That’s why we can’t get good things no matter how long it takes.
Just when we thought we had learned lessons from the failures of FTX, Three Arrows Capital, Celsius, and others, the memecoin boom hit us again.
Are you undermining your core purpose?
The crazy crypto casino is back! While some people make a ton of money with frog-themed meme coins, others suffer a lot from skyrocketing fees. This boom is not only spreading to the greedy human mind, it is also disrupting the functioning of the world’s most valuable blockchain.
New tokens can be created using the BRC-20 standard enabled by the Bitcoin blockchain upgrade “Taproot”, and various meme coins based on the Bitcoin blockchain have been born. there is Many of them imitate coins issued on other chains that have seen wild price swings. For example, Ethereum-based Pepecoin (PEPE) lost 50% of its value after gaining about 5 million%.
Prior to the birth of these memecoins, Bitcoin NFTs were on the rise with the advent of the Ordinals Protocol.
Bitcoin transaction fees are skyrocketing because memecoins and their use as Bitcoin NFTs use far more data than a simple Bitcoin (BTC) transaction. Bitcoin miners recently made more money from transaction fees than the block reward of 6.25 BTC. This means that if you want to send a small amount of bitcoin on-chain, you either have to accept a miner or you have to pay exorbitant transaction fees.
Related Article: Bitcoin NFT Reversing Mining Trends – Transaction Fees Exceed Mining Rewards
You can hear the cynicism of US Senator Elizabeth Warren’s “Anti-crypto Army.” “Traders are blinded by making money, undermining the core purpose of cryptocurrency technology as a better currency or medium of exchange for value,” she said.
Not surprisingly, these developments have caused an uproar within the Bitcoin community. The battle for the scarce resource of block space has created tensions for years. A prominent example of this is the blocksize wars of 2016-2017. This led to the Lightning Network, which processes small transactions off-chain and reserves blockspace for large transactions.
This time the tension is even higher. Purists who believe Bitcoin’s sole purpose is to replace the status quo are outraged that Bitcoin is being used for flimsy frog JPEG images. On the other hand, those issuing and using new BRC-20 tokens and Ordinals tokens argue that no one can decide the purpose of Bitcoin. After all, it’s an open protocol.
We can all agree that rising transaction fees and blockchain congestion are problems. It’s a question that shakes the core of Bitcoin’s resource efficiency and utility. But how do we deal with it?
Let’s say, at your own risk, that the answer does not lie in the proposal of prominent early Bitcoin developer Luke Dashjr.
He proposes to effectively shut down the BRC-20 token and Ordinals projects by introducing a filter. Dasher’s critics call this censorship. Regardless of what you think Bitcoin’s purpose is, censorship resistance should be protected.
Troy Cross of the Bitcoin Policy Institute said the US administration’s proposed tax on bitcoin mining discriminates against individual energy choices. Following , I would also like to argue that the Bitcoin community cannot impose restrictions on what forms of value exchange the Bitcoin blockchain can be used for.
In my humble opinion, a fair move would be an upgrade that reduces the burden on blockspace and improves the overall functionality of the system regardless of the use case.
If lightning isn’t enough to improve Bitcoin’s scalability, what can we learn from the various Layer 2 scaling projects in the Ethereum community, such as the ZK rollup and the Optimistic rollup?
Or is it possible and appropriate to include time and cost limits on certain speculative activities that threaten the liquidity of the system as a whole? Specifically, it envisions a short-term resale of assets.
People much smarter than me will point out the flaws in my proposal. In fact, if you say that blaming the resale of assets is no different than Mr. Dasher criticizing memecoins, he’s right. One person’s actions are OK, and another person’s actions are judged as NG.
individual rights and collective interests
Still, the heart of the matter is not that the Bitcoin blockchain is being used for frog images, but its value as an efficient, third party-free payment system for all types of value transfers. is compromised by block space congestion.
As CoinDesk columnist David Morris pointed out, even if millions of people use Bitcoin as a currency, as Bitcoin advocates hope, they will still face the same problem. do. That is why we need to focus on governance discussions.
Related article: Can Bitcoin become a global payment method if it can’t keep up with memecoin popularity? 【column】
The question of how to balance individual rights and collective interests is a core challenge for all blockchain communities. Bitcoin is no exception.
｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Original: Frogs, Fevers and Fees: Bitcoin’s New Governance Challenge