SRC-20 vs Runes: Who’s the Real Innovator?

Within the fast-changing crypto scene, new narratives appear in a matter of days, gaining support just as quickly. With the industry’s fast-paced nature, the creation of new protocols is a commonplace activity. However, it is not rare to see spin offs and iterations of old technologies, revived with fresh and hype-fueled concepts. In this article we will tear apart a claim that has been popular among some users in the crypto community: that Runes are a hype-driven copy of SRC-20. Let’s dive into this controversial take.

Firstly, let’s have a quick recap at how Runes and other relevant protocols work to fully understand their potential similarities and differences with SRC-20. Runes are the product of the improvements made to previous standards that aimed to improve Bitcoin’s utility. It all began with the launch of Ordinals in early 2023, an event which sparked interest in bringing new use cases into the Bitcoin ecosystem. 

Runes were created by Ordinals creator (@rodarmor on Twitter). They were launched to enable the release of fungible tokens (“normal” tokens), whereas Ordinals were designed to allow launching non-fungible tokens (NFTs).

However, Ordinals themselves were the result of an iteration of another standard, BRC-20. BRC-20 is an experimental token standard on Bitcoin that works by embedding (so-called inscribing in this context) data into Satoshis. Nevertheless, inscribing data into Satoshis considerably hindered Bitcoin’s network efficiency as it was not originally designed to support the addition of more data than necessary for transactions.

Following up on the mission of improving BRC-20’s efficiency, new token standards were introduced. One of the first examples which is less known but still had great significance in the creation of Runes is called SRC-20. You may be wondering, how come I have never heard of this standard yet? The answer is it’s not that well-known and has not reached mass adoption (yet), but let’s try to understand how it works.

SRC-20

It is a standard that was also created to expand the utility of the Bitcoin network by using a core technology called “Stamps”. SRC-20 tokens utilize Stamps to attach data to Bitcoin, allowing to embed various types of data, including images and text, into Bitcoin, transforming it into a more flexible platform, and thus, increasing its utility.

SRC-20 tokens are unique because they embed data, such as images and text, directly into Bitcoin transactions using a special data storage method. Their main differentiator against other standards like BRC-20 tokens is storing data in unspent transaction outputs (UTXOs) on Bitcoin. This makes SRC-20 tokens more secure and immutable, as the data cannot be removed or pruned.

For context, the UTXO model is a key component of Bitcoin for transaction data storage. Simply explained, the UTXO (Unspent Transaction Output) system allows Bitcoin to perform transactions by “picking up” UTXOs which are indivisible units of Bitcoin that have not been spent and they’re used to create new outputs. This model is what ensures no double spending and allows the conservation of value within Bitcoin.

By leveraging UTXOs to inscribe data, SRC-20 tokens are able to encode JPG, GIF, PNG, or SVG files up to 24x24 pixels in size for the creation of NFTs, but fungible tokens are also possible to be launched. Each SRC-20 token has a unique numerical identifier, and tokens are created by adding a "stamp" string to a new Bitcoin transaction. Now, let’s jump into a recap of Runes.

Runes

Runes also presented a way to inscribe data into Bitcoin more efficiently, tackling one of the main issues with other Bitcoin-based standards: they could cause bottlenecks in the network. Here’s the catch: Runes are also a UTXO-based protocol to create fungible tokens atop Bitcoin.

UTXO-Based

A key characteristic of Runes is they are based on the UTXO model meaning that all transactions with Runes use Bitcoin’s native storage and management system. By using UTXO, Runes will inherit all Bitcoin’s safety features and they will also be more resistant to changes on the Bitcoin network.

But the big difference when comparing Runes against SRC-20 is that Runes utilize the OP RETURN opcode to store data. What’s that? You may ask, let’s make the OP RETURN opcode easy to understand first:

• In the computer world, an opcode is the portion of a computational language instruction that specifies the operation to be performed.

• OP RETURN in Bitcoin is unspendable, as the opcode contains up to 80 bytes but it literally contains “OP RETURN” at the beginning of the line, meaning that the output can never be used as input in a transaction.

• The purpose of OP RETURN in Bitcoin is to prove the existence of documents at a certain time, embed hash values, or record version numbers.

• Shortened to 1 sentence, the OP RETURN is then an instruction in the Bitcoin blockchain that allows people to put a small amount of text or data into a Bitcoin transaction.

By now, you might’ve already picked up on what makes these two protocols similar, there is a common denominator between them that is responsible for the controversy.

Differences

The question is, if both SRC-20 tokens and Runes attach data to Bitcoin, what is the difference?

Data Storage

Runes use the UTXO model to embed data through the OP RETURN opcode, which in paper, can be more efficient and uses a native opcode that already exists in Bitcoin to add data, not much changes in the network.

On the other hand, while SRC-20 is also based on the UTXO model, they make an emphasis on data immutability to ensure that once data has been stamped, it cannot be changed. This same characteristic makes this standard more limited, as data immutability means data storage is impacted permanently, directly impacting network efficiency.

In contrast, Runes are more flexible and efficient in terms of data storage as data footprint is minimized.

Immutability

One of SRC-20’s strengths consists of data immutability, this is different to Runes as they can have data erased under certain circumstances.

Adoption

Runes have experienced a much more remarkable adoption. The protocol took the crypto community by storm by strategically aligning their launch with Bitcoin’s halving and a considerably more robust marketing tactic.

Similarities

Data Storage

While one of the core differences between SRC-20 and Runes was data storage with the UTXO model. There is a big similarity between them that is also storage-related. None of the protocols support data pruning meaning that they are both as good at ensuring data safety. However, as mentioned previously, SRC-20 tokens have better long-term permanence if immutability and permanence is what you’re looking for. 

Nevertheless, the common denominator here is the UTXO model that both protocols use, they both inherit Bitcoin's strong security features, keeping things safe and sound.

Objective

Both aim to make Bitcoin more useful. SRC-20 focuses on keeping data immutable, while Runes are about being efficient and flexible.

Who got here first?

Here is where things have taken an interesting turn amidst the rise of Runes. Some users detect that Runes use similar principles for their operation. The similarities are highlighted above, and they have sustained the claims of some users who state Runes are not something innovative and their rise was fueled mainly by hype.

Some users call Runes a copy or SRC-20 being the original protocol that proposed the utilization of Stamps and the UTXO-model. The not-so-small detail is the date of creation of these protocols. The SRC-20 standard was launched in March 2023 while Runes were launched in April 2024, coinciding with a Bitcoin halving event. This time difference puts more weight on the similarities, as it’s easy to see how a protocol that launched almost a year after is able to take on a protocol that launched much time before but struggled to gain traction.

Recently, there has been more recognition towards the SRC-20 protocol. Several sources and members of the crypto community are expecting a resurgence of the protocol as it seems users are starting to appreciate the SRC-20 protocol for what it does best: data immutability and long-term permanence

At the end of the day, Runes aren't just a copy of SRC-20. They were more like a spin-off period in the story of SRC-20. While SRC-20 laid the initial foundation, being one of the first protocols working to attach data to Bitcoin. Runes took those ideas and ran with them, making things smoother and more efficient. So, while SRC-20 was definitely a precedent, Runes also brought an innovative take to the table, proving that innovation in the Bitcoin space is far from over.

While it is safe to say that none of the protocols are done with their time on the blockchain space, we must also appreciate that Runes might’ve helped SRC-20 in the long term as some of their flaws might’ve resparked an interest in the SRC-20 protocol, but only time will tell if it was actually beneficial for it. 

A controversial question arises from the situation above. Was the development and rise of Runes driven by genuine innovation, or was it a calculated move to copy SRC-20 and grab the market attention first? 

This controversial take makes us wonder about innovation in the crypto space. Is true innovation about who gets there first, or who can market their product more effectively? In the end, SRC-20 was created much before and Runes got way more attention almost 1 year after that. As this polarizing opinion might remain merely an opinion, it still remarks a very important aspect for the crypto community: the influence of good marketing and perception can overthrow technical details. Whether Runes are a genuine step for Bitcoin’s utility or not, their impact on the ecosystem is still significant.

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