For months, Bitcoiners have been hotly debating the phenomenon of ordinals and the significant trading activity and congestion they cause on-chain.
This is a very nuanced confrontation where it is difficult to find the right “ideological” answer. I won't try to give a definitive answer here, as it ultimately depends on the community as a whole. But I hope we can all agree on some common ground rules that can help us resolve the debate without getting into another war resulting in harsh and bitter pitchforks.
A story of free markets and higher purposes
The complexity of the debate lies in the cognitive dissonance that the Ordinals trigger within the Bitcoin community. It’s safe to say that Bitcoiners are very supportive of free markets, freedom, and financial freedom.
And on the one hand, ordinals are the purest expression of the will of the free market. If some people are willing to pay to transact with rigged tokens that push Bitcoin Script's capabilities to their limits, then who are we to say that's wrong?
The foundation of the Bitcoin network lies in the use of selfish economic incentives to create a positive outcome for all: the creation of a value-neutral settlement and payment layer.
Miners, who are one of the main pillars of Bitcoin, earn huge amounts of money from Ordinals.
And we also can't deny the long-term benefits of Ordinals and BRC-20s for the network. The ordinals managed to push the percentage fees in overall miner revenue at around 10%, which is similar to what we saw during the most active phase of the 2021 bull market.
While some Bitcoin users may choose to downplay this problem, the fact remains that without mining rewards, the security of Bitcoin would be tenuous at best. It follows that anything that can push the use of the Bitcoin blockchain is good for Bitcoin, right?
Of course, it's not that simple. Ordinals make it more expensive to use Bitcoin for what it was designed for: payments and the transfer of value.
Some die-hard Bitcoiners would probably have a heart attack if they saw the community embrace speculative shitcoin trading as a “solution” to the security budget problem. And they're not so wrong.
Bitcoin was born as a way to escape the tyranny of central banks, to give everyone in the world the hardest money ever conceived, and to serve as a neutral layer that people can use regardless of their economic, geographic or policy. Speculative shitcoin trading does not exactly fit this higher purpose.
So while ordinals are likely a legitimate use of Bitcoin that aligns with free market principles shared by Bitcoiners, they ultimately prevent Bitcoin from achieving its true purpose. How can we reconcile this?
Is pragmatism the key to the game?
There is currently an unresolved issue issue in Bitcoin Core GitHub which proposes treating ordinals as a vulnerability in Bitcoin Core, where the only appropriate response is to eliminate it in any way possible.
That's certainly one way to look at it, but I think this approach is too knee-jerk a reaction. Bitcoin is beautiful in its simplicity and robustness, and the community has rightly resisted significant change in its fundamentals over the years.
Ordinals and BRC-20s are somewhat of a trick, but they still follow the rules of Bitcoin. They pose no more danger to Bitcoin than the hyperactive traders of 2017, who caused the largest rise in Bitcoin fees to date. Even spiritually, they are not that different from the Omni protocol, which used the OP_RETURN field to introduce tokens into Bitcoin (USDT is probably its most famous user).
The consensus within the Bitcoin community is that the majority of users should use L2 solutions to transact BTC, and that the main chain should be reserved for extremely high-value, high-cost use. After all, this is the only way to fit enough transaction fees into the current block size to guarantee the security budget in the long term.
If L2s were to achieve mass adoption, the majority of Bitcoin network usage would serve as a data layer for these secondary protocols. I don't think it would be the worst thing in the world. And if I had to choose, I would choose Bitcoin as the go-to data availability solution for extremely sensitive information – well ahead of custom solutions whose future largely depends on the coffers of a single development company.
But the key argument is that if we are to make changes to Bitcoin, they must be extremely slow, methodical and calculated.
While I understand the hostility towards the way ordinals are primarily used today, they can also be very useful for non-speculative uses. I would definitely choose them to store the next Wikileaks.
There is also an argument to be made in favor of speculators. Without them, Bitcoin would not have achieved the global popularity it has today. It has always acted as a Trojan horse, a way to initiate the network effect needed to generate global money in Bitcoin.
As long as BRC-20s and Ordinals don't actually endanger Bitcoin, we need to make sure they have time to evolve and grow. This doesn't mean anything needs to be done at the network level to support them even further. Quite simply, if it works, don't fix it – we might just see something of real value come out of this experimentation.
This is a guest post by Robbie Greenfield. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.