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The launch of BRC-20 tokens and Ordinals NFTs on Bitcoin has transformed the No. 1 blockchain overnight into a clunkier version of Ethereum.
The core developers and miners who signed off on the network’s Taproot upgrade in November 2021 never envisaged this would be the result. Bitcoin now suffers from many of the same problems that have bedeviled Ethereum for years, including scammy memecoins and shitcoins, NFTs of monkey pictures hogging block space and skyrocketing transaction fees.
The network is even having to deal with incidences of miner extractable value (MEV), whereby miners profit by reordering pending transactions.
“I’m kind of upset at myself for not realizing,” says Quantum Economics founder Mati Greenspan, a Bitcoiner since 2013.
“It took these guys starting to hype up JPEGs on Bitcoin until I was like: ‘Oh shit, what did we just do?’” He laughs ruefully.
Some Bitcoiners on Bitcointalk and Twitter refer to the impact of Ordinal NFTs and BRC-20 tokens as an attack on Bitcoin, an exploit of Taproot, or simply as spam clogging up the network.
It’s sparked a fierce debate over whether unexpected outcomes are precisely the sort of outcomes you should expect from a permissionless protocol, or whether something needs to be done to get rid of them.
Why are Bitcoin fees so high?
BRC-20 tokens were only launched by anonymous developer Domo back on March 8. They use Ordinal inscriptions of JavaScript Object Notation (JSON) data to deploy token contracts, mint tokens and transfer tokens. Some argue this is horribly inefficient and costs four times as much in transaction fees as if they just used binary.
Alongside the inefficiencies, there’s also a gold rush for minting memecoins. Someone will deploy a contract with a ticker for a new token and a max supply, and then traders rush in to mint as many as possible in the series, on a “first come, first served” basis, at whatever fee rate gets them priority. These tokens have already surpassed $1 billion in market cap — even though Domo argues they will be worthless.
But they are here to stay — at least in the short term — with major wallets already adding support for BRC-20 tokens. And newer developments, such as the launch of a Uniswap fork that amassed $500,000 in trading of “smart BRC-20” tokens (SBRC-20) in just a few days, suggest that the building of a permissionless new ecosystem on Bitcoin is set to continue.
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