Bitcoin Ordinals, a technology that allows the addition of text, images, and code on the smallest unit of Bitcoin, known as a satoshi, has sparked an ongoing discussion within the Bitcoin community. Since its introduction in January 2023, opponents of Bitcoin Ordinals have raised concerns about its perceived drawbacks, including rising transaction costs and slower speeds. Conversely, supporters argue that the technology presents new opportunities, enhances decentralization, and protects freedom of speech.
As the number of Bitcoin Ordinals inscriptions doubled from 2.5 million to over 5 million within just eight days, the controversy surrounding the technology continues to grow. One of the main arguments raised by Bitcoin purists is the undeniable impact of Ordinals on Bitcoin’s network capacity and scalability, as they believe Bitcoin should strictly adhere to Satoshi Nakamoto’s original peer-to-peer payment mission.
The increased activity of BRC-20 tokens, which utilize Ordinals inscriptions, has led to a significant surge in BTC transaction fees. The trading frenzy surrounding BRC-20 memecoins like Pepe (PEPE) has caused Bitcoin transaction costs to reach the highest levels since 2021. Moreover, the influx of BTC into minting new tokens settled via Ordinals inscriptions has resulted in substantial blockchain congestion. In fact, Binance temporarily suspended BTC withdrawals due to a backlog of 400,000 pending transactions congesting the mempool.
Critics, such as Enrico Rubboli, CEO of Bitcoin layer-2 sidechain Mintlayer, argue that the technology behind Ordinals is flawed and does not align with the core Bitcoin community’s principles. Rubboli further expresses concerns about potential regulatory scrutiny, as new BRC-20 tokens could be considered unregulated securities.
On the other side of the debate, Ordinals supporters highlight the technology’s ability to unlock new value on the Bitcoin blockchain. They believe that issues like higher transaction costs will diminish over time. Supporters like F2Pool’s chief marketing officer Li Qingfei argue that the network congestion caused by Ordinals should be temporary and that solutions, similar to the Lightning Network, will alleviate transaction costs and increase speeds.
Despite the disagreements, some community members embrace the transformation of Bitcoin into a more intricate technology, emphasizing the importance of freedom of speech and the uncensorable nature of Ordinals.
As the debate rages on, the Bitcoin community remains divided on the implications and merits of Bitcoin Ordinals, with both supporters and opposers raising their voices in an attempt to shape the future of the technology.