casey · GitHub

for data storage (which was not an intended use case, and any ways to do that were limited, like OP_RETURN being capped at 80 bytes)

@Semisol It was not actually limited in practice, since customers of miners' blockspace have been storing arbitrary data in Bitcoin via p2ms regardless, due to the lack of OP_RETURN flexibility, which was worse for Bitcoin than OP_RETURN (occupied nodes' RAM), yet done anyway because "you cannot stop the free market"; if you try, you will end up with sub-optimal outcomes and an inefficient market. Inscriptions is better than the real alternative of p2ms, and so is an improvement even in just this simple way to Bitcoin's functioning.

Arbitrary data (with its inherent mix of pros and cons) has been stored in Bitcoin throughout its history, prior to Inscriptions, so Inscriptions is really nothing new:

  1. http://www.righto.com/2014/02/ascii-bernanke-wikileaks-photographs.html
  2. https://ourbigbook.com/cirosantilli/cool-data-embedded-in-the-bitcoin-blockchain
  3. https://fc18.ifca.ai/preproceedings/6.pdf

It's not something a subset of people "don't like" -- it is misuse of the network, which was meant for financial transactions (the whitepaper, name and code point to this)

@Semisol However, it is exactly about what people do not like, and it is exactly not a misuse of the network.

In reality, the market demand (fee market is competitive, fee rate determines priority; if the non-financial tx with higher fee rate outcompetes the financial tx with lower fee rate, then this is the free market speaking about where real economic value lies, as an example) is what actually determines for which use the miners sell their finite blockspace to their customers (those paying for transactions) -- and is what determines good/desirable vs. bad/undesirable/spam/nonsense/stupid/etc. The individual opinion of someone is not what determines which uses are valid or invalid, as of course it is the miners who "own" that blockspace, so it is only the miners who make that determination (and if users for example try to stop nodes from relaying certain transactions to miners, ahem, it only incentivizes miners to create alternative channels for users to directly send transactions to miners, which as you may imagine creates all kinds of unintended consequences that are bad for Bitcoin -- you must remember the bottom line realities of the network, upon which the unstoppable free market operates, in order to avoid making mistakes that make what is seen as a problem become even worse).

Miners are incentivized to increase their total revenue per block, as a course of normal business, and also as they try to offset their exponentially-declining subsidy revenue (which is meant to be replaced with fee revenue, hence the name 'subsidy'). As such, miners do not care to pass moral or any other such judgement to choose to censor technically-valid bitcoin transactions (and since Bitcoin is supposed to be a censorship-resistant network, we would hope so!).

At best, Bitcoin is designed so that miners simply behave as rational economic actors, which means they should be optimizing their fee revenue, which in turn is good for Bitcoin as it encourages censorship-resistance, and also increases Bitcoin's "security budget" (relevant when considering Bitcoin inherently exists in an adversarial environment in which hostile hashrate must be assumed to exist) -- by encouraging higher-fee transactions that are economically meaningful on the base layer (this is what determines 'value', not any moral or other judgment).

Anything that increases demand for Bitcoin's supply of blockspace, thus allowing bocks to be filled with a floor of lower fee-rate transactions to create a competitive fee-rate market, acts to boost fee-rate pressure, thus helping to increase the fee-to-subsidy ratio of each block and improving Bitcoin's security. Since security is the number 1 priority of any Bitcoin user, without which everything else is irrelevant, the number 1 priority should be to boost demand for blockspace.

Inscriptions simply popularizes another demand for blockspace (arbitrary data stored by customers desiring the best decentralized network on Earth), beyond the existing demands from SoV (store of value) and MoE (medium of exchange) (low-value high-volume MoE transactions go on second layers, high-value low-volume MoE transactions go on base layer) uses that so far have not been sufficient to reliably fill blocks & generate enough fee pressure to offset the subsidy (fee-to-subsidy ratio of 100%).

Inscriptions theoretically (and so far in practice, however the fee-to-subsidy ratio of each blocks is still only 3.5%, since this only picked up steam 2 weeks ago) achieves this boost in blockspace demand by filling blocks and increasing economic activity on the base layer (vs. the last 1.5 years that have been marred with many non-full blocks and thus paltry fees -- objectively bad from the point of view of network security), thus objectively it is not a misuse of the network, and rather it is "good for bitcoin" for anyone who cares about Bitcoin's security and security sustainability (vis a vis the hashrate sustaining itself without the exponentially-declining subsidy), and who is able and willing to truly appreciate what a censorship-resistant network requires to function successfully in an adversarial environment. Really, it is a matter of being focused on priorities, so that the number 1 priority of security and security sustainability is able to rise in your mind to the top of consideration (over lesser considerations of judging uses as 'good' vs. 'bad'/'nonsense'/'spam').

Disclaimer: I have not used Inscriptions nor do I intend to use it anytime soon, so I am not speaking in my own interest, I am only speaking in the interest of Bitcoin.

Read the original on github.com ↗