Ordinal critics are wrong to claim that inscriptions, especially BRC-20 tokens, are a denial-of-service attack on regular bitcoin (btc) transfers, on-chain analysis suggests.
According to James Check, lead analyst at Glassnode, the vast majority of bitcoin's block space today is still made up of normal monetary transactions, with inscriptions “embedded in any remaining space around monetary transfers.”
Comparing Ordinals: NFTs VS BRC-20
Glassnode figures show that signups share roughly 50/50 of total bitcoin transactions with monetary transfers.
However, the former is generally more block space efficient than the latter. By using less than 10% of the block data size, registrations generate between 20% and 40% of the networks' total fees.
“We're packing more value, more fees, and more data into the same block,” Check wrote in a mail to X on Wednesday. “Signups are good for bitcoin, they pay miners while making space utilization more efficient.”
The fact runs counter to Bitcoiners' initial understanding of Ordinals as a protocol for enrolling heavy image-based NFTs on the blockchain.
While this was mostly true earlier this year, the arrival of the BRC-20 token standard has led to a “second wave” of small text-based inscriptions. These smaller but much more frequent enrollments have greatly expanded bitcoin's UTXO pool, filled its mempool, and steadily increased transaction fees.
A crystal node report in September highlighted the prevalence of a BRC-20 token called SATS, whose months-long minting process fueled a 45.5% increase of 21 million bitcoin UTXOs. Earlier this week, Binance announced that it would begin listing trading pairs for SATS.
The opposition of the ordinals
The same report described text-based inscriptions as “padding” for blocks, similar to soft newspaper packaging placed next to large valuable contents inside a shipping box. They buy up any available space cheaply on a less active block and find themselves displaced by “more urgent monetary transfers.”
“Your opposition is purely ideological and subjective,” Check told Ordinals' critics. “Fortunately, bitcoin has a set of consensus rules that are objective and do not respond to our subjective feelings or values.”
bitcoin Core developer Luke Dashjr has repeatedly labeled Ordinals transactions as “spam” that exploits a bug in the bitcoin code.
Its recently launched bitcoin mining pool, OCEAN, has chosen to filter registrations of the transactions it processes in order to “contribute to blocks full of real transactions.”
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