The Bitcoin world is abuzz with the upcoming halving, which, if previous cycles are to be believed, will kick off the next bull run as the supply of new coins is reduced and the new inflation rate drives wild swings in price discovery.
But that’s not all that’s happening this month; while the programmatic cutting of new supply has been known for some time, an unknown entity that could affect the Bitcoin market has entered the equation in the form of the launch of Runes.
This new protocol is an add-on to the scourge that is Ordinals and promises to bring a new format of fungible tokens to Bitcoin, similar to those currently clogging up blocks as we speak.
Launching the NFT-like Ordinals protocol last year sparked an entirely new market for NFTs and fungible tokens. Seeing the popularity and shortcomings of BRC-20 tokens, which emerged as a stop-gap solution for degens needing to trade tokens, developer Casey Rodarmor proposed Runes as a framework for creating fungible tokens on Bitcoin last September.
Like BRC-20 tokens, Runes will live directly on the Bitcoin blockchain, and the protocol launch has the ordinal enjoyers foaming at the mouth. If the halving does kick off the expected bull run and the Bitcoin market becomes flushed with liquidity, “Bitcoin adjacent assets” should see a spillover, or that’s the theory; we’ll have to wait and see if it plays out.
As preparation for rugging the normies and Bitcoin tourists during this next cycle, crypto degens, known for their aggressive trading strategies and love of all things meme-related, are scrambling to prepare.
But their methods are a bit… ironic, to say the least.
Full node frenzy
Traditionally, degens haven’t been the most interested in the technical underpinnings of crypto. However, the Runes launch has them diving headfirst into the world of Bitcoin full nodes.
Why the sudden interest?
It all boils down to potential profits.
With a new, potentially volatile market emerging, degens want the edge.
During bull markets, hundreds of thousands of people are looking to make their fortunes and will be frantically refreshing websites, many of them shoddily built and not ready for any real demand. So there’s no guarantee that all these fly-by-night front ends will work when the trading behinds heat up.
So, instead of leaving it up to chance and third-party service providers, crypto degens are choosing to verify and no longer trust.
Oh, the rich irony.
Running a full node allows them to interact directly with the Bitcoin blockchain, potentially giving them faster transaction confirmation times and a supposed advantage in the early days of Runes.
The decentralisation dilemma
Here’s the twist: this degen activity, fueled by pure financial gain, is actually contributing to the decentralisation of the Bitcoin network.
A core principle of Bitcoin is that any single entity does not control it, and you can interact directly with it if you choose to, which gives you more control and better privacy.
An added benefit fro the network is that the more full nodes there are, the more robust and resistant to censorship the network becomes.
So, in their quest for profit, degens are unintentionally strengthening the very network they’re planning to exploit with their JPEGs (referencing the recent trend of inscribing images and other data onto the Bitcoin blockchain using Ordinals).
A web of self-interest
This situation highlights the complex web of motivations in the crypto space.
These new Rune-motivated node runners aren’t without their shortcomings for the network since their aim is to spam the blockchain with unnecessary metadata, trying to profit from one another by trading on this secondary market.
One of the key benefits of having more control over your Rune experience is the empowerment it brings. This control extends to traders, who can now manage their bidding for transactions. This shift could potentially drive a more competitive fee market, with traders confidently setting their fees in a market characterised by consistently high transaction fees and a stuffed mempool.
As these Rune-based tools are refined or users learn to enjoy the command line, they can also “snipe” transactions to a trader’s advantage and battle it out for profits in the MEV opportunities that will undoubtedly emerge.
While some see this as a cost of maintaining decentralisation as a core value, others will be annoyed by these new node runners who are simply looking for the next big payday.
However, no one can stop you from running a node, regardless of your motivations, so the degen node surge is something we have to deal with in this cycle. Even with the pain points they bring, these new node runners are likely to turn out to be a positive development for Bitcoin’s long-term security, even if in the short term, there will be added spam and annoyance from Bitcoin purists.
Came for the gains, changed through the pain
So, the crypto degenerates (affectionately known as degens) are all aflutter about this new Runes protocol.
Apparently, it’s gonna rain tokens (or some other form of digital trinket) on the Bitcoin blockchain, and these savvy traders are chomping at the bit to get their hands on some and plan to all make out like bandits after spending money on a Raspberry Pi and a 1TB SSD.
The only problem? Even with a node, it doesn’t change the fundamentals of this market, which is a sentiment-driven, highly speculative zero-sum game.
And traders will find that out the hard way, come the blow-off top and resulting bear market, which will leave them with a node wallet filled with worthless metadata tied to dust-sized UTXOs.
So, what happens when their Runes dreams turn into pixelated dust?
Well, chances are they’ll be left holding a participation trophy… a participation trophy that just happens to be a powerful computer safeguarding the Bitcoin network.
Here’s the funny part:
The cost of running this node might just guilt them into keeping it going; you know, sunk cost fallacies can be strong among this cohort of traders.
Hey, nobody likes throwing away money, even if it’s powering a glorified digital disaster; the node isn’t a paperweight; there’s more!
The modern Bitcoin node is like a Swiss Army knife for Bitcoin. It’s not only a fancy wallet and block explorer but also the key to unlocking the Lightning Network (think super fast Bitcoin transactions) and even coin mixing (think digital incognito mode for your coins).
So, instead of a bunch of degens running around with bags of worthless jpeg data, we might see them become accidental Bitcoin maxis minted created in 2024.
Who knows? Maybe instead of minting Runes, we’ll mint a bunch of Bitcoin believers along the way.
Now that’s a plot twist no one saw coming!
