A large number of BRC-20 tokens issued using the Ordinals protocol are congesting the Bitcoin network and driving up transaction fees. This has sparked a debate among Bitcoin developers about how to quell the on-chain frenzy.
The discussion is taking place on the Bitcoin developer mailing list for discussing topics related to Bitcoin development. Opinions are divided over whether more drastic measures should be taken to curb the surge in BRC-20 issuance.
Rising transaction fees are forcing some Bitcoin users in Africa to turn to alternative payment methods, such as stablecoins. Major cryptocurrency exchange Binance has also launched Lightning Network, a Layer 2 scaling solution for Bitcoin.
Bitcoin miners are getting unexpectedly high returns, but for Bitcoin purists, it’s creating an existential conflict. Bitcoin was designed to be both a peer-to-peer (P2P) payment network and free from censorship.
“Real Bitcoin transactions are being squeezed out by rising costs,” said developer mailing list member Ali Sherief.
“Clearly worthless tokens threaten the smooth normal use of the Bitcoin network for its intended purpose as a peer-to-peer digital currency.”
Should it be left to the market?
Sheriff proposes to mitigate the impact of BRC-20 tokens by drafting and implementing a Bitcoin Improvement Proposal (BIP) or by changing Bitcoin Core, the primary software for connecting the Bitcoin network.
But not everyone agrees with that opinion. Michael Folkson, a key member of the London Bitcoin developers meetup group, believes the status quo should be maintained.
“Consensus rules are fixed and the rest is left up to the market,” Folkeson wrote.
“You may not like these use cases, but if you start playing the Whack-A-Mole game, how are you going to stop a group from popping up a year later to oppose your use case?”
Mass issuance of tokens
The Ordinals protocol allows users to record data in the smallest unit of Bitcoin called a ‘Satoshi’ or ‘sat’. This creates a unique NFT.
Sheriff also noted that Domo itself called the tokens it issued “worthless.” In fact, Domo tweeted, “These tokens are going to be worthless. Please don’t waste your money issuing lots of them.”
CoinDesk asked Domo if it still considers the BRC-20 token worthless, but has yet to respond.
Over $1 billion market capitalization
Already 14,300 BRC-20 tokens have been issued, with some 420,000 trillion tokens in circulation. The total market cap of BRC-20 tokens reached $1 billion last week.
The price of ORDI, which Domo created for testing purposes and has no practical use other than to explain how BRC-20 token issuance works, stands out from the crowd. At the time of writing this article, the price is $ 7.90 (about 1070 yen), and the market capitalization is $ 161 million (about 20.9 billion yen).
In response to the enthusiastic transaction, some developers, including Sheriff, criticized the BRC-20 token as spam. We are looking for a way to suppress the issuance turmoil.
“Anyone on this mailing list knows what happened to Bitcoin mempool in the last 96 hours due to heavy trading of side projects such as BRC-20. (Mr. Sheriff)
Bitcoin’s mempool (short for memory pool, a database that holds unconfirmed transactions) was certainly congested, with nearly 500,000 unconfirmed transactions at one point. For most of 2022, the number of deals pending approval remained below 50,000.
In February, veteran Bitcoin developer Luke Dashjr developed an Ordinals spam patch filter called “Ordisrespector” that detects and rejects Ordinals transactions. Dasher joined Sheriff’s discussion, calling for changes to be made to Bitcoin Core to filter out problematic transactions, which they call “spam.”
“This should have been done months ago. Spam filtering should have been standard in Bitcoin Core from day one,” Dasher wrote.
No changes to the Bitcoin protocol or Bitcoin Core have been determined so far, so the BRC-20 token issuance is likely to continue.
“Miners are making millions of dollars from trading these tokens,” said veteran Bitcoin Core developer Peter Todd. “Many people, myself included, will continue to operate nodes that do not block such tokens,” he continued.
｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Original: Among Bitcoin Developers, Debate Is Raging Over Whether to Censor Ordinals BRC-20s