The advent of the Ordinals Protocol has transformed Bitcoin from a rather outdated single-asset chain into something much more exciting.
However, this newfound excitement has prompted a response from laser-eyes, who argue that BTC was not intended for cashless transactions — some going so far as to describe the protocol as a network spam attack.
Protests aside, Ordinal Capitalists say the unlicensed system also includes the freedom to use Bitcoin in any way one chooses. They accuse fundamentalists of trying to spoil their fun.
Diverging viewpoints have set the stage for a possible chain split – which ultimately serves no one’s best interests.
Taproot opened Pandora’s box
The Taproot soft fork was introduced in November 2021. At the time, it was mainly seen as an upgrade to improve the security, efficiency, and scalability of the network. However, it also enabled executable commands and execution of certain scripts – thus laying the foundation for Ethereum-like functions such as smart contracts and dApps.
In January, the impact of this Ethereum-like add-on began to take shape when developer Casey Rodarmor released Ordinals. This protocol allows each of the 100,000,000 satoshis in Bitcoin to include additional metadata, including text, images, video, and code.
By February, the Ordinals protocol was used to write a jpeg processor into the blockchain, opening the door to the Bitcoin NFT market. But as a “square and hole” use of the technology, acquiring and trading Bitcoin NFTs was cumbersome and technically challenging, requiring knowledge of node synchronization and trusting a third party to issue the NFT upon payment.
Recently, supporting wallets, including the Ordinals Wallet, Xverse, and Hiro Wallet, have been rolled out to address these pain points, making the process more like the standard experience NFT buyers are used to.
Before Ordinals NFTs went live, the average block size hovered around 1.2MB, but since its introduction, subsequent blocks have doubled the average — negatively impacting speed and scalability. In addition, high transaction fees and chain inflation, through the accumulation of unconfirmed transactions, have led to usability issues.
This is where BRC-20 tokens come in
Driven by meme coin season, the BRC-20 token saw its highest market cap of $1 billion on May 8. However, the broader market uncertainty and coin-carpet spread has since seen a significant drop – down to $574 million at the time. He presses.
Per KuCoin, the burgeoning popularity of BRC-20 has exacerbated the issues seen with NFTs, causing significant network delays, with some users reporting 4-hour confirmation times. Additionally, BRC-20 tokens have contributed to an increase in transaction fees.
Despite the usability issues, miners are reaping the benefits with on-chain metrics, including Miner Hash Price, which measures miners’ income relative to network contribution, and Miner Percent Mined Supply Spent, which looks at the rate at which miners sell for mined coins. , indicating the revitalization of the bitcoin mining space.
cryptoslite The analysis concluded that if the momentum continues at its current pace, miners will experience enhanced profitability and a greater sense of confidence in the network, leading to a preference for holding mined coins.
The division of society in ordinal order
Notable members of the Bitcoin community have expressed their support for Ordinals. For example, the MicroStrategy chair Michael Saylor He said that the protocol was responsible for the flipping the bullish sentiment – adding that if he was a miner, he would be happy.
Moreover, he noted that the technology will lead to many new applications in the long run, some of which can solve critical societal problems — giving the example of writing a will on the blockchain.
“I can also record my last will, and if my last will and will transfer a billion dollars from me to you, how much is it worth to be burned on the blockchain and verified crypto?”
while, Willy Woo He expressed a more realistic point of view, saying that there are good and bad points to consider. While additional transaction fees provide strong incentives for miners, which will become even more important in the future as block rewards dwindle with each halving, this comes at the cost of more centralization due to fewer people wanting to run higher-bandwidth nodes.
For now, given that decentralization isn’t “well-established,” Wu said the Ordinals, and associated boon for miners, arrived a little too soon for his liking.
“I would have preferred the impact of ordinal ranking to be much later when the security budget becomes more urgent, it would be at a time when decentralization is already well established.“
January 3 co-founder Samson Mao downplayed The Ordinals. Overcrowding and high fees are nothing to worry about, he said, because paying miners huge fees is unsustainable in the long run.
“It’s a question mark as to how long they can do that. It might be a few more days. It might be a week. But it’s definitely not a sustainable model for throwing money.”
Clarifying his position, Mao explained that Ordinals is a largely hype-driven market fueled by short-term money buyouts. Moreover, he expects the sector to disappear once token issuers make enough money.
“They exist to make some naive people take notice of them by doing some crazy antics…
But like most projects in the blockchain space, it fades in importance once token issuers make their money.”
What does Satoshi think?
Satoshi Nakamoto can’t make an opinion on whether ordinal numbers are good or bad for Bitcoin. But people have turned to his Bitcointalk forum posts to try and understand his point on the matter.
In a December 2010 post, Nakamoto endorsed the idea of keeping the blockchain lean and bloat-free with the goal of maximizing scalability.
“Bundling every proof-of-work quorum system in the world into one unmeasured data set.”
Nakamoto talked about separating non-monetary transactions into a separate chain called BitDNS – which was envisioned as a side chain or Layer 2 using Domain Name System Internet Protocol. Later, this project became a completely separate alt-chain, rebranding it to Namecoin.
“Bitcoin and BitDNS can be used separately. Users should not have to download both to use one or the other. BitDNS users may not want to download everything that the following several unrelated networks decide to aggregate.”
Based on this, it appears that Nakamoto wanted to keep the main chain exclusively for fiat transactions and to side chain/layer 2 to handle big data features.
Bitcoin’s core developers also seem to have adopted the purist’s stance, as evidenced by @employeewho announced the developers’ plans to expand Taproot’s spam filters to remove Ordinals entirely.
Bitcoin Civil War
In a throwback to 2017 and the Bitcoin Cash hard fork, the question of whether Bitcoin should increase its block size to accommodate Ordinals has sparked debate within the community.
With no consensus on the best path forward, the possibility of a further split in the chain looms increasingly large. But, of the 105 BTC coins so far, it should be noted that all of them have faded into obscurity.
The most successful fork, Bitcoin Cash, is down 98.9% against Bitcoin from a peak of 0.43 in November 2017. This indicates that Ordinals is likely to face significant challenges, making forks unfeasible.
There is no shortage of alternative first layer offering coding with the added advantage of more complex features, such as event logic processing. What’s more, this alt-layer 1 could operate on a larger scale and at a lower cost than Bitcoin – making the Ordinals a dinosaur by comparison.
Yes, the Ordinals have breathed new life into Bitcoin, especially from the point of view of modernity and mining sustainability. But other strings are better at encoding.
Moreover, so far, the protocol’s primary use case is to invest in meme currency, which lacks utility, has no collective benefit, and does not contribute to the goal of getting rid of the corrupt fiat money system.
Ordinal values are bad for Bitcoin because they hinder the goal of revolutionizing money.