tl;dr
As the Bitcoin halving approaches, it is anticipated that Ordinals inscriptions and BRC-20 tokens will remain secure in wallets without any need for action. The launch of the new Runes token protocol is expected to impact interest in BRC-20 tokens, with increasing demand for Ordinals and potential b...
As the Bitcoin halving approaches, it is anticipated that Ordinals inscriptions and BRC-20 tokens will remain secure in wallets without any need for action. The launch of the new Runes token protocol is expected to impact interest in BRC-20 tokens, with increasing demand for Ordinals and potential benefits for Bitcoin-based assets. However, cooling demand has been observed for some prominent Bitcoin tokens, while the Runes protocol, developed by the inventor of the Ordinals protocol, is anticipated to bring efficiency and potential advantages to the space. The protocol's launch at the halving is expected to lead to sustained high fees on Bitcoin, potentially affecting the Ordinals protocol and creating scarcity among existing collections.
We’re hours away from the Bitcoin halving and the associated launch of the Runes fungible token standard, and collectors on the top chain might be wondering: What does any of this have to do with the NFT-like Ordinals inscriptions on the chain? And what of BRC-20 fungible tokens built on the Ordinals protocol? Unlike Ethereum’s “merge” transition back in late 2022, there’s no reason for concern around what could happen to on-chain Bitcoin assets after the halving. The halving simply refers to the quadrennial reduction in mining rewards, which slows the supply of new BTC entering the market and tends to lead to an eventual price surge. Bitcoin will simply continue producing blocks, so any Ordinals inscriptions or BRC-20 tokens will remain in your wallets, and there’s nothing you need to do.
But the bigger question revolves around demand for Bitcoin-related assets and how the launch of the new Runes token protocol will impact interest in BRC-20 tokens. Ordinals have seen surging demand in recent months, with NFT trading volume surpassing that of longtime leader Ethereum. The shift has propelled cross-chain marketplace Magic Eden to the top of the pile, and Ordinals collections that have promised upcoming Runes token drops to holders—like Runestone, for example—are soaring as a result.
Will that momentum shift lose steam after the halving? Nobody can say for sure, but DappRadar’s Senior Communications Manager Robert Hoogendoorn anticipates that Ordinals and other Bitcoin-based assets will benefit from expected BTC price increases down the line. “Just like the halving is likely to increase the price and therefore demand for BTC in the long run,” he told Decrypt, “I also expect demand for Bitcoin assets, like Ordinals, to increase.”
As for BRC-20 tokens, we’ve seen cooling demand for some of the prominent Bitcoin tokens on the market, such as ORDI and SATS, which have fallen much harder than Bitcoin in the last couple of weeks—and harder than many other cryptocurrencies. The Runes protocol is not only billed as a more efficient implementation of Bitcoin-based tokens, but it has another potential advantage: It was developed by Casey Rodarmor, the inventor of the Ordinals protocol.
BRC-20 was an experimental token standard based on his protocol, and certainly, anyone is free to build on the permissionless chain. But Runes has Rodarmor’s own stamp on it—and when it comes to the billions of dollars worth of Bitcoin being thrown around this space to obtain valuable assets, that means something to some collectors and investors. “It’s his vision of how he's seeing this come together,” Elizabeth Olson, head of growth at Bitcoin wallet startup Xverse, previously told Decrypt. “Obviously, Ordinals have been a huge success, so I would imagine that Runes will be just as big, if not bigger, than BRC-20 tokens.”
But Runes could throw a wrench into the economics of Bitcoin and create new assets on the chain—for better or for worse, depending on your perspective. There’s a ton of anticipation around Runes launches, including projects vying to be one of the first mints right out the gate, and demand for Runes could drive up the cost of using the network for some time to come. “The release of the Runes protocol at the halving will lead to a period of sustained high fees on Bitcoin,” pseudonymous NFT historian and Runestone project co-creator Leonidas told Decrypt. “This will affect the Ordinals protocol in several ways. Because it will be more expensive to inscribe files on-chain, artists will have to become more clever about how they use file space.”
What happens if fewer new Ordinals projects are deployed on Bitcoin, and it costs more to buy and trade them anyway? Some builders believe that this will boost the prices of existing collections. “The increased cost associated with dropping a collection will also induce scarcity amongst the existing collections,” Leonidas added. “
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