This is an op-ed by Roy Shenfield, co-founder and CEO of Breez, a Lightning Network mobile app.
The more amazing the thing, the more passionate he is. Bitcoin is among the greatest wonders of the late modern world, so it is understandable that Greg Foss is very excited about it. So emotional in fact, that he dropped 11 f-bombs in 31 seconds Out of concern for his future (and this despite the fact that he is Canadian!).
Why is this staunch Bitcoin supporter so concerned? because Two men dressed in cheap witch costumes Is the Fortnite dance embarrassing? Certainly the stakes must be higher.
According to some, there is a battle going on for the future and soul of Bitcoin. According to others, we just got a fun, cliched and harmless way to play with Bitcoin that makes it funnier and smarter, although no less revolutionary.
Ordinal rules, inscriptions, and the BRC-20 protocol are the basis of the dispute. arrangement Allow individual seat selection; engravings Allow objects such as text, images, and data files to be written to; and BRC-20 Second-class tokens may be minted directly on them, such as Ethereum-lite. In fact, they introduce storage as a new use case for the Bitcoin blockchain in addition to its existing and main use as a ledger for currency transactions. These features affect block sizes, transaction fees, and validation times, so they aren’t insignificant.
The basis of disagreement is what it means for the future of bitcoin. Is it pathological like a tumor? Do they provide a competitive advantage, like chlorophyll and chelators? Or are they just harmless and benign, like male nipples or that irritating little thing at the top of your throat?
ordinal ABCs one two Three
Among the recent Bitcoin developments mentioned above, Ordinals came out on top. Casey Rudarmour, the man who “invented” the Ordinals (this time), sought to innovate “Persistent IDs Bitcoin Applications Can Use.” In other words, he wanted to catalog SATs by giving each one a serial number that could survive through time and UTXOs.
Of course, giving each session a unique identifier means that they are no longer the same completely are interchangeable because they are no longer exactly the same, when the ordinal convention is applied. exactly like Library of Congress (LCC) classification system For books in search libraries or web page URLs, ordinal makes each session unique and retrievable. Identification affects interchangeability without eliminating it.
The inscription is the second controversial development in the bitcoin world. “Ordinal Theory Handbook” It gives a nice brief definition to the inscriptions, which helps relate them to the Ordinals:
“Patters insert sats of arbitrary content, creating original Bitcoin digital artifacts, more commonly known as NFTs… These transcribed swats can then be transmitted using bitcoin transactions, sent to bitcoin addresses, and held in Bitcoin UTXOs. These transactions, addresses, and UTXO is normal Bitcoin transactions, addresses, and UTXOS in all respects, except that in order to send individual blocks, transactions must control the order and value of inputs and outputs according to ordinal theory.”
Of course, bitcoins are just too complex to take in all of that Bored monkey nonsense. If we are going to publish copyright cartoons on our blockchain, we will wizards instead of monkeys. I mean, monkeys? Let’s go.
whatever. Think of inscriptions like a blockchain tattoo. Some people will love them, others will despise them. The world (and the witness statements of the transaction) is big enough for both of them.
The third recent development in Bitcoin is BRC-20 protocolthat allows people Mint and token distribution according to predetermined criteria. Written as inscriptions on benches marked with ordinal numbers, these symbols make us feel a full circle. These three features allow users to create digital items/NFTs and use the Bitcoin blockchain to distribute and trade them.
So how’s it going? It is not surprising that some people are drawn to certain numbers, such as one or seven or 69,420, so some sessions are desirable because the Ordinals made them.rare(Although if you think about it, every ordinal number is unique, so each number is just as rare as the others.)
There is also a market for BRC-20 tokens, many of which are second-tier bitcoins only. For example, file $OG$ symbol and the $Pisa symbol Both have a supply of 21 million (just like bitcoin) and, at one point, had a market cap of around $10 million.
The result is:
- SATs can now be uniquely identifiable under a new agreement
- People can add data to SATs
- Token minting algorithms are a kind of pattern data, so people can mint tokens on the Bitcoin blockchain
It is important to note that while ordinal elements, patterns, and BRC-20 are recent developments in how Bitcoin works and how we use it, they are not really “innovations” because they are not really new. Something like Ordinals has been proposed under the name BitDNS Back in 2010. Use OP_RETURN to store data strings on UTXOs It goes back nearly a decade. Minting of second-class “tokens” on the underlying blockchain is basically it The idea behind Ethereum, which is not really new. (Tip of the hat to James Zukowho dived deeply into this in Presentation he gave in Prague.)
What this means for bitcoin: Transaction fees
Ordinal symbols, inscriptions, and BRC-20 symbols are, of course, controversial. Although some love them, as transaction fees in recent months attest, others are confused or annoyed. Even the man who invented the BRC-20 He said“These would be worthless. Please don’t waste your money on railroads.”
OK, but “worthless” isn’t a synonym for “evil.” Some people think tattoos and Big Macs are worthless, while others love them. So what’s the big deal?
Opposition to new Bitcoin features usually stems from the following assumptions:
- Patterns and arrangement make bitcoin less like money
- They make transactions more expensive
Let’s deal with the last point first. Thanks in part to Ordinals, the number of transactions in the mempool has increased by approx Two orders of magnitudeThe accumulated data has increased about 150 times.
The effects are contradictory. On the other hand, more data per transaction increases storage and computing burdens for contract operators, for which they receive no compensation. Not great.
On the other hand, more data to account for means higher fees for miners. In fact, the average transaction fee on-chain has reached $30.91 newly. high on the chain Transaction fees are not evil. In fact, higher fees are a good thing. It incentivizes miners, which attracts and incentivizes miners to invest, which maintains hash rate high and makes Bitcoin safer. This is about as evil as a St. Bernard carrying a barrel of brandy.
Moreover, higher on-chain fees only reinforce the different use cases between bitcoin on-chain and bitcoin on the Lightning Network. Arguably, cross-chain payments weren’t well suited to small, fast transactions because they treat small and large transactions in much the same way. By contrast, Lightning fees are proportional to the amount of the transaction. If you’re paying two, three, or ten times the price of your beer or pizza in transaction fees for cross-chain payments when you could be paying one-thousandth of them on Lightning, you’re doing it wrong.
If on-chain fees prevent you from paying with bitcoin, you could potentially take advantage of Lightning’s relative fee. If Lightning fees are keeping you from paying with Bitcoin, you could potentially take advantage of the one-size-fits-all on-chain fee.
What does this mean for bitcoin: money
As for whether bitcoin is still money in the world of ordinal, there are two ways to answer that question. First, we can comb through the various definitions to What money is to come up with a final list of criteria and use it for evaluation Bitcoin white paper And all subsequent protocols. Aristotle would be proud, but the answer would be unnecessarily theoretical and abstract.
Instead, we can actually observe what people are doing out there in the world. However plausible this new use case may be, people love vignette and are willing to pay for it.
- Who do they pay? Miners.
- How do they pay? transfer fee.
- What do miners do with transaction fees? Reinvest some of it to cover the costs of mining more bitcoins.
- Where does this bitcoin go? From miners to the world, where it is traded.
And there you have it: pay and trade. People pay miners, miners pay people, they use bitcoin, ergo bitcoin is money. We have found the essence of the coin without a dictionary (sorry, Aristotle).
In other words, bitcoin is still money, but the Bitcoin blockchain can also used for storage. Note the boolean operator: (money And storage) no (money or storage). In fact, adding new, plausible use cases may be a prerequisite for any coin from this point on. The question is just, what counts as “logical”? But time — and the market — will tell.
Good, bad or benign?
So, let’s go back to the original question: Are Ordinal Numbers, Patterns, and BRC-20 good or bad for Bitcoin? Or is it just a new feature of the world that we will adapt to without much consequence?
Well, these jobs weren’t high on my personal priority list. I can’t say that Taproot Wizards Or “ordinal symbols” that really make the world a better place.
But I am not afraid of these developments either. They raise the fees, and the higher fees have beneficial side effects on the blockchain. What is good for Bitcoin is good for the world, whether it was intentional or not.
And it advances the case for Lightning as a low-fee way to use bitcoin as money for small, everyday purchases and transfers. In general, what is good for Lightning is good for Bitcoin, which is good for the world. Wizards GIFs and subcodes can’t do much harm, so I’ll just keep calm, stack up the sats and keep making Lightning as good as it can be.
This is a guest post by Roy Shenfield. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.