Understanding Inscriptions in Bitcoin
Inscriptions, including ordinals, stamps, and runes, have become a controversial topic within the Bitcoin community. Essentially, inscriptions are data, such as .jpeg files, embedded within Bitcoin transactions. This practice is often linked to ordinals, or “unique satoshis,” tracked using a methodology known as ordinal theory. This theory employs virtual numbering to trace satoshis across transactions, creating a map of ownership that is maintained by software external to the Bitcoin protocol, known as the ordinal explorer.
The Technical Mechanics Behind Inscriptions
Creating a Bitcoin transaction involves generating a “utxo” (unspent transaction output), which ties a specific quantity of Bitcoin to a public key through a script. These scripts use a simple execution language with limited instructions, known as opcodes. Key opcodes include OP_CHECKSIG, which verifies transaction signatures, and a combination of OP_FALSE, OP_IF, and OP_PUSH used to embed data in P2TR and P2WPKH utxos. This ensures the data is preserved in the blockchain without being actively executed during the transaction.
The Impact on Bitcoin’s Decentralization
Inscriptions have inadvertently turned Bitcoin transactions into something akin to casino tokens, attracting speculative behavior that distorts financial incentives. Miners and pools, enticed by high transaction fees, may prioritize these inscriptions, undermining the argument that transaction fees alone ensure network security. The influx of tens of millions of inscriptions has led to blockchain bloat, with full nodes required to store this data, posing risks if the number of full nodes decreases significantly.
The Problem with Stamps Protocol
While ordinals can be pruned, stamps present a greater challenge. Stamps embed data as public keys within multiple multisig utxos, dramatically increasing the total number of utxos and complicating node setup. This has led to longer node synchronization times, as evidenced by recent tests showing a significant increase in setup duration, even with upgraded hardware.
Advocating for Proper Data Management
There is a growing consensus that arbitrary data should not be embedded in the blockchain. Inscriptions should ideally use OP_RETURN, an opcode designed to insert small amounts of data (up to 83 bytes) without harming decentralization. OP_RETURN was introduced to mitigate the negative impact of embedding arbitrary data, allowing lightweight nodes to prune this data completely.
The Call to Action
The current state of inscriptions requires immediate attention to prevent further centralization of the Bitcoin network. Users and miners are encouraged to adopt clients like BitcoinKnots, which offer stricter filters and bug fixes, and to support mining pools like Ocean Mining, which minimize inscriptions in mined blocks.
Conclusion
To preserve the decentralized nature of Bitcoin, it is crucial to address the misuse of inscriptions. Proper data management through OP_RETURN and the proactive use of optimized clients and responsible mining practices can help maintain the integrity and efficiency of the Bitcoin network.
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