The recent surge in popularity of Bitcoin Ordinals has sparked both excitement and concern within the Bitcoin ecosystem. There has not been this much of a polarising topic since the block size wars. Given Ordinals need to gobble up the already limited block space, it has begun to marginalise other transaction types like standard Bitcoin transfers or Lightning channel management, as well as a forcing factor for increased fees.
Ordinals, introduced in 2023, enable users to inscribe data into the Bitcoin blockchain, tie it to a serial number and tether it to a satoshi. This function allows users to create NFTs and tokens with all the data embedded in the chain.
While Ordinals have brought new users to Bitcoin, new projects have sprung up around this new use case, and it has become a welcomed revenue driver for miners. Some fear their potential to cause bloat and disrupt the network’s primary function of serving as a digital currency.
As new users and speculators move into this market to try to mint or trade these unregistered securities, the surge in inscriptions and BRC-20 token minting has led to significant congestion on the Bitcoin network.
As you can imagine, if you’re not interested in token trading, but your experience with Bitcoin is disrupted, you won’t take too kindly to the new status quo, especially when you feel like what these users are doing is non-productive.
In response, the Bitcoin Knots developer Luke DashJr has proposed a patch addressing these concerns. This patch, currently in its early stages of development, would introduce a limit that restricts the size of storage space inscriptions can use on-chain.
Bitcoin Core code has allowed users to set limits on the size of extra data in transactions since 2013; however, by obfuscating their data as program code, inscriptions bypass this limit.
Understanding the Ordinals Issue
Ordinals leverage Bitcoin’s script system to allow users to inscribe data onto the blockchain permanently. This data can be anything from simple text messages to videos, images, scripts, and more. As an ordinal user, you’re essentially using Bitcoin as a costly cloud storage service, adding your data into the chain by paying a Bitcoin transaction fee.
Those Bitcoiners who aren’t too keen on this use case feel that just because something can be done with Bitcoin, there are more efficient ways to use the network.
Critiques of ordinals are that it is:
- Spamming the network
- A form of denial of service attack
- Unnecessarily increasing the cost of use for the average user
- Bloating the blockchain makes it harder to run nodes on low-tech hardware
- Transactions like this should be abstracted to a layer two
- It brings in regulatory issues with securities trading on Bitcoin
- It brings in legal concerns with the type of data that could be permanently added to the chain
The unfortunate reality for Ordinal opponents is that miners will accept these transactions into blocks as long as these users are willing to pay the fees. To a miner, all they see are transactions with high fees they can earn money on; any additional data you add to the chain isn’t of interest to them, and how you index, display, and use that data in secondary markets is of no real significance.
What is Bitcoin Knots?
Bitcoin Knots is a full Bitcoin client and builds the backbone of the network. It offers high levels of security, privacy, and stability. It includes more advanced features than Bitcoin Core, but they are not as well-tested. Knots do use more space and memory as it includes optional policies that improve the spam filtering capabilities using matching patterns identified in spam.
The proposed Bitcoin Knots patch
Luke Dashjr, the maintainer of Bitcoin Knots, pushed live an updated version of the client, claiming to have “fixed” the Ordinals spam issue in Bitcoin Knots v25.1 while there is talk that this patch could find its way to Bitcoin core in a future v27 release.
Community reaction and potential impact
The proposed Bitcoin Knots patch has generated mixed reactions within the Bitcoin and crypto community. Some users support the patch as a necessary measure to protect the network from potential harm. Others argue that the patch represents an unnecessary restriction and even censorship of individual freedom.
The potential impact of the patch is still uncertain; on one end, it could end up as a niche implementation that only a few nodes run, and Ordinals continue to find multiple paths to the chain. On the other hand, if clients adopt the patch, it could significantly reduce the impact of inscriptions on the current mempool and the blockchain.
Not the first shot at Ordinals
This is not the first attempt at disrupting Ordinals since its controversial launch in January of this year. The protocol has seen itself come under opposition from projects like Ordisrespector, which is a Bitcoin full node patch which actively filters out Ordinal transactions, refusing to include it in the nodes’ local mempool, while Sophon was a snipping bot that would actively seek out BRC-20 token transactions and front run them.
The Bitcoin Knots patch represents yet another attempt to add a barrier to entry for Ordinals and discourage users from participating in these types of transactions; whether it will be successful remains to be seen.
Can ordinals be erased for good?
Hostility to Ordinals will not be taken lightly, with obvious incentives to keep it going; there is a certain cohorot in miners, ordinal projects and traders keen on keeping this market up and growing and will provide active opposition.
For a patch like this to be effective, it would need ubiquitous use, and the chances that every node would upgrade to this patch are doubtful. Asking people to walk away from additional income favouring an ideological stance will only win over some.
The debate surrounding Ordinals highlights the need for careful consideration when introducing new features to the Bitcoin network. As Ordinals continue to evolve, the community must find ways to ensure they can coexist without too much disruption, the network’s primary function as a medium of exchange and store of value.
Right now, the battle lines are being drawn, but how far each side is willing to go is still being determined, with plenty of possible outcomes.
- Ordinals dominate on-chain transactions, and traditional transactions move to L2s—the most likely scenario.
- Ordinals themselves find a way to migrate to an L2 like Liquid or Taproot assets, or the market starts to shrink and needs to accommodate L2s to support those not willing to pay premium fees.
- Ordinals are forced off Bitcoin to other forks of Bitcoin still in operation.
The most unlikely but most disruptive would be that a compromise cannot be found between traditionalists and ordinals, and the only other solution would be a potential fork in the network.
If there were to be talks of a hard fork, it would put all participants (users, nodes, holders, miners) at the crossroads. Do they opt for the Bitcoin network focusing only on traditional transactions, or do they support the chain allowing ordinals?
Do your own research.
If you want to try out Bitcoin Knots or learn more about it, we recommend checking out the following resources to kickstart your research.
