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The battle for the future of Bitcoin rages in real time on Twitter as we stand on the cusp of a global economic contraction, thanks to over 50 years of fiat dollar rule, and eagerly await approval of 'a spot Bitcoin ETF by SEC. Yet in the trenches of Twitter, the ongoing skirmish is over what bitcoin is and how it should and should not be used. I covered this battle in detail on Orange Label, but to summarize, there are two camps in this battle: the monetary maximalists and the Blockspace demand maximalists. The big question is should listings be part of Bitcoin and how can they be stopped?
The purpose of this article is not to influence you one way or another, but rather to share some figures that demonstrate that the price of registrations will be evaluated over time. Over the past year, we have seen a doubling of the price and hashrate of BTC, and during this time, listings have caused big changes in demand for block space. We saw fees reach a 4 year high as mempools removed reasonable fees.1, meaning that there were so many high-fee transactions in the memory pools that lower-fee transactions were being removed from the memory pools. In other words, there was no chance that low-fee transactions would be included in blocks. What started as a laughable novelty 12 months ago has attracted legions of new bitcoiners. This is an undeniable fact considering the number of nodes accessible on the network over the past two years.
As Bitcoin Twitter began to divide on the topic, a meme emerged suggesting that registrations will be priced as the NGU technology does its job. This brings us to the next logical question: when are registrations priced? It's up to the market to decide. For now, we can just crunch the numbers and see how many dollars a listing will cost as the price of Bitcoin appreciates.
Calculator
I'm a big fan of tabletop calculators23 and use them quite often when creating a story. For this piece, I wanted to understand how much it would cost to inscribe a 100kb photograph at different prices. This then turned into a question of how much these BRC20 shitcoiners are spending and when will this nonsense end. These are around 50 bytes or 0.05 KB for reference. I was able to find4 a simplified formula for registering:
Formula for calculating the cost of ordinal registration
Total Cost in USD = ((((Listing Size in KB * 1000) / 4 * Fee Rate)) / 100,000,000 ) * Current BTCUSD Price
The important variables for this calculation are the file size in kilobytes, the fee rate in sats/vbyte and the current price of BTCUSD. With this little bit of information, I was able to create a simple static table to see how listings of different sizes will increase in USD cost as NGU for fees and BTCUSD.
This chart reveals a lot of information and the takeaway for me is how expensive it will be to group data into blocks in the not too distant future. Let's take our 100 KB image example. At current fees of around 100 sat/vbyte and $50,000 BTCUSD, registration will cost $1,250. That's a big pill to swallow. Now let's look at the BRC20 shitcoin token used for money laundering… Its size is approximately 0.05 KB. “At current fees of approximately 100 sat/vbyte and $50,000 BTCUSD, registration will cost $0.63 . It's a small amount, but these things come in truckloads. We are talking about collections with 1 million units. So not a small amount and there's not just one BRC20, there's tons of them popping up. The question of liquidity of these things is for another post.
As you move down the chart towards higher BTCUSD prices for each listing size, you can see how ridiculous things get. Our modest 100 KB jpg will cost $62,500 to list when BTCUSD hits $1 million and 200 sat/vbyte. Likewise, the same BRC20 would increase to $25 for a single token. This kind of price starts to value really stupid things like monkey pictures and memecoin shitcoins.
As you can see, the cost of producing these listings increases linearly with the increase in BTCUSD. This alone will cause a large portion of the market to rise in price, but you have to ask yourself, as the overall market size increases, will this bring in new entrants that will generate additional demand, in other words, the pond will get bigger and the fish will get bigger, the small fish just can't eat.
What to expect?
It's hard to think about what happens next because there are many plausible outcomes, but the one I come back to is the meme I mentioned at the beginning of this article, that registrations will be priced. Just do the math, they don't lie. I don't think we're about to die any time soon, but there will come a time when it's just too expensive for stupid things to exist on-chain. Activities with low time preference will prevail.
I see the overall listing ecosystem continuing to evolve, which means people's minds and opinions will continue to change as well. We see thoughtful feedback from developers5 warning6 of how changing the protocol to address or eliminate the use of inscriptions will only push people to “mine” other parts of the protocol for its precious block space. We are seeing new ways to fund registrations and encourage data seeding via Bitcoin + torrents such as RequestDurabitAnd Precursive inscriptions. Listings are one thing, blocks of space are valuable and people are willing to pay for them. Bitcoin is for haters, and it's going to get weird (meh). Cope and seethe but don't forget to have fun.
- Reasonable is subjective, markets are clear. I believe I've seen transactions with fees up to 20 sat/vbyte being purged, which in recent memory seems absurd. ↩︎
- Debunking Hashprice ↩︎
- Satsflow scenarios ↩︎
- Someone did this and it's pretty handy. I used this formula to create my table in Google Sheets. ↩︎
- “NACK concept.
I don't think this is in the best interest of the users of our software. The whole point of participating in transaction relay and having a mempool is to be able to predict what the next blocks will look like. Intentionally excluding transactions for which there is very clear economic demand (as stupid as it is) breaks this capability, without even removing the need to validate them when exploited.
Of course, anyone is free to run or provide software that relays/preserves/fetches whatever they want, but if your goal isn't to have a realistic memory pool, you can just as easily well run it in -blocksonly mode. This saves a lot more resources, if that is the goal.
Since this is an attempt to not only not see certain transactions, but also to discourage their use, this will at best result in these transactions being routed around nodes implementing this, or at worst will result in a practice of transactions submitted directly to miners, which poses serious risks for the centralization of mining. Although non-standardity has always been used to discourage cumbersome practices, I think it is (a) much less relevant these days where full blocks are the norm, so it won't reduce node operating costs anyway and (b) powerless to stop transactions for which there is already an existing market – a market that pays dozens of BTC in fees per day.
I think the demand for block space that many of these transactions pose is completely wrong, but choosing not to see them is burying your head in the sand. – Peter Wuille Link ↩︎ - “Since the infamous 4MB block Bitcoiner Taproot Wizard went on fire, fighting to try and stop the listings. The listings are certainly not good for bitcoin, but the way bitcoiners try to stop them will be far worse than the damage the listings could have caused. – Link Ben Carman ↩︎
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