Weekly Waffle Feb 5: Fallen Idols

Most Bitcoin maxis “believe” in the OG blockchain network as they believe in a religious icon.?They call Bitcoin the holy grail of decentralized money, see the dichotomy between Bitcoin and fiat as a holy struggle of good vs evil, and worship Bitcoin as a guarantor of personal freedom that must prevail over government control and totalitarianism.?

Most of them don’t have a clue about blockchain technology and couldn’t tell a Merkle tree from a maple tree.?

They were shocked to the core this week.?

On February 1, the unimaginable (to them) happened. The Bitcoin network mined its largest block to date, a 4 MB monster containing … what blasphemy! … an NFT.?

There are many shocks here: the technically uninitiated were shocked to find out there not every Bitcoin block is created equal; many thought that Bitcoin was pure, unadulterated, and money-like, where every Bitcoin was created equal and fungible like a dollar bill.?

The second camp exists around a rather inane technical discussion of block size: the “Small is Beautiful” camp of small-block supporters felt?attacked?by the big bolder.?

The bolder was mined by the Luxor mining pool. It contains 63 transactions, one of them what is called an “Inscription” by something called “Ordinals”, a 3.94 MB jpg of a wizard called a ‘Bitcoin NFT’. Fans of the fiat usurper were aghast that Bored Ape Yacht Club-style nonsense was soiling the original network.?

By some account, the NFT mint is part of a race to exploit the hated Taproot update of Bitcoin. Taproot allows multiple participants in a transaction to create a single combined digital signature, making transactions more efficient and private. After Ordinals went live, programmers soon discovered that using Segregated Witness (Segwit) in combination with Taproot allows for a full block to be 4 MB in size, bypassing the 1 MB limit encoded in the Bitcoin blockchain.?

Luke Dashjr, who called Ordinals an attack on Bitcoin from its inception, quickly created a node patch to filter or censor Ordinal “spam.” “NOT a protocol change or soft fork/hard fork, just a harmless (if it works right) spam filter,” he wrote.?

Bitcoin now has a spam filter.

All hell broke loose on the bitcoin Reddit feed. Hector Lopes wrote “Yeah … This is rather dangerous. We’re one bad actor or one automated miner away from cementing vile and disgusting things to a permanent, globally distributed, uncensorable database. It will be interesting to see if there is a free market solution to this.”

For a tech geek like myself, the whole affair made for entertaining weekend reading. For Michael Saylor and his kind, it was a wake-up call of gigantonormous proportions.?

I have no solution to this conundrum because objectively, it never was a conundrum. From a technical standpoint, Bitcoin was always just that: a blockchain network, a blockchain that can be programmed and changed, a blockchain that evolves like any other.?

We now have DeFi on Bitcoin, NFTs, and all without a fork. The issue is so monumental that even Bloomberg paid attention.

It is most certainly a momentous moment, but it has been coming for a long time. Developers have always been looking for ways to make Bitcoin “useful”. Those efforts ballooned after the creation of Ethereum.?

Truth be told, it isn't that much of an attack. Ordinals are a numerical labeling scheme for individual satoshis, not Bitcoin blocks.. Using these unique labels as identifiers, arbitrary data like still images can be “attached” to satoshis. "Just as they do for any other transaction to be added onto bitcoin’s blockchain, users creating these inscriptions must pay a fee commensurate to the size of the asset they’re storing. The average size of a bitcoin block has risen past 2 megabytes in the wake of ordinal inscriptions becoming more widely used:" Since they do not write to the core, fungibility is assured.

These ordinal labels are?externally projected onto the satoshis, and not directly on bitcoin’s base layer.?This is an important distinction; if they were an alteration to Bitcoin Core and directly visible with any regular full node, bitcoin’s fungibility may be inexorably damaged. Transacting bitcoin would be made exceedingly more difficult as different satoshis would have different values, and the interchangeability, one BTC equalling one BTC, would be threatened. Thankfully, this is not the case; Bitcoin Core is not aware of inscriptions.?Ordinal labeling and inscriptions don’t damage bitcoin’s fungibility because it’s an opt-in convention, proponents say. You don’t have to observe them if you don’t want to. You can transact bitcoin regularly without witnessing or even acknowledging ordinal numbers on individual sats—let’s explain why...

The purists have called Bitcoin “digital gold” and perhaps the “reserve currency” of the world. This discussion may now be put to rest. They were wrong. They idolized Bitcoin for something which it is not. Post-Taproot Bitcoin can host anything, even … and here comes the nuclear warhead … malicious content.?

Bitcoin as a financial God has been dethroned this February 1, 2023. Let’s see what will happen to the fallen idol now.?