Original author: flowie, ChainCathcer
first level title
The Bitcoin network fluctuated violently, and multiple data indicators hit record highs
While BRC-20 brought new narratives, it also put almost unprecedented pressure on the Bitcoin network.
Yesterday, after the daily transaction volume on the Bitcoin chain reached a record 605,000 on May 1, the single-day transaction volume on the chain reached a new high of 663,000. At present, on the Bitcoin network, the transaction volume related to the BRC-20 protocol, including deployment/minting/transfer, has exceeded the transaction volume of the non-Ordinals protocol. On May 7, the transaction volume of the BRC-20 agreement once accounted for more than 65%.
The extraordinary transaction volume caused unprecedented congestion on the Bitcoin network, causing panic in the community. According to the data from the Bitcoin browser, there are currently 309,732 unconfirmed transactions on the Bitcoin network. Yesterday, the Bitcoin network was frequently stuck, and twice there were no blocks produced for more than 1 hour. Binance also suspended Bitcoin withdrawals twice due to the congestion of the Bitcoin network, and was forced to integrate the Lightning Network to ease the pressure.
At the same time of congestion, Bitcoin network fees and block rewards have also soared. Bitcoin network transaction fees have risen over the past 24 hours to an average of $19.2 per transfer. According to @BitcoinEmber, 2 months ago, the average BTC reward for each block output was only about 0.19 BTC handling fee, and now it has soared to 4.85 BTC handling fee, an increase of 25 times.
The high fees and block rewards have also allowed miners to create amazing profits, with a profit of more than 36 million US dollars in just 7 days. What's even crazier is that yesterday, in order to compete for the first transaction, the block rewards of three Bitcoin blocks greatly exceeded transaction fees. According to 21 Shares researcher Tom Wan's historical analysis, the probability of this happening is less than 0.005 % . As a result, the Bitcoin transaction fee rate has hit the highest record in the past 6 years. Since July 2021, the transaction fee rate on the Bitcoin network has remained at around 1-2%, but on May 7 this indicator soared to 31%.
BRC-20 is causing quite a bit of controversy due to the volatility it causes to the Bitcoin network.
Recommended reading:《first level title
Controversies and risks caused: decentralization, lack of fairness and security
Many people believe that Satoshi Nakamoto's original intention was to "make a de-sovereignized currency", and creating DeFi, NFT, and tokens on Bitcoin is deviating from the original intention. In fact, since the beginning of this year, the new narrative around the Bitcoin ecology has been dissatisfied and criticized by Bitcoin purists. With the outbreak of the BRC-20 narrative, many encrypted kols have become more specific about their accusations.
First of all, the BRC-20 narrative is accused of violating the core of the encrypted world-decentralization. Bitcoin is currently the most decentralized, but the mechanism established by BRC-20 is encouraging centralization. The bitcoin manual AnalystChe KohlerIt is argued that BRC-20 tokens introduce unnecessary complexity to managing digital assets, for example, requiring additional steps for storage and transactions. Specifically, the BRC-20 minting inscription requires the installation of a separate Unisat wallet. In addition, there is no automatic market maker on the Bitcoin chain. For the tokens that have been minted, they must either be traded privately or in a specialized secondary market such as UniSat’s Marketplace. market transactions. This provides CEX with more asset management opportunities and fee income, and brings fraud and attack risks to users.
The encryption security platform SlowMist also reminds users that the related BRC-20 token casting platform has relatively weak defense measures, and the code is easily tampered with by malicious attacks, and the assets of the user Mint are easily stolen.
In addition to centralization, BRC-20 tokens have also been accused of deviating from mainstream narratives such as fairness and low cost. Encryption researcher Haotian | CryptoInsight (@tme l0 211 ) believes that there is a logical paradox between the first-come-first-served fomo mechanism of inscriptions and the mechanism of miners’ priority packaging according to miners’ fees, which means that mint is not necessarily fair. That is to say, although they can both mint at the same time, if the miner's fee is not in place for ordinary users, they will definitely be squeezed out with higher miner's fees than big users. In the end, it will also lead to one-click trading in the secondary market, which may be cheaper than the hard work of mint.
In addition, Haotian also reminded users that there are some cognitive pitfalls in the Unisat-like agent service, coin withdrawal and recharge wallet specification, and batch mint signature on-chain mechanism. Successful transaction of inscriptions on the chain requires deducting commissions from three parties, platform network data delays, and estimated error costs caused by various stalls, so the miner's fee is 2-3 times higher than expected.
And many technical schools also pointed out some risks in the security mechanism. First of all, BRC-20 tokens have little to do with Bitcoin assets and do not have the security mechanism of the Bitcoin network. Bitcoin ecosystem contributor Ajian mentioned that issuing assets on the Bitcoin chain can only rely on "off-chain protocols", and Omni, Counterparty, RGB, Taro, and Ordinals are no exceptions. And no matter what data is written to the chain, it is impossible to transform it into a security mechanism for these assets. If you issue an asset, no matter what data you write to the chain, it is impossible to require the Bitcoin network to control the inflation of this asset. In other words, BRC-20 tokens are attracting many investors with the help of Bitcoin, but they do not have the security and decentralization of Bitcoin.
In addition, block rewards exceeding transaction fees will also trigger MEV strategic attacks called time-bandit attacks. crypto analyst@0x ShinChannnIt is analyzed that when the potential reward of MEV exceeds the block reward, it becomes economically reasonable for miners to destabilize the consensus. Specifically, a miner/group of miners attempts to rewrite the blockchain history by secretly mining an alternate version of the chain, which includes transactions with higher fees. When an attacker's alternative chain becomes longer than the current main chain, they can publish it to the network, effectively causing a reorganization of the blockchain. Blocks that previously belonged to the main chain but are now superseded by the attacker's chain become orphan blocks. Ultimately, Time-bandit attacks broke consensus and produced orphaned blocks, negatively impacting the overall security and reliability of the network.
epilogue
epilogue
The current benefit myth of BRC-20 tokens may cause many users to have a great deviation in the perception of the real market and risks under FOMO. Among the currently popular BTC-20 tokens, only ORDI, VMPX, NALS, and DRAC have a 24-hour trading volume exceeding one million dollars. According to the analysis of active data on the chain, many analysts believe that the number of BTC-20 active players may be around 10,000, and among them, there may be very few people who gain huge assets.
In addition, those who missed the BTC-20 outlet may be able to focus on more narratives about the performance of the Bitcoin network. Although BRC-20 tokens continue to be controversial, it also exposes some problems of the Bitcoin network to a certain extent. At present, the lightning network and RGB protocol surrounding Bitcoin performance may be ushering in a second spring.
