The battle for Bitcoin's future is raging in real time on Twitter as we are on the cusp of a global economic downturn, thanks to 50+ years of the US dollar fiat currency system, and anxiously awaiting approval of a Bitcoin exchange-traded fund by the International Monetary Fund. second. However, in the trenches on Twitter, the ongoing skirmishes are over what Bitcoin is and how it should or should not be used. I've covered this fight in some detail on Orange Label, but to summarize there are two camps in this fight: Monetary Maximalists and Blockspace Demand Maximalists. The big question is should sprites be part of Bitcoin and how can they be stopped?
The purpose of this piece is not to sway you one way or another, but rather to share some numbers that show that engravings will price over time. Over the past year, we have seen Bitcoin's price and hashrate double, and during that time filings have caused some big changes in demand for block space. We saw fees rise to a 4-year high as memory kits were scraping reasonable fees1, which means that there are too many high-fee transactions in the memo pools, resulting in low-fee transactions being dropped from the memo pools. In other words, there was no opportunity to include transactions with low fees in the blocks. What started as a laughable novelty 12 months ago has brought in hordes of new Bitcoin users. This is an undeniable fact when you look at the number of reachable nodes on the network over the past two years.
As division over the topic began on Twitter, memes emerged suggesting that the engravings would be priced while the NGU technology did its work. This brings us to the next logical question… When are engravings priced? This is up to the market to decide. For now, we can simply run the numbers and see how many dollars the engraving process will cost as the price of Bitcoin rises.
Calculator
I'm a big fan of table calculators23 And use them often when creating a story. For this piece, I wanted to understand how much it would cost to record a 100KB image at different prices. This then turned into wondering how much BRC20 companies are spending, and when will this nonsense end. It is about 50 bytes or 0.05 KB for reference. I was able to track him down4 A simplified formula for making an engraving:
Ordinal engraving cost calculator formula
Total cost in USD = ((((Registration size in KB * 1000) / 4 * Fee rate)) / 100,000,000 ) * Current BTCUSD price
Important variables for this calculation are the file size in KB, the fee rate in sats/vbyte, and the current BTCUSD price. Using this simple information, I was able to create a simple static table to see how much different sized USD tokens like NGU and BTCUSD cost more.
This graph reveals a lot of information, and the big takeaway for me is how expensive it will be to put data into blocks in the not too distant future. Let's take our example of a 100KB image. With current fees around 100 sat/vbyte and $50,000 BTCUSD which would cost $1250 to register. This is a big pill to swallow. Now let's examine the Shitcoin BRC20 token used for money laundering… It is about 0.05 KB in size. “At the current fee it's about 100 sat/vbyte and $50,000 BTCUSD, which would cost $0.63 USD to register. That's a small amount, but this stuff is registered by the truckload. We're talking about batches of a million units. So it's not a small amount and there's not a single BRC20, it's There are tons popping in. The question about the liquidity of this stuff is for a different post.
As you move down the chart to higher BTCUSD prices per pattern size, you can see how ridiculous things are. A modest 100KB jpg file will cost $62,500 USD to register when the BTCUSD price reaches $1 million and 200 sat/vbyte. Likewise, the same BRC20 will rise to $25 per token. This kind of starts pricing out really stupid things like monkey pictures and meme coins.
As you can see, the cost of producing these patterns increases linearly as the price of BTCUSD increases. This alone will price out large portions of the market, however you must ask yourself as the overall size of the market increases, will it bring in new entrants that will increase demand, in other words, the pond will become larger and the fish will be larger, the smaller fish will not be able to eat.
what are you expecting?
Thinking about what happens next is difficult, as there are many plausible outcomes but the one I will come back to is the meme I mentioned at the beginning of this article, the cameos will be priced out. Just check the numbers, they don't lie. I don't think we're anywhere close to the death of sprites in the short term, but there will come a time where having stupid things on the series becomes very expensive. Low time preference activities will prevail.
I see that the overall engraving ecosystem is continuing to evolve and that means people's minds and opinions will continue to change as well. We're seeing thoughtful feedback from developers5 warning6 How changing the protocol to address or remove the use of tokens will only lead people to “exploit” other parts of the protocol for its precious block space. We are seeing fresh new ways to crowdfund inscriptions and incentivize data farming via Bitcoin + torrents like ReQuest, Durabit, and Precursive Inscriptions. Inscriptions are a thing, block space is precious, and people are willing to pay for them. Bitcoin is for enemies, and it's going to get weird. Deal and get angry but remember to have fun.
- Reasonable is subjective, and the markets are clear. I think I've seen transactions with fees of up to 20 sat/vbyte being cleared, which seems ridiculous in recent memory. ↩︎
- Demystifying retail price ↩︎
- Satsflow scenarios ↩︎
- Someone made this and it is very helpful. I used this formula to build my table in Google Sheets. https://instacalc.com/56229 ↩︎
- “Nack concept.
I don't think this is in the best interest of the users of our software. The point of participating in a transaction relay and having a memory pool is to be able to predict what the next blocks will look like. Deliberately excluding transactions for which there is very clear economic demand (no matter how stupid) breaks that ability, without even removing the need to validate them when mining them.
Of course, anyone is free to run or provide software that transfers/retains/stars whatever they want, but if your goal is not to have a realistic memory pool, you can also run in -blocksonly mode. This results in much greater resource savings, if that is the goal.
Insofar as this is an attempt not only to not see certain transactions, but also to discourage their use, this will at best lead to those transactions being routed around nodes executing this, or at worst lead to the practice of making transactions directly to miners, which would involve On the serious risks of centralizing mining. Although non-standards have historically been used to discourage cumbersome practices, I think this is (a) much less important these days where full blocks are the norm so you won't reduce the costs of running the node anyway and (b) powerless to stop transactions for which It already has an existing market – one that pays dozens of BTC fees daily.
I think the demand for block space that many of these transactions make up is largely misleading, but choosing not to see it is burying your head in the sand. – Peter and Will Link ↩︎ - “Ever since the infamous 4MB Taproot Wizard block was set on fire, they have been fighting to try and stop the pattern. Granted, the pattern is not good for Bitcoin, but the way Bitcoin tries to stop it would be far worse than any damage the pattern could ever cause.” – Ben Carman link ↩︎
