Learn Concept: The Impact of Bitcoin Runes on the Bitcoin Network Post-Halving

By: Eliza Bennet

The concept of Bitcoin Runes, a way of augmenting transactions by embedding arbitrary data into the transaction outputs, is one that has greatly affected the Bitcoin network. On the day of the halving event, an impressive 57.7% of all transactions were accounted for by Bitcoin Runes. This transfer augmentation method manipulated Unspent Transaction Outputs (UTXOs) to assign Runes to a UTXO using the OP_RETURN function.

The embedding of data in transactions can be achieved without causing network congestion, thanks to this function. However, despite the primary intention of reducing network clutter, the success of Bitcoin Runes led to network congestion due to the large volume of transactions they generated. This data shows clearly how the sudden influx of a new transaction method can quickly change the dynamics of a network, leading to unanticipated consequences, such as higher transaction fees and slower processing times.