Why Charms?
Charms is a token standard for Bitcoin, designed to be developer-friendly and programmable.
But there are already a few token standards out there, even on Bitcoin, why create another one?
In short, because none of them are programmable, or particularly developer friendly. And we are fixing this.
We believe in the magic of programmability. We also believe in decentralization and security of Bitcoin. A (perhaps) under-appreciated aspect of Bitcoin’s security is its UTXO model. It’s widely believed that the UTXO model is “hard” to make programmable. But not impossible 😼
Let us introduce: developer-friendly, programmable tokens, implemented directly on Bitcoin.
Because this is a kind of magic, we call Bitcoin outputs (UTXOs) with such tokens charms.
What are Charms
Programmability is needed to do one thing: create apps. Apps are:
- tokens
- NFT collections
- DEXes
- Auctions
- … you (create and) name it!
App state needs to be stored somehow, and that’s what charms are for.
A single charm can contain multiple of tokens, NFTs, arbitrary app state. Structurally, it is a mapping of app -> data.
Tokens and NFTs are treated as special cases of apps:
- a token data (within a charm) is its amount (a natural number),
- NFTs can have arbitrary data, which is useful for use cases like controlling token supply (if a token is controlled by an NFT).
Combining tokens, NFTs and arbitrary apps in a charm allows for composability:
- an NFT can control the supply of a token,
- a limit order to trade one token for another,
- … limitless other things.
A charm gets created or spent (or burnt) as one unit, just like a Bitcoin UTXO. A charm can only exist on top of a Bitcoin UTXO (such outputs are said to be enchanted or charmed). Because of this, whoever owns the Bitcoin UTXO, can do whatever they want with the charm (just as well as with BTC in the UTXO).
Essentially, charms are app-level UTXOs that enhance (enchant) Bitcoin UTXOs.
How are Charms Created
Charms come into existence by the magic of spells added to Bitcoin transactions.
Difference from Runes
Runes and Ordinals are an inspiration for Charms (among other things).
Runes are tokens on top of Bitcoin, managed by runestones — metadata messages (in Bitcoin transactions’ OP_RETURN outputs), directing minting and transferring of runes (the Runes tokens). Runestones can be viewed as a kind of [[1. Spells|spells]].
Runes seem to lean towards digital artifacts, collectibles (with concepts like rarity of a name).
Charms aim to address programmability and composability: you can have multiple apps interacting with each other. Charms could (perhaps in a not too distant future) even work with Runes.