Bitcoin (BTC) developers are in disagreement over the new “Ordinals” protocol, which has opened up a plethora of new applications for the cryptocurrency. While some celebrate the innovation, others believe it is clogging up the blockchain and causing problems for those using it as a peer-to-peer digital currency. Ali Sherief, a developer, has called for an upgrade to be introduced that would remove all transactions related to the new protocol. He believes that the introduction of worthless tokens is threatening the smooth operation of Bitcoin.
The BRC-20 token standard was developed by a pseudonymous Twitter user in May, which is an Ordinals-based project for issuing fungible assets on Bitcoin. This has led to an explosion of speculative memecoins with a market cap of nearly $500 million. The number of Ordinals transactions has recently surpassed 10 million.
The limited hard drive space on the Bitcoin blockchain means that settlement speeds are limited to around seven transactions per second. When users request more transactions than new blocks can handle, they must bid for miners to prioritize their transfers using higher transaction fees. Developers like Luke Dashjr believe that regular transactions should be prioritized and that others should be classified as “spam”. His tool, Ordisrespector, allows Bitcoin node runners to ignore such transactions.
Some developers believe that the innovation should be welcomed and that it is unethical to discount transactions that are subjectively disapproved of. Jameson Lopp, co-founder of Bitcoin custody solution Casa, believes that transactions are valid as long as users are willing to pay the attractive fee. He also argues that critics are effectively claiming that “any form of auction is a denial of service, and whoever wins is denying all of the losers of the auction.”
Michael Saylor, Bitcoin billionaire and advocate, welcomes the new protocol and its potential applications beyond speculative tokens and assets. He suggests that it could be used to tokenize all of the stocks and exchange-traded funds trading on NASDAQ so that individuals can take personal custody of their shares of stock instead of leaving them with a centralized custodian. Stably has already used the BRC-20 standard to launch Bitcoin’s first native US dollar stablecoin, Stably USD (USD).
While the new Ordinals protocol has opened up a world of new applications for Bitcoin, it has also caused controversy among developers. Some believe that it is clogging up the blockchain and causing problems for those using it as a peer-to-peer digital currency, while others welcome its potential for innovation. The limited hard drive space on the Bitcoin blockchain means that settlement speeds are limited, and developers are divided on how to prioritize transactions.