Ordinances, Edicts, and BRC-20 Can’t Break Bitcoin

This is an opinion editorial from Roy Sheinfeld, co-founder and CEO of Lightning Network mobile app Breeze.

The more amazing something is, the more passion it will generate. Bitcoin is one of the greatest wonders of the modern world, which is why Greg Foss is so passionate about it. so emotional in fact that he fell 11 F-bombs in 31 seconds Out of concern for its future (and this despite the fact that he is Canadian!).

Why is such a staunch bitcoin supporter so concerned? Because two people in cheap magician costumes Did Cringey do the Fortnite dance? The stakes must be high, of course.

According to some, the battle is on for the future and soul of bitcoin. According to others, we have found a fun, boring and effortless way to play with bitcoin which makes it even more fun and boring, though no less revolutionary.

The ordinance, the inscription and the BRC-20 protocol are the bone of contention. ordinals Allow identification of individual sats, inscription Allow objects such as text, images and data files to be written to them, and BRC-20 Allows second order tokens to be cast directly on them, like ethereum-lite. In fact, they introduce storage as a new use case for the bitcoin blockchain in addition to its existing and dominant use as a ledger for currency transactions. These features are affecting block size, transaction fees and verification times, so they are not irrelevant.

The crux of the controversy is what they mean for the future of bitcoin. Are they pathological like tumors? Do they provide a competitive advantage like chlorophyll and claws? Or are they just harmless and benign, like male nipples or that little dangling thing at the top of your neck?

ordinal ABC one two Three

Among the recent developments in bitcoin listed above, Ordinals comes first. Casey Rodermer, the guy who “invented” the Ordinals (this time), tried to invent “Stable identifiers that can be used by bitcoin applications.” In other words, he wanted to index the sets by giving each one a serial number that would survive time and UTXO.

Of course, giving each set a unique identifier means they are no longer Correct! convertible because they are no longer completely identical when applying the ordinal convention. just like Library of Congress Classification (LCC) System For URLs to books or web pages in research libraries, the ordinals make each one unique and retrievable. Identibility affects fungibility without eliminating it.

Insignia is another controversial, recent development in the world of bitcoin. “Ordinal Theory Handbook” gives a wonderfully concise definition of the inscriptions, helpful in linking them to the ordinances:

“Inscribed sats with arbitrary content, creating bitcoin-native digital artifacts, commonly known as NFTs… These inscribed sats can then be transferred using bitcoin transactions, bitcoin addresses Can be sent over, and bitcoin can be kept in UTXO. These transactions, addresses and UTXOs are normal bitcoin transactions, addresses and UTXOs in all respects, with the exception that in order to send individual SATs, transactions must control the order and value of inputs and outputs according to the sequential principle.

Of course, bitcoiners are too sophisticated to get caught up in all this. bored ape shit, If we had to copyright cartoons on our blockchain, we would magicians instead of monkeys. I mean, ape? Let us go.

whatever. Think of the inscriptions like blockchain tattoos. Some people are going to love him, others are going to despise him. The world (and transaction witness data) is big enough for both.

The third recent development in bitcoin is BRC-20 Protocolthat gives people token generation and distribution according to predefined parameters. These tokens are written as inscriptions on sets marked with ordinals, bringing us full circle. These three features allow users to create digital artifacts/NFTs and distribute and trade them using the bitcoin blockchain.

so how’s it going? Not surprisingly, some people are attracted to particular numbers, such as one, seven or 69,420, so some sets are revered because of the ordinals that created them.Rare(Though, if you think about it, each ordinal number is unique, so each is just as rare as the other).

There is also a market for BRC-20 tokens, many of which are just second-order bitcoin. For example, $OG$ token And this $PIZA token Both have a supply of 21 million (exactly like bitcoin) and, at one point, had a market cap of around $10 million.

The result is:

1. SATs are now uniquely identifiable as per the new convention
2. People can add data to sets
3. The token-minting algorithm is a type of inscription data that allows people to create tokens on the bitcoin blockchain.

It is important to note that, while ordinals, inscriptions and BRC-20 are recent developments in how bitcoin works and how we use it, they are not truly “innovations” because they are not truly new. Something like Ordinals was proposed under the name BitDNS back in 2010, Using OP_RETURN to store string of data on UTXOs goes back almost a decade, and minting a second-order “token” on the underlying blockchain is basically Idea behind Ethereum, Which is not really new. (hat tip to Giacomo Zukowho dived deep into they gave a presentation in prague,

plus a change,

What this means for bitcoin: Transaction fees

The ordinance, the inscription and the BRC-20 token are undoubtedly controversial. While some people love them, as evidenced by transaction fees in recent months, others are surprised or annoyed. Even the guy who invented the BRC-20 Where is, “These would be useless. Please don’t waste money in a big way.

OK, but “useless” is not synonymous with “evil”. Some people think tattoos and Big Macs are wasteful, others love them. So, what’s the big deal in this?

Opposition to new features of bitcoin usually stems from these perceptions:

1. Ordinances and Prescriptions Make Bitcoin Less Like Money
2. they make transactions more expensive

Let’s tackle the last point first. Thanks to a handful of ordinals, the number of transactions in the mempool has increased by approx. two orders of magnitudeAnd the data in the backlog has grown about 150 times.

The effects are twofold. On the one hand, more data per transaction increases the storage and computing burden for node operators, for which they do not receive any compensation. not great.

On the other hand, more data to calculate means more fees for miners. In fact, the average on-chain transaction fee reached $30.91 recently. High on-chain Transaction fee is not bad. Actually, high fees are a good thing. They incentivize miners, which attract miners and motivate them to invest, which persists hash rate higher and makes bitcoin more secure. It’s as bad as a St. Bernard carrying a cask of brandy.

Furthermore, the high on-chain fee only reinforces the different use cases between on-chain bitcoin and sat on the Lightning Network. On-chain payments have arguably never been suitable for quick micro-transactions because they treat small and large transactions almost the same. In contrast, Lightning fees are proportional to the transaction amount. If you’re paying two or three or 10 times the cost of your beer or pizza in transaction fees for on-chain payments when you can pay one thousandth of that on Lightning, you’re doing it wrong. ,

If on-chain fees are preventing you from paying with bitcoin, you should probably take advantage of Lightning’s proportional fees. If Lightning fees are keeping you from paying with bitcoin, you should probably take advantage of one-size-fits-all, on-chain fees.

What This Means for Bitcoin: Paisa-Pun

As far as the question of whether bitcoin is still money in the normal world, there are a few ways to answer that question. First of all, we can sort out the various things definitions Of What Wealth come up with a final list of criteria and use it to evaluate bitcoin white paper And all subsequent protocols, Aristotle would be proud, but the answer would be unnecessarily theoretical and abstract.

Alternatively, we can actually see what people are doing in the world. No matter how sensible this new use case may be, people love inscriptions and are willing to pay for them.

• Who are they paying? miners.
• How are they getting paid? transaction fee.
• What are miners doing with transaction fees? Reinvesting some to cover the cost of mining more bitcoins.
• Where does that bitcoin go? From the miners to the world where it is transmitted.

And there we have it: payments and circulation. People pay miners, miners pay people, they’re using bitcoin, so bitcoin is money. We’ve got the gist of currency without a dictionary (sorry Aristotle).

In other words, bitcoin is still money, but the bitcoin blockchain can Too be used for storage. Note the boolean operator: (money And storage) No (Wealth Or storage). Indeed, adding new, sensible use cases may be a prerequisite for any currency from this point forward. The only question is, who is considered “sensible”? But time – and the market – will tell.

good, bad or gentle?

So, let’s return to the original question: are ordinals, inscriptions 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 tasks were not at the top of my personal priorities list. i can’t say that Taproot Wizards Or that “ordinal tokens” are actually making the world a better place.

But I am not even afraid of these developments. They increase fees, and higher fees have beneficial side effects on the blockchain. What’s good for bitcoin is also good for the world, whether it’s intentional or not.

And they strengthen the case for Lightning as a low-fee means to use bitcoin as money for small, everyday purchases and transfers. Generally speaking, what is good for Lightning is good for Bitcoin, which is good for the world. Wizards GIFs and helper tokens can’t really do much damage, so I’ll just stay calm, stack and continue making Lightning as good as I can.

This is a guest post by Roy Sheinfeld. The opinions expressed are solely his own and do not necessarily reflect the opinions of BTC Inc. or Bitcoin Magazine.