What Are Runes

Runes is a new protocol allowing unique, interchangeable tokens to be etched, minted, and transferred within Bitcoin transactions, serving a variety of digital commodity purposes

Runes docs: https://docs.ordinals.com/runes.html

BRC-20 vs Runes

Where BRC-20 introduced the possibility of "token management" ontop of Bitcoin, Runes truly expands Bitcoin utility, fully integrated in the UTXO underpinnings

BRC-20 tokens represent a fungible token standard on the Bitcoin blockchain. BRC-20 tokens rely on ordinal inscriptions based on Ordinal Theory introduced by Casey Rodarmor. Inscriptions do not rely on smart contracts, but rather allow the encoding of JavaScript Object Notation (JSON) data onto satoshi tokens (ordinals)

BRC-20 expanded Bitcoin possibilities beyond just a store of value however, this came with a tradeoff of increasing BTC UTXO bloat, potential privacy concerns due to on-chain visibility, no Lightning Network compatibility

Runes aim to solve the deficiencies of the BRC-20 / Inscription framework by implementing a new standard built directly into the UTXO framework. Runes allow unique, interchangeable tokens to be etched, minted, and transferred within Bitcoin transactions, serving a variety of digital commodity purposes

Through protocol messages called Runestones, Runes can be managed in a single transaction with greater functionality vs ordinals which would require many multiple transactions with limited functionality