What is RSIC?

The Rune-Specific Inscription Circuit is a system built on Bitcoin that allows users to mine inscriptions on Bitcoin. It is built upon the foundation laid by the Ordinals protocol for inscribing data onto satoshis and creating Bitcoin Non-fungible tokens (NFTs).

RSICs are inscriptions embedded onto Bitcoin blocks using the Ordinals protocol. Currently, 21,000 RSICs are available and distributed to members of the Ordinals community.

The project utilizes runic symbols enclosed in grids matched against the latest Bitcoin block hash. If successful, the RSIC would yield 335 RUNECOINS for each block and have a base value of 21 RUNECOINS per block. The different reward types are flat, boosted, random, and halving.

History of RSIC

The history of the RSIC project begins with Casey Rodarmor’s launching of Ordinals in January 2023. Little information is known about the team behind the RSIC project, except that they are part of the Ordinals community.

In January 2024, the initiative freely distributed 21,000 RSIC inscriptions to more than 9,000 digital wallets, the holders of which were users involved with Ordinals.

Following the Bitcoin halving in April 2024, the mined runes were distributed in the first phase. In the impending second phase, users are expected to get access to an RSIC mining device.

Core Components of RSIC: Bitcoin Blockchain, Bitcoin Ordinals Protocol, Cryptographic Hashing and Peer-to-Peer (P2P) Network

Bitcoin Blockchain

The Bitcoin blockchain is a decentralized, distributed ledger that records Bitcoin transactions. It consists of a chain of blocks, each containing a set of transactions from a specific period.

These blocks are cryptographically linked, with each new block referencing the previous one, creating an immutable record of all Bitcoin activity. The RSIC protocol is built on the Bitcoin blockchain’s security and decentralization to create a unique yield farming mechanism.

It interacts with the Bitcoin blockchain by matching an RSIC’s symbol hash with the latest Bitcoin block hash to determine rune token yields.

Bitcoin Ordinals Protocol

Bitcoin Ordinals is a protocol that enables the creation of NFTs on the Bitcoin blockchain. Ordinals allow for the inscription of data, including images, text, and other digital content, directly onto individual satoshis, the smallest unit of Bitcoin.

The RSIC Protocol builds upon the foundation laid by Bitcoin Ordinals. RSIC utilizes Ordinals to create 21,000 unique inscriptions that serve as yield-generating assets within its meta description.

Each RSIC is an Ordinal inscription featuring runic symbols with an added layer of functionality. This functionality allows users to mine RUNECOIN based on the rarity of its symbols and their match with the Bitcoin block hashes.

Cryptographic Hashing

Cryptographic hashing transforms inputted data of any size into a fixed-size output called a hash. The process is designed to be one-way, meaning it’s computationally infeasible to reverse the hash process with current technology.

These hash functions are crucial in various applications, including password storage, digital signatures, and data integrity verification. The RSIC metaprotocol uses cryptographic hashing in its core functionality.

Within the RSIC protocol, cryptographic hashing creates unique identifiers for each RSIC inscription and facilitates the mining of RUNECOIN.

Peer-to-Peer (P2P) Network

P2P is the process of users interacting directly with each other without the need for a central server or intermediary. In a P2P network, each node, peer, or user acts as a client and a server, capable of requesting and providing resources.

This architecture allows for efficient data distribution, improved scalability, and increased resilience, as there is no single point of failure. The RSIC Protocol leverages the P2P network structure of the Bitcoin blockchain to create its unique metaprotocol.

Using Bitcoin’s existing P2P infrastructure, RSIC enables the decentralized distribution and transfer of RSICs and RUNECOIN.

Features of RSIC: Runecoin, Non-fungible tokens (NFTs) and Yield Farming

Runecoin

Source: Runecoin Website

Runecoin (RSIC•GENESIS•RUNE) is a project built on the Bitcoin blockchain that utilizes the Runes protocol. This allows the project to create and manage crypto assets on Bitcoin’s blockchain, expanding the pioneer blockchain’s initial use case.

The project’s total supply is 21 billion Runecoins, mirroring Bitcoin’s total supply of 21 million BTC. Users can acquire Runecoin through a mining process with a Rune-Specific Inscription Circuit (RSIC).

The project underwent a season 1 event that activated 19,883 RSICs and boosted 17,155 of the activated RSICs. At the end of the season, only 1 RSIC was transferred, and 53% (11,037) of the total available RSICs were pooled.

RSIC on Magic Eden

Source: Magic Eden

Magic Eden is a marketplace for NFTs built on the Solana blockchain. The project saw the listing of RSIC metaprotocol, allowing users to list and purchase the Ordinal NFT.

There are currently 8,100 unique wallets holding RSICs acquired through Magic Eden, and 977 RSICs are listed for sale on the platform.

NFTs on Bitcoin

NFTs are unique digital assets representing ownership or proof of authenticity of a specific item or content on a blockchain. RSICs are a unique application of NFT technology within the Bitcoin ecosystem.

They leverage the Bitcoin Ordinals protocol, which allows for the creation of NFTs on the blockchain. Each RSIC is a distinct, non-fungible token with its runic symbols and attributes, making it a unique digital asset.

The token’s unique design directly impacts the use cases of NFTs within the Bitcoin ecosystem. As such, RSICs represent an evolution in NFT technology, combining the concepts of digital scarcity, unique ownership, mining, and yield generation.

Yield Farming

Yield farming, a popular concept in decentralized finance (DeFi), involves lending or staking cryptocurrency assets to generate returns. The RSIC Protocol adapts this concept to the Bitcoin blockchain through its Runecoin mining function.

In the RSIC metaprotocol, each RSIC NFT acts as a virtual mining device for rune tokens. RSIC holders can farm or mine rune tokens through their ownership, activation, and pooling of RSICs.

Yield generation is tied to the progression of the Bitcoin blockchain. With RSICs earning a base rate of 21 runes per Bitcoin block, the yield can significantly increase to 335 runes per block. This is because the RSIC’s symbol hash matches the latest Bitcoin block hash.

Risk Analysis

Advantages

The RSIC project is built on Bitcoin, allowing it to use the impenetrable blockchain’s security protocol. It also introduces NFTs and P2P transacting to expand the Bitcoin blockchain’s use cases.

Further, with the approval of the OP_CAT Bitcoin Improvement Proposal (BIP), RSIC tokens can be bridged to layer 2 networks. The combination of yield farming, bridging, and scarcity would positively affect the traction the RSIC project gains.

If Rune-themed assets become a sought-after commodity within the Ordinals ecosystem, the demand for RSICs could rise. This is because RSICs are the key to acquiring Runecoins. Owning an RSIC could position holders for early access to Runecoins, granting them a significant advantage.

Disadvantages

Engaging with and leveraging RSICs to acquire Runecoins demands a comprehensive grasp of the Ordinals protocol. This would also require an increased comprehension of how to interact with Bitcoin’s blockchain.

Participants are expected to activate their RSIC to participate in mining and pay attention to the Rune allocation type. The Rune allocation was divided into fiat, boosted, random, havening, and reserve. Users activated RSICs by following the instructions on the inscription.

This technical hurdle may exclude prospective participants who, despite their interest in RSICs, lack the required specialized knowledge. Notably, the most basic operations in the RSIC ecosystem include acquiring, listing, and purchasing RSICs.

Additionally, the issue of limited liquidity presents an additional disadvantage. Given the finite supply of RSICs, locating willing buyers could prove problematic, particularly if the intrinsic value of Runes remains ambiguous or poorly defined. Unlike other developed technologies in the crypto space, the RSIC project currently has limited demand and use cases.

This scarcity-induced illiquidity may impede market efficiency and deter risk-averse investors or casual enthusiasts from participating in the RSIC ecosystem.

Challenges

The most fundamental challenge for RSICs is the lack of clarity surrounding Runecoins and their interaction with theoretical target elements. Without a clear understanding of what Runes are and what value they might hold, presenting the value proposition of RSICs becomes challenging.

Furthermore, the Ordinals protocol and the concept of Runecoins are still under development, creating an environment of financial fluctuations for RSICs. So, their current functions could be significantly altered during the development process.

Take Action on RSIC

Learn more about the RSIC project on Gate.io.