> For the complete documentation index, see [llms.txt](https://satochain.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://satochain.gitbook.io/docs/introduction/satochain-blockchain/first-runes-based-blockchain.md).

# First Runes-based Blockchain

The Runes protocol, launched in September 2023, is a groundbreaking addition to the Bitcoin ecosystem, characterized by its simplicity and efficiency. Conceived by Casey Rodarmor, also known for creating the Ordinals protocol, Runes introduces a method for issuing fungible tokens directly on the Bitcoin blockchain. This development enables the creation and management of tokens that are both interchangeable and divisible, much like ERC-20 tokens on the Ethereum network.

Runes distinguishes itself from other Bitcoin fungible token protocols by eliminating the reliance on off-chain data or the necessity for a native token. It achieves this by embedding token data into specific UTXOs (Unspent Transaction Outputs), which are designated as 'Rune-bearing.' Key token information, such as supply, issuer details, and metadata, are efficiently stored in compact ‘OP\_RETURN’ outputs linked to the Rune-bearing UTXO. The transfer of a Rune-bearing UTXO conveys both the Bitcoin value and the associated token to the new owner, who then verifies the token's authenticity and updates their ledger.

#### Key Features

* **Simplicity:** The Runes protocol aligns with Bitcoin's foundational principles, aiming for minimal complexity. Unlike Ordinals, Runes addresses blockchain size and transaction fee concerns by attaching token data to pre-existing UTXOs, effectively reducing data expansion.
* **Efficiency:** Utilizing UTXOs for token management significantly enhances transaction processing. This method represents a substantial leap in scalability compared to the method of wrapping Bitcoin into tokens on other chains.
* **Interoperability:** Designed to integrate flawlessly with current Bitcoin wallets and tools, Runes is committed to a user-friendly experience. This seamless integration reduces barriers for users, encouraging broader adoption by enabling them to easily merge Runes into their existing Bitcoin operations.

## Runes vs. BRC-20 Tokens

<table><thead><tr><th width="246">Components</th><th width="125">Runes</th><th>BRC-20 Tokens</th></tr></thead><tbody><tr><td><strong>UTXO-based</strong></td><td>✔</td><td>✘</td></tr><tr><td><strong>Ordinals Theory-based</strong></td><td>✘</td><td>✔</td></tr><tr><td><strong>Token Type</strong></td><td>Fungible</td><td>Fungible</td></tr><tr><td><strong>On-chain Footprint</strong></td><td>Minimal</td><td>High</td></tr><tr><td><strong>Lightning-Compatible</strong></td><td>✔</td><td>✘</td></tr></tbody></table>