Bitcoin transaction fees have skyrocketed in recent days due to so-called “inscriptions” in the timechain.
When the timechain gets dirty
Entries are the act of inserting arbitrary data (usually jpegs) into bitcoin transactions.
It was the Taproot update that made this possible by making it possible to enter up to 400,000 bytes in a single transaction. Or 10% of the space of a single block.
“Registrations” allow this vulnerability to be exploited to spam the timechain (blockchain). It all started with collections of jpegs called “ordinals”.
Our full article on the subject: “Ordinals, Improvement or attack? »
Since then, an industry has been built in record time to try to make Ponzian mayonnaise rise. Everyone wants to create their collection of jpegs “on-chain”, which requires carrying out transactions.
Hence the recent traffic jam and rising transaction fees. Remember that bitcoin can only handle a handful of transactions per second.
So far, nearly $120 million has been paid in transaction fees to complete listings:
These crazy sums can be explained by the juicy bubbles backed by these inscriptions. Market capitalizations are indecent:
-Ordinals: $400 million
–Rare Sats : 800 million dollars
-BRC-20: $2.4 billion
The BRC-20 ORDI token has just reached a market capitalization of $1 billion after an 850% increase in 30 days.
Obviously, these valuations are based on wind. The starving volumes are orchestrated by groups of smart people who buy the jpegs for themselves. As always, it’s a matter of stirring the sauce until naive people give in to FOMO and take the bait.
As a result, transaction fees have exploded. You have to pay more than 270 sat/vB to make a bitcoin transaction. Or around $35 for a 300 vB transaction.
The Bitcoin Knots solution
The fashion will pass, like the NFT scam. BRC-20, ordinals and other inscription substrates will return to dust, not without having enriched Bitcoin magazine and the anonymous people who shamelessly promote collections of scams…
The rug pull of the BRC-20 ORDI token is already in progress at the time of writing:
No node expected to download and relay all these scams. We are in the presence of a vulnerability exploited through social engineering capitalizing on FOMO and pump & dump.
Bitcoin is a payment network, not a jpeg parking lot. This unexpected bug is causing a problem and needs to be fixed. So what to do? After all, taproot is important for coinjoins, anonymity and multisig transactions.
While waiting for a consensus update, we must filter these toxic transactions which also reduce the decentralization of bitcoin. Indeed, these large transactions increase the cost of managing a node.
In the short term, the solution lies with the miners. The latter can filter transactions through a pool that has adopted the Stratum V2 protocol.
Or go through the OCEAN pool recently launched by Jack Dorsey and Luke Dashjr which uses the client bitcoin knots to filter transactions.
Some are calling for censorship. But again, before taproot (and segwit), inserting mountains of gunk into a transaction was not possible!
Others will say that this “censorship” goes against the incentive system on which bitcoin is based. In other words, why would miners deprive themselves of “juicy” transaction fees?
It’s a bit quick to forget the ethics and the incentive not to turn bitcoin into an unreliable system parasitized by pump & dump shitcoiners.
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