BRC-2.0 Bitcoin Tokens Could Outshine Runes

In a recent announcement, Best in Slot, the infrastructure company powering some of the most popular Bitcoin applications and wallets like Xverse and Liquidium, revealed that BRC-20s are getting an upgrade.

Dubbed BRC2.0, it’s expected to go live on Bitcoin Testnet in Q1 of 2025, with the aim to bring “smart contracts” to BRC-20s, enabling them to compete with Bitcoin sidechain designs.

In short, the “BRC20 Programmable Module” is designed to “unlock infinite new use cases for native assets on Bitcoin—including seamless DeFi, RWAs, DAOs, stablecoins, and more—without relying on multisig bridges or L2s.”

After many years in the space, we can all agree that we’ve heard promises like this before. However, metaprotocols have one distinguishable advantage: they are fully on-chain, rather than relying on entirely separate chains with new trust assumptions. Sure, metaprotocols may not be the best approach to decentralizing the token economy on Bitcoin, but they’re a start.

Runes suffered from overwhelmingly high expectations before their launch, and this is an opportunity for BRCs to make a comeback. No matter your stance on tokens on Bitcoin, competition between different standards will ultimately bring more efficiency and reduce on-chain bloat—something we can all agree is desirable.

The real question is this: for regular Bitcoiners who use Bitcoin purely as a monetary network, do we really need to go through this again? On-chain congestion, useless pump-and-dump schemes, skyrocketing fees…

My answer is: absolutely!

First, as Bitcoiners, we’re supposed to support free markets. Having additional fee-paying users is literally the best possible outcome for Bitcoin’s survival. Miners have just gone through another halving, and keeping mining profitable is the only way to prevent centralization in the hands of subsidized actors (whether governments or financial markets—yes, miners issuing unlimited loans to buy machines will not last forever).

For context, according to CoinDesk, Solana’s validators experienced a record influx of over 100,000 SOL, worth nearly $25.8 million, in fees and tips due to intense trading activity of the TRUMP and MELANIA tokens.

Second, the Pandora’s box has already been opened. Tokens on Bitcoin are here to stay. If users desire additional programmability, who has the authority to stop it? (Aside from pro-censorship thinkbois, of course.)

As Bitcoin’s ecosystem evolves, the introduction of the BRC-20 upgrade presents a compelling case for why it might eclipse the Runes token standard. Here are several reasons why:

1. The primary allure of BRC2.0 lies in its promise to enhance efficiency. With smart contract functionality, BRC-2.0 tokens could handle complex operations directly on the Bitcoin blockchain, potentially reducing the need for additional layers or sidechains. This could lead to more compact transactions, reducing on-chain bloat, a problem Runes have been criticized for due to their initial hype and subsequent congestion. This efficiency could be a game-changer for Bitcoin’s scalability, offering a streamlined approach to tokenization without altering the core protocol’s security or decentralization.
2. BRC2.0 is designed to integrate with existing Bitcoin infrastructure. Thanks to collaborations with the likes of the Layer 1 Foundation, it could improve user experience and interoperability. Unlike Runes, which faced challenges in user adoption due to complex minting processes and bad UX, BRC2.0 aims to provide a more user-friendly interface for token creation and interaction. This could lead to broader acceptance and use, making Bitcoin a more attractive platform for developers and users alike.

My default position on anything new related to Bitcoin is always caution. We’ll have to wait for the actual specifics of this new protocol to be disclosed, but I’m excited about the prospect of more efficient DeFi use cases on Bitcoin—not on lesser chains.

If you’re still skeptical, I’ll leave you with this question: If tokens on Bitcoin are inevitable, what is worse?

• Metaprotocols using Bitcoin’s block space in exchange for fees, without changing the network’s rules?
• Or Bitcoiners bridging their hard-earned Bitcoin to centralized, competing chains to access the same token markets?

As a Bitcoin Maxi, I want all the fees. I want all the users. Bitcoin Maxis should be FEE REVENUE Maxis, as long as the core ethos of the underlying network remains unchanged (looking at feline enjoyyyyers).

My TL;DR:

• Wait and see what BRC2.0 has to offer. Will it truly become programmable in a way that’s secure enough for Bitcoiners to trust?
• Runes may become irrelevant if BRCs stage a real comeback, especially with better UX.

• Let the miners rejoice with degen fees.
• Tokens on Bitcoin without changing the rules are better than tokens on Bitcoin that require new opcodes or altered rules.
• Grateful for all the gigabrain devs building on Bitcoin apps instead of vaporware chains.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Articles I write may discuss topics or companies that are part of my firm’s investment portfolio (UTXO Management). The views expressed are solely my own and do not represent the opinions of my employer or its affiliates. I’m receiving no financial compensation for these takes. Readers should not consider this content as financial advice or an endorsement of any particular company or investment. Always do your own research before making financial decisions.