• Bitcoin
  • Blockchain
  • Crypto
  • Metaverse
  • AltCoins
  • Business
  • Investment
  • Upcoming
What's Hot

We’ve Failed Gen Z, But Bitcoin Offers Hope For The Future

June 8, 2023

Over 400 Small Businesses In The Philippines Are Now Accepting Bitcoin Payments

June 7, 2023

How My Bitcoin Mining Firm Is Surviving Crypto Winter, Again

June 7, 2023
Facebook Twitter Instagram
  • Bitcoin

    We’ve Failed Gen Z, But Bitcoin Offers Hope For The Future

    June 8, 2023

    Over 400 Small Businesses In The Philippines Are Now Accepting Bitcoin Payments

    June 7, 2023

    How My Bitcoin Mining Firm Is Surviving Crypto Winter, Again

    June 7, 2023

    Amboss Unveils LINER Index, Bolstering Enterprise Adoption Of Lightning Network

    June 7, 2023

    Coinbase, America’s Largest Cryptocurrency Exchange, Sued By The SEC For Securities Violations

    June 7, 2023
  • Blockchain

    BlockJoy raises $12M to help cut operating costs for businesses running blockchain nodes • TechCrunch

    February 2, 2023

    Blockchain Futurist Conference — Canada’s biggest crypto conference returns for fifth year

    February 2, 2023

    WEMADE and Metagravity Sign Strategic Alliance MOU to Collaborate on Blockchain Games for the Metaverse

    February 2, 2023

    Will Polkadot’s [DOT] new parachain fix the blockchain?

    February 1, 2023

    BNB Chain Unveils 3rd Blockchain in BNB Ecosystem, Tether ‘Never Borrowed from Celsius’, Ripple Sold $226M Worth of XRP in Q4

    February 1, 2023
  • Crypto

    Crypto Donations Now Need An Appraisal

    February 2, 2023

    Bitcoin Shrugs Off Fed Rate Hike to Hit Six-Month High

    February 2, 2023

    Stock and Share Market News, Economy and Finance News, Sensex, Nifty, Global Market, NSE, BSE Live IPO News

    February 2, 2023

    Yates County cryptocurrency miner completes debt restructuring deal

    February 1, 2023

    How ‘King of Instagram’ Dan Bilzerian ‘made millions’ from cryptocurrency after bizarre poker deal

    February 1, 2023
  • Metaverse

    Facebook’s Metaverse Division Lost Nearly $14 Billion Dollars Last Year

    February 2, 2023

    Samsung Hints Metaverse Ambitions At Product Launch Event, Eyes Integrating Different Realities Into Premium Smartphones

    February 2, 2023

    Sanlam makes history with SA’s first media launch in the metaverse

    February 2, 2023

    Meta’s plans to expand metaverse are up and running again: Here’ how

    February 2, 2023

    RFOX VALT Launches AI-Enabled Metaverse Apartments for Sale

    February 1, 2023
  • AltCoins

    Altcoins Lead Post-Fed Crypto Rally as Risk Appetite Increases

    February 2, 2023

    CAKE, SHIB And These Alt-Coins Are Trending

    February 2, 2023

    Elon Musk Wants McDonald’s to Accept Crypto Payments. Dogecoin (DOGE), Bitcoin (BTC), and Snowfall Protocol (SNW) Benefit

    February 2, 2023

    Crypto Analysts are Saying These Altcoins Have Huge Potential – Here’s Why

    February 2, 2023

    Are Cryptos Bound to Retrace Amid Recent Pump?

    February 1, 2023
  • Business

    Ray Dalio Warns Money Is in Jeopardy, Favors Inflation-Linked Crypto

    February 2, 2023

    BIT Mining Limited Regains Compliance with NYSE Continued Listing Standards

    February 2, 2023

    Bithumb’s de facto owner arrested over alleged embezzlement

    February 2, 2023

    Crypto Custody Firm Copper Alerted to Security ‘Incident’ Over Christmas

    February 1, 2023

    Cathie Wood’s Ark Invest Says Bitcoin Could Hit $1.5 Million by 2030

    February 1, 2023
  • Investment

    The Investor’s Guide to Crypto Options Trading

    February 2, 2023

    Pune software engineer loses Rs 13 lakh to crypto investment fraud

    February 2, 2023

    Crypto Investment Products’ AUM Surges as Investor Confidence Returns: CryptoCompare Report

    February 2, 2023

    Crypto Investors Can Purchase Bankruptcy Put Options to Protect Funds on Binance, Coinbase, Kraken Crypto Exchanges

    February 1, 2023

    Ethereum price forecast for February, including Morgan Stanley comments By Investing.com

    February 1, 2023
  • Upcoming

    S&P 500 rises to the highest level in five months Thursday as Meta leads a tech comeback

    February 2, 2023

    Looking For Something Different From Nubank and C6 Bank? Try Lanistar! – Sponsored Content

    February 2, 2023

    NYDFS Releases Guidance For BitLicensees And Limited Purpose Trust Companies On Asset Custody In The Wake Of Cryptocurrency Insolvencies – Financial Services

    February 2, 2023

    This Supreme Court Case Will Reverberate Throughout the Compliance and ESG World | NAVEX

    February 2, 2023

    Ethereum (ETH) Could Reclaim $2,000, Trader Says

    February 1, 2023
investorstoday.press
investorstoday.press
Home»Bitcoin»Addressing Ordinal Concerns: Bitcoin Decentralization And Block Space
Bitcoin

Addressing Ordinal Concerns: Bitcoin Decentralization And Block Space

maikdezana@icloud.comBy maikdezana@icloud.comFebruary 26, 2023No Comments5 Mins Read
Share
Facebook Twitter LinkedIn Pinterest Email

Bitcoin inscriptions have been out for a few more weeks, so we follow up on the fee market and block usage to observe what’s changed after 100,000 inscriptions.

The below is an excerpt from a recent edition of Bitcoin Magazine PRO, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.

Addressing Bitcoin Decentralization & Block Space Concerns

New users have been flocking to Bitcoin to create what are known as inscriptions — often called NFTs (non-fungible tokens) on other blockchains. These mostly image files were increasing demand for Bitcoin block space, which caused some network participants to worry about Bitcoin’s future decentralization. If the cost to run a full node increases substantially due to users needing the storage space and bandwidth to download all this data that is unrelated to monetary transactions, fewer people might run full archival nodes, centralizing Bitcoin’s ledger.

The amount of cumulative storage used by inscriptions continues to climb with almost 3 GB of storage specifically related to inscriptions at the time of writing.

(Source)

Should the block space consistently be used to its full extent of 4 MB, it will add approximately 210.24 GB of data to the chain each year, which isn’t a major cost hindrance for running a full node but can still be considered pricey in places where technology isn’t as cheaply available. There is the ability to run a pruned node which does not require storage of any of this witness data and only keeps track of Bitcoin’s monetary transaction data. However, in order to create a pruned node, users still must download all of the data initially. This is where the concerns for insufficient bandwidth come into play. In areas of the world where there isn’t access to high-speed internet, the initial block download might take so long that it won’t be possible to sync to the chaintip.

That being said, the expectation for Bitcoin’s block space was always that it would be full at some point, which is partially why there is a cap on the block size. This cap was raised during the SegWit soft fork and included the fee discount for witness data — like inscriptions — that is unrelated to Bitcoin’s financial ledger and its unspent transaction output (UTXO) set.

Bitcoin has been compared to a decentralized clock because of the way it keeps track of the order of transactions as they happen around the world. The nature of inscriptions on Bitcoin uses this ordering to number the inscriptions as they are written onto the blockchain, aka timechain. As the inscription count approached 100,000, people rushed to get their inscriptions confirmed before or exactly at that number. We saw the largest increase in fees around this time, which is shown above in dark green. By quickly glancing at the fee rate chart, it’s clear when the 100,000th inscription was made because of the most amount of fees greater than 25 sat/vByte.

After this monumental inscription number, the rush to create NFTs on Bitcoin has drastically decreased. While there is still a backlog of transactions in the mempool, the fees required to get a transaction confirmed in the next block have dropped considerably and the daily total fees spent on creating inscriptions is “down only.”

(Source)

Even though the fees are down along with the total amount of money being spent on inscriptions per day, the number of pending transactions in the mempool remain high and constant, with no signs of letting up in the short term.

The number of pending blocks waiting to get confirmed remains high.

In this past mining epoch, blocks are being mined so quickly that there is an expected difficulty adjustment of nearly +11%.

“The expected ratchet upward in mining difficulty will take away some of the relief that operations were feeling in recent weeks, due to the increase in USD-denominated revenue. Miner revenue denominated in bitcoin terms will once again head to new lows.” — State Of The Mining Industry: Public Miners Outperform Bitcoin

This rapid rate of mining blocks has allowed for some of the inscription transactions with lower fee rates to be mined because blocks were getting mined faster than new transactions were being broadcast to the network.

Now that the initial rush to be an early inscriber is likely over, one theory for inscriptions is that they will become a buyer of last resort for block space in times when fees are low and fewer people are transacting on chain.

We will see if this thesis plays out. It’s possible that times of lower fees will be used by people opening up Lightning channels as well, which is one of the arguments against inscriptions as they potentially crowd out Bitcoin’s financial use cases.

Final Note

There are unanswered questions about the bandwidth requirements for downloading an archival full node as well as the cultural questions of whether these non-monetary transactions should be happening on Bitcoin’s base layer or if it’s even possible to move them to a Layer 2.


Like this content? Subscribe now to receive PRO articles directly in your inbox.

Relevant Past Articles:

  • Fee Market Competition: Bitcoin Ordinals And Inscriptions
  • State Of The Mining Industry: Public Miners Outperform Bitcoin
  • Earlier Than You Think: An Objective Look At Bitcoin Adoption
  • State Of The Mining Industry: Survival Of The Fittest
  • Bitcoin Sellers Exhausted, Accumulators HODL The Line

Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
maikdezana@icloud.com
  • Website

Related Posts

We’ve Failed Gen Z, But Bitcoin Offers Hope For The Future

June 8, 2023

Over 400 Small Businesses In The Philippines Are Now Accepting Bitcoin Payments

June 7, 2023

How My Bitcoin Mining Firm Is Surviving Crypto Winter, Again

June 7, 2023

Amboss Unveils LINER Index, Bolstering Enterprise Adoption Of Lightning Network

June 7, 2023
Add A Comment

Leave A Reply Cancel Reply

Top Posts

Subscribe to Updates

Get the latest crypto news

Advertisement
Demo
Top Insights

We’ve Failed Gen Z, But Bitcoin Offers Hope For The Future

June 8, 2023

Over 400 Small Businesses In The Philippines Are Now Accepting Bitcoin Payments

June 7, 2023

How My Bitcoin Mining Firm Is Surviving Crypto Winter, Again

June 7, 2023
Get Informed

Subscribe to Updates

Get the latest creative news from FooBar about art, design and business.

Categories
  • AltCoins (1,399)
  • Bitcoin (1,759)
  • Blockchain (1,384)
  • Business (1,378)
  • Crypto (1,365)
  • Investment (1,383)
  • Metaverse (1,361)
  • Upcoming (1,319)
Facebook Instagram
  • Contact Us
  • privacy policy
  • about us
© 2023 Designed by investorstoday.

Type above and press Enter to search. Press Esc to cancel.