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Inscriptions, ordinals, and runes

Inscriptions and ordinals attach data to bitcoin. Runes are a way to make simple tokens there. They are not bitcoin itself, and they inherit bitcoin's fees.

A worked case

Someone buys a rune because it is on bitcoin, and treats it as bitcoin. The fee to move it is large. The token has its own market, its own sellers, and no claim on the coin underneath except the fee it paid to be written.

What they are

An inscription is data written into bitcoin. An ordinal is a way of pointing at a particular satoshi. A rune is a fungible token tracked in bitcoin transactions.

What they are not

They are not a second bitcoin with bitcoin's simplicity. You are trusting the software that reads the extra data. Fees can spike because the chain is shared.

A market for these objects can be thin. Thin means the last price is a poor guide to what you can sell for.

Writing on bitcoin is not holding bitcoin

From 2023, ordinals and inscriptions put arbitrary data on bitcoin by using the witness space of a transaction. Runes, later, were a simpler way to make tokens there. The fees to do this were sometimes enormous, because the data competes with ordinary payments for the same blocks. Miners were paid. People who wanted a cheap bitcoin payment were not.

A token created this way is not bitcoin. It does not inherit the 21 million cap. It inherits the fee market, and it has its own sellers. Buying one because it is on bitcoin is like buying a sticker on a banknote and thinking you bought the bank. The banknote's rules did not become the sticker's rules.

If you pay a high fee to write data, you paid for block space. If you buy the token from someone else, you paid that someone. Keep those bills separate.

Read it yourself

• Bitcoin wiki: controlled supply, which inscriptions do not change
• Ordinal Theory Handbook, what an inscription is

These links are the record. They are not a recommendation, and they are not instructions. A news story or a court paper can still be wrong about a detail. The check does not change because a famous name is in the story.

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Open a question. The line is about this topic. It is not a verdict that anything is safe.

Check yourself