For months, Bitcoin users have been hotly discussing the rankings phenomenon and the large amount of trading activity and congestion it has brought to the chain.
It is a very delicate conflict where it is difficult to find the correct “ideological” response. I won't try to give a specific answer here, because ultimately it's up to society as a whole. But hopefully we can all agree on some common ground rules that can help us resolve the debate without getting into another war that leads to bitter divisions.
The story of free markets and higher purpose
The complexity of the debate lies in the cognitive dissonance that Ordinals stirs up within the Bitcoin community. It's safe to say that Bitcoiners are very pro-free markets, pro-liberty, and pro-financial freedom.
On the one hand, rankings are the purest expression of the will of the free market. If some people are okay with paying to transact with tokens that push Bitcoin Script's capabilities to their limits, who are we to say that's wrong?
The foundation of the Bitcoin network is to use selfish economic incentives to create a positive outcome for everyone – creating a value-neutral settlement and payments layer.
Miners, as one of the mainstays of Bitcoin, make huge sums of money from Ordinals.
We can't deny the long-term benefits that Ordinals and BRC-20 bring to the network as well. Arrangements were able to pay off percent of fees in miners' total revenue to about 10%, which is similar to what we saw in the most active phase of the 2021 bull market.
Although some Bitcoin users may choose to downplay this issue, the fact remains that without mining rewards, Bitcoin's security would be weak at best. It follows that anything that can drive blockchain usage for Bitcoin is good for Bitcoin, right?
Of course, it's not that simple. The rankings make Bitcoin more expensive to use for what it was designed for: payments and value transfer.
Some hardcore Bitcoin users would probably have a heart attack if they saw the community embrace speculative trading in cryptocurrencies as a “solution” to the security budget problem. And they're not entirely wrong.
Bitcoin was born as a way to escape the tyranny of central banks, to give everyone in the world the hardest money ever designed, and to serve as a neutral layer for people to use regardless of their economic, geographic, or political background. Speculative trading of chitcoins is completely disproportionate to this higher purpose.
So, while rankings may be a legitimate use of Bitcoin that fits with the free market principles shared by Bitcoin users, they ultimately hinder Bitcoin from fulfilling its true purpose. How can we reconcile this?
Pragmatism is the name of the game?
There is currently not resolved problem On Bitcoin Core GitHub suggests treating Ordinals as a vulnerability in Bitcoin Core, where the only appropriate response is to root it out in any way possible.
That's certainly one way to think about it, but I think that approach represents too much of a knee-jerk reaction. Bitcoin is beautiful in its simplicity and robustness, and the community has rightly resisted any significant change to its fundamentals over these years.
The ordinal numbers and BRC-20 are a bit of a trick, but they still follow Bitcoin's rules. They pose no more risk to Bitcoin than the hyperactive traders of 2017, who caused the biggest spike in Bitcoin fees to date. Even in spirit, it's not that different from the Omni Protocol, which used the OP_RETURN field to deliver tokens to Bitcoin (USDT is probably the most famous user).
The consensus in the Bitcoin community is that the bulk of users should use L2 solutions to transact BTC, and that the main chain should be reserved for very high-value, high-cost use. This is, after all, the only way to absorb enough transaction fees in the current block size to ensure the security budget in the long term.
If L2 protocols gain widespread adoption, most of the use of the Bitcoin network will be as a data layer for these secondary protocols. I don't think that would be the worst thing in the world. If I had to choose, I would choose Bitcoin as the ultimate data availability solution for highly sensitive information – far ahead of custom solutions whose future largely depends on the coffers of a single development company.
But the main argument is that if we want to make changes to Bitcoin, they have to be very slow, methodical and calculated.
Although I understand the hostility towards the way ordinal numbers are mostly used today, they can also be very useful for non-speculative uses. I will definitely choose them for my next Wikileaks stock.
There's also an argument to be made for speculators. Without it, Bitcoin would not have reached the global popularity it has today. It always acts as a Trojan horse, a way to bootstrap the network effect required to make global Bitcoin money.
As long as the BRC-20 and Ordinals do not realistically put Bitcoin at risk, we must make sure we give them time to develop and grow. This does not mean that anything needs to be done at the network level to support them further. Quite simply, if it works, don't fix it, we might see something of real value come out of this experience.
This is a guest post by Robbie Greenfield. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.