The Ordinals protocol is a system for numbering Satoshis (the smallest unit of Bitcoin) or a derivative protocol that uses Bitcoin UTXO as a data storage medium, essentially belonging to the “colored coin” category.

Luke Dashjr aims to address the issue of “garbage data” introduced by BRC-20 and Ordinals on the Bitcoin mainnet. The goal is to lighten the burden on Bitcoin, ensuring its simplicity and decentralization and making it not an absolute rejection of BRC-20 itself.

From Luke’s proposal perspective, as long as a mining pool is willing to package Ordinals and BRC-20 transaction data, both can survive on the Bitcoin network. However, the user experience would noticeably degrade (processing delays for BRC-20 transactions would increase). This also highlights the potential and opportunities for Bitcoin Layer 2 solutions.

If utopian slogans like “USD substitutes” or “Code is Law” continue to be disproven over time, what is the true purpose of the existence of Bitcoin and blockchain? What problems can it truly solve?

Recently, radical remarks about BRC-20 made by Luke Dashjr, an expert in the Bitcoin community, have triggered countless discussions. Luke believes that BRC-20 and the Inscription protocol bypass the Bitcoin block data size limit and force a large amount of “junk data’’ into the block. This approach will bring unnecessary burden on the nodes because it will increase the node’s expenditure on network speed, bandwidth and storage capacity. If this situation continues for a long time, it will keep reducing the degree of decentralization of the Bitcoin network and eventually disintegrate the fine traditions on which this “most decentralized blockchain ecosystem” relies.

Luke’s concerns are not unfounded. On February 1 of this year, the Bitcoin network witnessed its “largest block in history,” reaching a size of 3.96MB solely because the block contained an NFT called Taproot Wizards. Luke Dashjr and others predicted that such occurrences would lead to consistently larger Bitcoin block sizes, subsequently raising the hardware requirements for full nodes, which is contrary to the essence of decentralization - lowering the operating costs of user nodes. If future Bitcoins resemble Solana and Sui, where people can only run nodes in third-party data centers, it could be a tragedy for the Bitcoin community and the entire Web3.

Apart from increasing node bandwidth/storage costs and weakening decentralization, large blocks themselves can impact security. Larger blocks transfer more slowly in the network, leading to lower data consistency among nodes, higher orphan block rates, and increased ledger fork rates. The Conflux team and the Ethereum Foundation have emphasized these points in the past. Ethereum has been evaluating the impact of larger block sizes on security after the implementation of EIP-4844, as this situation inevitably has a “domino effect.”

Putting aside the negative impacts of BRC-20 and Ordinals on the fundamental security and decentralization of the Bitcoin network, the practice of nesting derivative assets within Bitcoin UTXO poses new risks. Essentially, it shifts the security issues that these derivative assets need to address directly onto the Bitcoin network. If the total value of these derivatives exceeds the assets/hashpower value required to secure the Bitcoin network, there is a risk of becoming “top-heavy,” with the upper layer being disproportionately heavier. This risk has become increasingly evident in POS Ethereum. Previously, tech figure “WhalePanda” expressed concerns about this issue in an interview.

Interestingly, despite expressing a negative stance toward BRC-20 and various inscriptions in some of his statements, Luke, when others suggested that Bitcoin Layer2 could be a new home for BRC-20 to avoid burdening the Bitcoin mainnet if the new version of the node client code is released and widely adopted, acknowledged this viewpoint. He did not categorically reject BRC-20 from an “ideological” perspective. Later, Luke explicitly stated that it’s not necessary to eliminate all inscriptions to bring benefits to the Bitcoin network.

Ultimately, Luke’s discontent seems to stem from the risks posed by the data inflation caused by various derivative products to the Bitcoin mainnet, rather than a desire to completely eliminate these derivatives. It is more about expelling “uninvited guests” like Ordinals to facilities outside the Bitcoin mainnet. This, in turn, presents an opportunity for Bitcoin Layer2. However, Luke’s radical approach has sparked controversy, not only involving disputes over the discourse authority within the Bitcoin ecosystem but also reflecting the fundamental differences in the product design philosophies between BTC and ETH. Many years ago, Vitalik disagreed with Luke and others on a similar matter, indirectly leading to his determination to create his own blockchain.

In the following passage, we will provide a technical analysis of the Ordinals protocol and Luke’s solution, and briefly outline the issues faced by “Satoshi Nakamoto maximalists” represented by Luke and the “speculators” represented by BRC-20 players. If Web3 is not as grand and beautiful as some claim, what is its true value?

Analyzing the Principles of the Ordinals Protocol

From a technical standpoint, the Ordinals protocol is a system that assigns a sequence number to satoshis (SATS, the smallest unit of Bitcoin) or, in other words, a derivative protocol that uses Bitcoin UTXO as a storage medium. Ordinals assign a unique sequence number to each satoshi, along with additional data (text, images, code, etc.), turning each satoshi into a unique NFT through a process called “inscribe.”

On the basis of Ordinals, BRC-20 introduces a method for issuing fungible tokens similar to ERC-20. However, the BTC script is not Turing complete and cannot implement a complex smart contract system like Ethereum. Taking the simplest transfer function as an example, derived assets based on the Ordinals protocol need to include the following content in the script:

This is a purely text-based interaction, and the Bitcoin network does not perform any computation or state settlement on the transaction content of BRC-20. The messages users see, such as successful BRC-20 transfers, are the final results obtained by nodes that endorse the Ordinals protocol after parsing and calculating the original script on the BTC chain.

If you have only 100 ORDI but specify the quantity as 10,000 during the transfer, you can still broadcast this transaction to the Bitcoin network. However, related nodes and explorers will not interpret it as a valid transfer.

In essence, Ordinals treats the Bitcoin network as a perpetual and immutable network disk, where only metadata, operation declarations, etc., are inscribed on the chain. However, all computational operations and state settlements are located in the servers of off-chain data indexing websites. This approach is almost identical to the EverPay project in the Arweave ecosystem.

In summary, Ordinals faces the following issues:

1. There is no state computing layer unifying consensus. The data interpreted by different wallets, browsers, etc. are not necessarily the same. It has happened many times before that user assets have different display results on different wallets.
2. Rely on centralized Indexer infrastructure. According to blockchain standards, this kind of application does not have strict requirements for security and is unreliable.
3. The usage scenario is limited. A series of complex DeFi activities in Ethereum cannot be completed based on the simple Ordinals protocol. Even current Ordinals transactions can only be completed through pending orders instead of the popular AMM. Therefore, products like Ordinals seem to be better implemented on Ethereum.

1. Network Pollution: The operational form of Ordinals on satoshis, resembling thousands of users performing transactions worth only $0.1 but paying $10 in transaction fees in a short period, is seen as similar to dust attacks by BTC purists. In the eyes of these users or developers, BTC is primarily used for storing value and transferring funds, and Ordinals activities severely disrupt normal network operations.

2. Increased User Usage Costs: Various inscriptions raise transaction fees on the Bitcoin mainnet, impacting other users. Additionally, the introduction of new infrastructure by BRC-20 and Ordinals requires users to understand and use new wallets, tools, etc.

Luke’s solution

Facing the issues with BRC-20 and Ordinals, Luke did not directly modify the consensus layer. Instead, he modified the Spam Filter (policy) module, enabling nodes to reject Ordinals transactions upon receiving P2P broadcast messages. In the policy, there are several ‘isStandard()’ series functions to check various aspects of transactions for compliance with standards. If they do not comply, the transaction received by nodes will be quickly discarded.

In other words, Ordinals can eventually be added to the chain, but most nodes will not include such data in their transaction pools. This will extend the delay in Ordinals data reaching mining pools willing to include it in blocks. However, if a mining pool broadcasts a block containing BRC-20 transactions, nodes will still accept it.

source:https://twitter.com/BenWAGMI/status/1732423859092247013

Luke has already submitted the modifications to the policy in the Bitcoin Knots client. In the Bitcoin Core client, he also intends to include the same submission. In the ‘policy.cpp’ file, he added a parameter named ‘g_script_size_policy_limit’, which restricts script size at multiple locations.

In the previous client, there was no limit on the script size of Pay-to-Taproot (that is, the transaction type used by Ordinals), which was finally added here.

Among them, the default value of ‘g_script_size_policy_limit’ is 1650 Bytes, which will limit many scripts used in Ordinals. The following figure shows the size of an NFT-related script:

However, since this parameter is only used for the Spam Filter module and not the consensus module, the node can modify the size of this parameter by itself to receive transactions with larger scripts. Although these transactions do not meet the expectations of Core developers, they can still be accepted by the Bitcoin consensus protocol. In other words, as long as there is a mining pool willing to package the transaction data related to Ordinals, Ordinals can still survive on the Bitcoin network, but the UX for the relevant users will be worse than it is now (the response delay will be longer than it is now).

This method cannot completely eliminate Ordinals’ on-chain activities and will not introduce any hard forks. Although there will definitely be nodes that do not comply with the new Policy, the number of Ordinals activities can be reduced as long as there are nodes that comply after the update, since there was no such Policy before.

Luke’s expectation is that the majority of nodes will comply with the policy he proposed. This update is generally flexible. As long as there is a mining pool willing to package BRC-20 and Ordinals data, the latter two can still continue on the Bitcoin mainnet, albeit with a poor user experience. However, as long as Bitcoin Layer2 quickly launches, BRC-20 and Ordinals can thrive on Layer2 as well.

Hidden Blockchain Belief Crisis in Luke Dashjr’s Actions

So how to evaluate Luke Dashjr’s behavior? Is this really just a battle between “big blocks and small blocks”? Admittedly, if you look at all this from a technical and product perspective, it seems that Luke is just defending the long-standing minimalist philosophy and decentralization concept of the Bitcoin community. This conservative approach, which is completely different from Ethereum, has always been “An indispensable part of the blockchain world.

Some people also believe that Bitcoin itself is a huge experimental field for community governance, and Luke Dashjr only represents one of the forces. Bitcoin does not belong to one person, but is a multi-party game among miners, exchanges, developers, and users. The resulting hybrid product, no matter how Luke targets BRC-20, those dazzling inscriptions will find a suitable home within the Bitcoin ecosystem.

However, this article will not discuss the above two points. It intends to introduce issues that most people are not aware of:

If we examine the recent “Luke Dashjr’’ incident from an ideological perspective, it is not difficult to abstract it into a conflict between the “technical faction” and the “trading faction”. The previous war of words between Blast and Polygon zkEVM has already divided the two major groups. The conflicts between the factions are undoubtedly obvious, and Luke Dashjr further intensified the differences between the two, making people think about the “ownership” of Bitcoin and even the blockchain itself: Who can represent the Bitcoin ecosystem? Are they the OG contributors who claim to be the successors of Satoshi Nakamoto, or are they the speculators who enjoy speculating on currency transactions all day long?

If you look at it from the perspective of Luke and other OGs in the Bitcoin community, most BRC-20 enthusiasts are profit-seeking people who “turn a deaf ear to what’s going on outside the window and only focus on making money on the chain.” The interests of those users do not seem to be worth protecting. However, expelling BRC-20 from the Bitcoin network will be beneficial to the long-term interests of the BTC ecosystem, which is more “important” than satisfying the greed of speculators.

However, if we consider those who completely negate the value of BRC-20 and Ordinals, ignoring the interests of the “mainstream users of Web3,” they also appear selfish and thoughtless. If they persist in thinking that things that are “noble” and “correct” are impractical and hypocritical in themselves, then despising those “vulgar people” from a commanding position might just be like “The pot calling the kettle black”.

Ultimately, the financial market itself does not contain morality. It’s challenging to say whose behavior is more ethical and whose is not. Everything relies on mechanisms and rules to determine (as Soros said). The permissionless advocated by blockchain does not explicitly deny the existence of “air coins” like BRC-20. So, is it an act against the spirit of permissionless to target those inscriptions while waving the flag of the “Bitcoin purist”? If we think from this perspective, is Luke’s behavior really worthy of approval? Have those who support or oppose him reflected on this behavior?

Although countless people have depicted the grand visions that blockchain can bring with fervent enthusiasm, and they have extolled the so-called “Satoshi Nakamoto spirit” and “Trustless maximalism”, why hasn’t the vision of a “USD substitute” or the “next-generation Internet” arrived yet? Instead, we have seen a series of things that cannot be elevated to the level of high culture. Is this due to the poor UX and usage barriers of decentralized networks?

For something that is unfriendly to users and almost always unable to compete with Web2 in terms of user experience, what unique scenarios can it bring that Web2 doesn’t have? If it struggles to gain product advantages that Web2 lacks, can the so-called “Trustless” slogan really be accepted by the majority of people? Talking about those distant and seemingly unattainable ideals of “Trustless without the need for human governance” and “mass adoption” while neglecting the wool party, which represents the mainstream user profile, is this attitude itself a kind of hypocritical selfishness akin to Kong Yiji depicted by Luxun?

Perhaps the technocrats indeed have the right to mock BRC-20 players for their pursuit of profit, and one might argue that blockchain should not degrade into a “casino on the chain.” However, we should seriously reflect on the meaning of blockchain. If it is not as grand and respectable as Satoshi Nakamoto claimed, and many utopian ideas it advocates are constantly being debunked over time, then behind the so-called “code is law,” “Mass Adoption,” and even “Web3.0,” is there a significant faith crisis comparable to Nietzsche’s “Death of God”? If the so-called “Nakamotoism” is just a castle in the air similar to Marxism, should we reconsider what problems Web3 really can solve?

source:https://zhuanlan.zhihu.com/p/49059750

Perhaps we cannot provide direct answers to the above questions, but undoubtedly, the blockchain’s inherent ability to fork and its attributes of a diverse community will ultimately give people a higher degree of freedom of choice than in real-world politics. In this imperfect world of Web3, there won’t be just one version of the chain. Compared to sovereign nations in the physical world, a blockchain that can create diverse “nations” according to the wishes of different communities will eventually become a supplement and optimization to real-world democratic governance, rather than simply serving as unrealistic and dull slogans such as “USD substitute” or “Gravedigger of Web2.” Many times, addressing immediate real-world problems is far more important than indulging in some beautiful illusions that “exist forever in tomorrow.”

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