How to solve Ordinals pushing Bitcoin towards congested Ethereum?
Solving Bitcoin congestion caused by Ordinals and Ethereum.
However, they will remain at least in the short term because some major wallets have begun to support BRC-20 tokens. And some new developments, such as the launch of the Uniswap fork in a few days with the “BRC-20” token (SBRC-20) trading for $500,000, indicate that building an unauthorized new ecosystem on Bitcoin will continue to develop.
High fees make the unbanked lose hope
Greenspan pointed out that despite the high level of interest driving Bitcoin transactions to historic highs, the number of unique addresses has dropped sharply, meaning fewer people are accessing the network. While transaction fee income has exceeded block rewards – which many consider to be the only way to ensure Bitcoin security after several halvings – it has also brought many problems.
“I talked to a miner yesterday who said his income doubled, which is great, especially for miners before halving, but it’s a disaster for countries like Nigeria and El Salvador, where the average cost of sending a transaction suddenly becomes $30, and the dream of financial inclusion on Bitcoin for the unbanked is temporarily postponed.”
Interestingly, this is not the first time someone has launched a token or NFT on Bitcoin. CounterBlockingrty led the way by launching NFTs on Bitcoin, including Spells of Genesis and Rare Pepes in 2015 and 2016, respectively. In addition, the stablecoin Tether also launched a token on Bitcoin via the Mastercoin protocol (later known as Omni) in 2014.
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Bitcoin geeks call for spam ban
On Bitcointalk, there has been a lot of discussion about how to deal with “attacks on Bitcoin”, with some claiming it is the work of malicious Bitcoin SV developers. Users discussed soft forks to “enforce Taproot validation script size limits,” how the protocol filters what they consider to be “spam,” and even mentioned hard forks to repeal Taproot.
Bitcoin developer Luke Dashjr said, “Action should have been taken months ago. Spam filtering has always been a standard part of Bitcoin Core, from day one. The existing filters not extending to Taproot transactions is a mistake, as this is just a bug fix and doesn’t actually need to wait for a major release.”
Ignore Them, They Will Disappear
The most ideal situation – and the one that the interviewee believes is most likely to happen – is that interest in these tokens and NFTs will wane as the memecoin craze dies down.
“Bitcoin network congestion is nothing new? It usually comes with hype, but when the hype subsides, it also fades,” the most likely scenario is that people will run out of funds.
However, if Ordinal continues to have a huge impact on the network, it is always possible to choose to use the core-selected forked Bitcoin to modify or remove Taproot. Blec and many others have suggested this possibility, although it appears to be largely hypothetical at this time.
Forking Bitcoin to Get Rid of Ordinal
Greenspan said that although a hard fork could always be implemented, “it would split the network. No one wants to do that.”
McCook said that in the scaling war of 2017, the market chose Bitcoin over Bitcoin Cash or Bitcoin SV, and predicted that the current version would beat the Taproot fork.
“I would choose the Ordinal version. So, although I don’t think Ordinal has any value, maybe I will need to engrave some absolutely anti-censorship information in the future, which will be very useful,” he said.
This could have a very powerful effect. For example, Julian Assange decided to make his WikiLeaks information public as an engraving, which is a very useful thing.”
Greenspan also believes that the benefits of using Bitcoin to store data are only just beginning to be explored.
“Now people are realizing that Bitcoin has the ability to store files. I’m looking forward to seeing what forward-thinking developers will do.”
Making Tokens Better
Domo said when releasing BRC-20, “I believe there are almost certainly better design choices and optimization improvements that can be made.”
Many people agree with this view. One of the simplest improvements is to use binary instead of JSON format, which developer John W. Ratcliff believes is “one of the least efficient data formats that anyone can use.” He believes this will reduce the size of BRC-20 tokens from 89 bytes to 19 bytes.
He said, “This means they paid over four times the necessary fee when submitting these BRC-20 tokens.”
Colin Harper, a researcher at Hashrate Index, said that using binary code “can reduce bandwidth by up to 80%.” However, as noted by Bitcoin influencer Udi Wertheimer, this does not completely solve the problem, as the surge in fees is due to token issuers competing to raise fees in order to prioritize getting low serial number tokens before the supply runs out.
There is another way to issue assets on Bitcoin, called Taro, which Domo says is “a better solution.” Taproot Asset says the overlay is a proposed protocol that will allow people to issue digital assets on Bitcoin and can be traded quickly and cheaply through the Lightning Network.
Building a Virtual Machine on Bitcoin
Trustless Computer takes a more radical and experimental approach, launching a fork project of Uniswap v2 called Trustless Market, which saw $500,000 worth of transactions in the first three days.
The project’s documentation states that they are developing a Turing-complete virtual machine called BVM, built on top of Bitcoin, to enable the DeFi ecosystem.
Core team member @punk3700 said it is “not a second layer, but a ‘protocol within the first layer,'” and works similarly to Ordinal but uses SBRC-20 tokens.
Unlike “writing text files to Bitcoin,” Trustless Computer writes smart contract transactions to Bitcoin. He claims this will reduce the bandwidth required for tokens by 80%-90%.
“I think the current form of BRC-20 (using text files) is just a flash in the pan,” he said. “You can’t build a scalable alternative financial tool with pen and paper.”
“Our SBRC-20 implementation is different. We use smart contracts, the same as ERC-20 smart contracts on Ethereum. It works exactly the same way as the preset.”
“Ordinals are just version 0.1 implemented on Bitcoin. Trustless Computer shows that you can build a complete DApp ecosystem on Bitcoin.”
He expects to see the deployment of MakerDAO, Aave, Compound, and other smart contracts soon, which, according to him, will bring about a huge change in Bitcoin.
Although the project has been covered by other major cryptocurrency news media, Magazine has not verified whether their technology is as effective as promised and there is controversy over how well smart contracts can be integrated with Bitcoin, so proceed with caution.
Can we scale Bitcoin with ZK-rollups?
The influx of NFTs and tokens on Bitcoin shows that the blockchain still cannot meet growing demand, which means the more popular it becomes, the worse it performs.
The Lightning Network is often touted as a solution, but Nostr’s founder Fiatjaf pointed out that it cannot cope with recent fee spikes. “The channels are too fragile, it’s too expensive to open a channel in a high fee environment, running routing nodes, etc.,” he wrote, saying users have to rely on centralized Lightning Network providers.
Grin’s Greenspan believes that gradual scaling is the only secure solution to ensuring that Bitcoin remains attack-resistant.
Various parties, including StarkWare and blockchain researcher Eric Wall, have been researching the use of zero-knowledge (ZK) rollups to scale Bitcoin, which is also the plan for Ethereum to address its similar challenges.
Ironically, however, while the surge in Ordinal’s demand indicates a need for further scaling, it also greatly reduces the likelihood of the community agreeing to enable ZK-rollups with a new hard fork.