2024 is turning out to be somewhat of a ‘coming of age’ year for 15-year-old Bitcoin. 

Following the excitement of the launch of the first approved Bitcoin ETF on the US Stock Exchange in January and the promise of wide institutional adoption, the crypto news desks lit up this week with talk of the fourth Bitcoin halving, which occurred on 20 April. In brief, this is a recurring event every four years, written into the blockchain’s code, which cuts the supply issuance of Bitcoin, and the rewards to those who mine it, by half.  

Mystery creator, Satoshi Nakamoto, designed this feature to maintain scarcity and counter inflationary pressure on the currency, in contrast to the seemingly endless printable supply of traditional ‘fiat’ currencies.

In past years the US$  value of Bitcoin has always increased significantly following the halving event, and miners’ fees significantly shrank, as anticipated. But this halving was different.   

The Dollar value of the digital asset barely registered the event, holding steady in its upper trading range reached shortly after the BTC ETF launched. This would suggest that this event was priced into the market, and may even indicate that, as Bitcoin matures and becomes more ‘legitimate’ in the eyes of the traditional markets, the dramatic price swings it is famous for could be a thing of the past.  

However, more interestingly, it appears that Bitcoin miners’ fees spiked dramatically during the halving, rather than reduced, and remain unusually high. 

So, what’s going on? 

In short, Bitcoin Rune. This new protocol, built on the Bitcoin blockchain, was launched on the same day as the Bitcoin halving, and was so wildly popular that the additional transactional activity led to congestion on the network. The ensuing fight to validate blocks saw miners’ fees rocketing to 5x usual reward levels and an all time high of double the previous record. 

Why is this exciting for Bitcoin? 

Bitcoin is often described as ‘digital-gold’, not simply because it is scarce, but also because its mining and consensus processes make it more tamper-proof than other cryptocurrencies. However, this security comes at a price. It’s fungibility made it less flexible for use cases outside being a redeemable store of value. 

Other blockchains such as Ethereum proved more useful for wider use cases due to the ability to easily encode smart contracts, Non-Fungible Tokens (NFT’s), meme-coins and the like. The ability to build on top of these blockchains triggered a tsunami of interest, investment, developer talent and innovation, whilst in relative terms Bitcoin lagged. 

However, several developers in recent years have sought to grapple with this problem and the Rune project is the latest of several iterations of these efforts. This protocol lets users create NFT-like inscriptions on the Bitcoin blockchain in a simple yet secure way. Given the enthusiastic up-take –demand seems ripe. It is exciting because it represents the dawn of a potential new era for Bitcoin to welcome in increased transaction fee revenue, development, and users.  

So, like the pimply-faced, broken-voiced schoolmate who emerges after the summer vacation as a developed, chisel-chinned dream-boy, Bitcoin is showing sure signs of maturing, shedding its teenage angst, and developing into a more well-rounded young adult, gaining broader acceptance and stability as it finds it way in the financial world.