions
• Fee increase: Average users and Lightning channel openings become more expensive
• Not what it's for: Bitcoin was designed as money, not an NFT platform
• UTXO bloat: Runes tokens increase the size of the UTXO set

The Bitcoin Layer 2 and Meta-Protocol Ecosystem

Inspired by the success of Ordinals/Runes, an entire ecosystem has grown:

• Stacks (STX): Smart contracts built on Bitcoin, with sBTC Bitcoin-pegging solution
• RGB Protocol: Smart contracts on the Lightning Network
• Liquid Network: Blockstream federated sidechain with confidential transactions
• BitVM: Turing-complete computation on Bitcoin (early phase)

Summary

Ordinals and Runes redefined what Bitcoin is capable of. Not everyone may be happy about it, but the genie is out of the bottle. Bitcoin is no longer "just" digital gold — it also carries the foundations of a programmable, extensible platform within itself.

Bitcoin's greatest virtue and greatest challenge is that the community debates everything. The Ordinals/Runes debate is the latest chapter in this — and probably not the last.

⚠️ Legal disclaimer: This article is for informational purposes only and does not constitute investment advice. All investment decisions are made at your own risk.