NFTs in the Bitcoin blockchain - Ordinal Theory

[philipma1957]

The discussion reminds me of the sustainability problem. On one extreme, if all moved to lightning there would be minimum incentive to mine. On the other extreme, if all moved on-chain, there would be minimum incentive to use due to the excessive cost. Obviously we'll find an equilibrium.

That could happen as result of people using Bitcoin to buy coffee

Forget coffees and teas. This could happen if millions joined the network and wanted to open just one lightning channel.

Well I look at this from a mining viewpoint. My power deal will always be good to earn profit.

As some say mining a btc costs 16k for me mining a coin costs 50% or 10.2k and the 50% is a constant.

Wether I mine any algo I pay 50% all the time.

So I look at mining from a different viewpoint then others.

Nfts and ordinals will boost fees which in turn means I earn more btc.

I realize higher fees may make btc investors not want to have the coin.

and lower fees will make miners stop mining the coin.

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[cryptosize]

The discussion reminds me of the sustainability problem. On one extreme, if all moved to lightning there would be minimum incentive to mine. On the other extreme, if all moved on-chain, there would be minimum incentive to use due to the excessive cost. Obviously we'll find an equilibrium.

Agreed. People should stop taking extreme positions.

Bitcoin is the perfect embodiment of a free market system (hashing difficulty adjustment).

On-chain for big transactions + off-chain for microtransactions = equilibrium achieved

[philipma1957]

The discussion reminds me of the sustainability problem. On one extreme, if all moved to lightning there would be minimum incentive to mine. On the other extreme, if all moved on-chain, there would be minimum incentive to use due to the excessive cost. Obviously we'll find an equilibrium.

Agreed. People should stop taking extreme positions.

Bitcoin is the perfect embodiment of a free market system (hashing difficulty adjustment).

On-chain for big transactions + off-chain for microtransactions = equilibrium achieved

If only it were this simple.

[BlackHatCoiner]

If you think the majority supports ordinals, why don't you create a poll on this and we'll see who's the majority?

Where did he state that the majority supports Ordinals, and since when is bitcointalk the gate to the majority?

[...]

It's roughly what's happening, I guess. Miners follow profit, but there is concern on whether short-term profit is greater than long-term, or if excessive fee rate is more desirable in the end. I can guess the miners don't care a lot about the long-term, but a mining expert can give us some better insight.

[mikeywith]

I am not sure myself how much volume we can handle with a combination of Lightning & on-chain at the current block size, but I heavily advocate for keeping it as low as possible for as long as possible. Ordinals goes completely against this by effectively reducing the block space we can effectively use for transactions.

This is one part of the issue here, we don't seem to have a perfect agreement on how blocks should be, you want them to be as empty as possible, while I might want them to be as full as possible, I don't know about you, but sure thing is I could be biased as someone who mines bitcoin for a business, but I am pretty sure I am not alone in this.

Keep in mind that I am on a "moderate level of greed" compared to many other miners, most miners I know hate LN because they think it takes away from the fees which they could have otherwise collected, I have to always defend things like LN in front of most miners and try my best to explain to them that despite taking away from them, it's all done for a greater purpose, and should LN becomes mainstream, blocks will be full again and they would be making even more money.

I also try to tell them that it's best for us as miners that more people actually "BUY" bitcoin and not just transact it,LN users have to buy Bitcoin to start with, so the more users mean more buyers which essentially leads to a greater value, more rewards for miners and more security for everyone else, so basically, the more users the better for everyone, which is why I don't like to dismiss the rights of anyone who wants to use the blockchain in the way they like, you want to build a layer-2 system to allow people to make small transactions? I won't go against it, you want to hold some NFTs on the blockchain? I won't go against it, anything that brings more users/value to the system is going to be good for bitcoin as a whole.

It's roughly what's happening, I guess. Miners follow profit, but there is concern on whether short-term profit is greater than long-term, or if excessive fee rate is more desirable in the end. I can guess the miners don't care a lot about the long-term, but a mining expert can give us some better insight.

I wouldn't call myself a miner expert, but I have been mining for nearly 7 years now, starting from a small mine at home, to now having a 2MW farm, having managed a few extremely large farms, spoke with folks who own even larger farms, pools' owners, even with mining gears manufacturers, I can tell you that Phil's concern is valid.

It's hard to tell whether we look at short or long-term profit, but I would assume it's something in between, Phill's power deal forces him to always think ahead of the other miners like myself, he gets 50% of whatever he mines using x power (which is limited), and he needs to buy the gears, so he would probably do some medium range maths to decide whether to invest the next 20k in SHA256 or in Scrpyt, the calculation he does now, is probably going to be different from the one he makes 10 months from now when BTC's halving would be 2 months away.

So if his 20k is going to ROI in 3 years with SHA256, he will just go with another algo, regardless of whether or not he thinks that BTC will stay there forever and Doge/LTC could die in 5 years.

I will be forced to follow the same logic that Phill's applies as we move further into more halvings, in fact, I face this dilemma every time I make a new purchase, I spend days with my partner trying to point that cash to the "perfect" algo, we both agree that BTC has more future chances of survival then LTC or Doge, but when it's 2 year ROI vs 8 months ROI for the same amount of power, you will seem to focus more on the short-term than not.

As the rewards shrink in value, the difference between mining BTC and other coins could be even greater than now, to the point where most miners would start looking at short-term as opposed to long-term, and there are only 2 things to stop money from going into those coins and to keep it flowing to secure BTC.

1- Increase rewards (you can't do that with the block rewards, can't play with the max supply) so it MUST come from fees.
2- BTC's fiat value has to grow a lot more than the other coins to offset the ROI difference.

No.2 is more difficult to happen since those coins have a much lower market cap than BTC and it's easier to increase their value than BTC, the good thing however, it's also a lot easier to bring their profitability down since their hashrate is a lot lower than on BTC when translated to value > hashrate.

[larry_vw_1955]

If BTC is worth 200k and fees are at 200$ it simply means that more people are actually using it,

maybe you're missing something change your phrase to "more people that are trying to use it" would make more sense. bitcoin can only do 7 transactions per second no matter what the transaction fees are...

there is no need to convince anyone at that point, you need to keep in mind that the 200$ is set by users not by miners, if enough folks pay 200$ fees will be 200$, if they think it is worth it, they will keep paying it, nobody could care less about how sad anyone else for not being able to use the blockchain to pay for their 20$ bill at walmart. If anything, higher fees simply mean people with more value are using the network, does not matter who and for what purpose.

well if bitcoin transaction fees ever go over about $5 i'll be using something else that has a more reasonable transaction fee. why pay through the nose when you don't have to?

[cryptosize]

The discussion reminds me of the sustainability problem. On one extreme, if all moved to lightning there would be minimum incentive to mine. On the other extreme, if all moved on-chain, there would be minimum incentive to use due to the excessive cost. Obviously we'll find an equilibrium.

Agreed. People should stop taking extreme positions.

Bitcoin is the perfect embodiment of a free market system (hashing difficulty adjustment).

On-chain for big transactions + off-chain for microtransactions = equilibrium achieved

If only it were this simple.

Free market is actually very simple, as long as people of power don't meddle with it.

[philipma1957]

If you think the majority supports ordinals, why don't you create a poll on this and we'll see who's the majority?

Where did he state that the majority supports Ordinals, and since when is bitcointalk the gate to the majority?

[...]

It's roughly what's happening, I guess. Miners follow profit, but there is concern on whether short-term profit is greater than long-term, or if excessive fee rate is more desirable in the end. I can guess the miners don't care a lot about the long-term, but a mining expert can give us some better insight.

I have been doing for 11 years. started with a mac pro and a single amd gpu.

I have 200kwatts used out of 275 kwatt max.
I have 2.3ph paid off sha miners
I have 45gh paid off Scrypt miners
I have 10gh paid off  gpus
I have some kda miners not much
I have some grin miners not much

my really good cant lose power is capped at 275 kwatts

so my expansion number need to take that into account
the no debt expansion is absolutely critical since I dont fear the bear no loans coming due.

Am i an expert no. but i do know what is good for me to do.

[mikeywith]

maybe you're missing something change your phrase to "more people that are trying to use it" would make more sense. bitcoin can only do 7 transactions per second no matter what the transaction fees are...

That number does not change with low fees either, so not sure what is the point you are trying to make, the only way for transactions to be so cheap is when blocks are not full.

well if bitcoin transaction fees ever go over about $5 i'll be using something else that has a more reasonable transaction fee. why pay through the nose when you don't have to?

Using and owning/buying are two different things, besides, the same thing will happen when fees go above $1 many people will stop transacting using BTC, same thing for when it hits $2  or any other number, but if it stays at $200 it simply means there are enough people willing to pay that much for a reason.

In reality, BTC is a final settlement protocol, it is like the settlement that happens between central banks ones every quarter of even yearly, final settlements are expensive and slow in nature, fees are low now because on the grand scheme of things nobody uses BTC for payments now, but eventually, it will be a lot more expensive regardless of who are the people using it, but again, BTC does not need you to transact it, just by holding it gives it value, it is like saying Gold is expensive to move, and thus it is useless, ya it is hard to take a bag of Gold to spend it at your local store, easier to use your credit card, that does not take away from the fact that Gold is superior to fiat.

I would not count on BTC on-chain to be usable by average people for daily small payments, fees above 5$ is easily doable without NFTs, it is only a matter of time.

[larry_vw_1955]

my really good cant lose power is capped at 275 kwatts

must be nice getting your power for free. i guess that's about what it will have to be someday to able to make a profit from mining.  

Am i an expert no. but i do know what is good for me to do.

how are you getting your power for free though.  all your machines would not be profitable if you had to pay normal rates for it

[Wind_FURY]

We need every bit of value we can extract, you will have very hard time finding a miner who would mind getting paid more be it the result of spam or NFTs.

That doesn't mean we should indulge miners.

Who's "we"?

I'm sorry that I'm responding without reading the last page with devotion, but it's just frustrating observing established experts going against the Bitcoin spirit without noticing. There is no "we" in transactions. I don't expect the majority of you to approve my transaction from an ethic standard when I make it. Nor do I expect you to feel I have circumvented your space. I don't even expect you'll attend to talk about it. The only thing I expect is that it will be done in 10 minutes.

You know you can't have both the most freedom preserving currency in the world and simultaneously dictate miners how to do their business or which transactions pass the collective approval.

Whether we like Ordinals, or not, there's nothing the community can do, except debate and express their own opinions. In theory there's something we can do = another soft fork, but practically speaking I believe, after Taproot - which brought us a development of using the blobspace for an unintended purpose, there will he no soft forks for a longer amount of time because of a "distrust that it might bring something unintended" again.

[pooya87]

~

The arguments you are making about hashrate, price and the future are not new. They are nearly as old as bitcoin! And yet we have seen both price and hashrate go up consistently, we've even seen hashrate go up when bitcoin has a bear year.
The fact is that things that affect hashrate are a lot more than just price and they are complicated enough to prevent speculation like this. Even at the current price the profitability of mining bitcoin varies massively from a tiny amount for those with high electricity price to those with basically free electricity (eg $0.0014/KWH). That alone renders all your speculation about future profitability wrong.

To me, from what I see and based on my own judgment, the majority of BTC users want to see it grow in value more than anything else,

Check out comments from 2017 and you'll see that everyone wants to see their transactions processed within reasonable time at a reasonable cost. Nobody wants to send a transaction at a high cost and still see it get stuck for days not confirming.
That's what spam attacks do to bitcoin. They can even prevent the growth and even cause price to dump.

[garlonicon]

well if bitcoin transaction fees ever go over about $5 i'll be using something else that has a more reasonable transaction fee. why pay through the nose when you don't have to?

Note that even if you count everything in dollars, then still, the price of your altcoins can change, so you will see very low on-chain fees, but you will pay a hidden fee, because your coins could be worth less. And even if you will pay with fiat directly, then those coins can be inflated ad infinitum, so paying a high on-chain fee can be a better deal than you think, if you count everything, including all hidden costs.

maybe you're missing something change your phrase to "more people that are trying to use it" would make more sense. bitcoin can only do 7 transactions per second no matter what the transaction fees are...

Bigger blocks does not necessarily mean cheaper transactions, if you want to count them in dollars, including all costs. As an experiment, you can compare for example BTC (where mempool congestion can happen) with BCH (where hard-fork can always increase the maximum block size, so you can pay one satoshi per byte, and get it confirmed). Then, you can look at on-chain fees, it will turn out that BTC is more expensive to transact on-chain. And then, you can compare the price of both coins in dollars. You will see that the price change is more costly than transaction fees, and it is very unlikely to find a case, where you pick some starting date and amount, you pick some frequency of transactions (for example, one transaction per day), and in some long period of time you will end up with a higher amount in dollars for BCH than BTC.

And the same is true for many altcoins: the cost of converting your BTC into other coins once, and using those other coins with cheaper fees, can be higher than using BTC directly.

[stompix]

If you think the majority supports ordinals, why don't you create a poll on this and we'll see who's the majority?    
I'd gladly fork this crap off immediately but unfortunately I'm not a core dev so all I can do is urge people to act responsibly (rarely works).  

Why don't you do it?
Cause you're the one bitching around for a change!
It's you who wants to change something based on the will of "the people", not me!

~

Where did he state that the majority supports Ordinals, and since when is bitcointalk the gate to the majority?

Eh, just as how they think they are the voice of the majority they also must invent adversaries to blame them for their failures, I got used to this.

Bigger blocks does not necessarily mean cheaper transactions, if you want to count them in dollars, including all costs. As an experiment, you can compare for example BTC (where mempool congestion can happen) with BCH (where hard-fork can always increase the maximum block size, so you can pay one satoshi per byte, and get it confirmed). Then, you can look at on-chain fees, it will turn out that BTC is more expensive to transact on-chain. And then, you can compare the price of both coins in dollars. You will see that the price change is more costly than transaction fees, and it is very unlikely to find a case, where you pick some starting date and amount, you pick some frequency of transactions (for example, one transaction per day), and in some long period of time you will end up with a higher amount in dollars for BCH than BTC.

Sorry but almost nobody cares about anything else than the price per tx in $, the same the "we" whoever they are don't care even about the sat/b fee, all they know is that to send money they need to pay x $ and it's a pretty normal thing, just throwing random numbers here do you think a 500 million RON house is expensive or that paying 1 million Vietnamese dongs for a burger is cheap? Without checking how much that is in your local currency of course you won't know it! All those users who bitch about fees want to pay $0.00025 as the are fees now over the meme coin while the cheapest one in BTC in last block is $0.24, nothing else.

And if we bring security and stuff in the equation then we're back to what Phil said and which probably too many ignored:

in 2056 if fees do not grow and efficiency doubles we can have 640 eh hashrate mining .
the value of the vault and guards protecting the 40 trillion cap will be the same 6-13 billion that protects the network now.

So, to make things clear and show a better picture, you will have a network worth the GDP of EU, USA and China combined, protected by gear worth the budget of Charlotte. Yeah, the price keeps the reward up by negating the halving, but you have more and more value pilling up with the same protection, and hash rate alone as in exahash or petahash doesn't mean a thing when you don't factor in how much it cost!
Because if now at 300exh it cost 5 billion to attack it then obviously at 150Th/s in 2013 you could attack it for $2500? Oh wait!

[serveria.com]

If you think the majority supports ordinals, why don't you create a poll on this and we'll see who's the majority?    
I'd gladly fork this crap off immediately but unfortunately I'm not a core dev so all I can do is urge people to act responsibly (rarely works).  

Why don't you do it?
Cause you're the one bitching around for a change!
It's you who wants to change something based on the will of "the people", not me!

Change? I don't want any change. Please bring my empty mempool back!    We somehow managed to survive 14 years in Bitcoin without ordinals and now it's me wanting change? Hahaha...

I did start a poll thread, please drop by and leave your vote! 

[mikeywith]

Change? I don't want any change. Please bring my empty mempool back! 

Stompix is correct, YOU want the change, not him, Ordinals are real, they are already in the blockchain, and no change is required to keep them there, on the other hand, a change is needed to ban them, so it's not like we are trying to convince you to let Ordinals in, they are already sitting on the couch, it's the folks who want them out of the house who are desperate for a change in the protocol, so his statement is perfectly stated.

Oh, and as for your little poll thread, please don't take that too seriously, the percentage of Bitcoin users who are going to see it rounded to a whole number will be zero, the only way to find out is to wait a few years and see, if Ordinals stay alive it means enough people wanted them - if they die, it means the opposite, simple free-market capitalism.

[philipma1957]

If you think the majority supports ordinals, why don't you create a poll on this and we'll see who's the majority?    
I'd gladly fork this crap off immediately but unfortunately I'm not a core dev so all I can do is urge people to act responsibly (rarely works).  

Why don't you do it?
Cause you're the one bitching around for a change!
It's you who wants to change something based on the will of "the people", not me!

~

Where did he state that the majority supports Ordinals, and since when is bitcointalk the gate to the majority?

Eh, just as how they think they are the voice of the majority they also must invent adversaries to blame them for their failures, I got used to this.

Bigger blocks does not necessarily mean cheaper transactions, if you want to count them in dollars, including all costs. As an experiment, you can compare for example BTC (where mempool congestion can happen) with BCH (where hard-fork can always increase the maximum block size, so you can pay one satoshi per byte, and get it confirmed). Then, you can look at on-chain fees, it will turn out that BTC is more expensive to transact on-chain. And then, you can compare the price of both coins in dollars. You will see that the price change is more costly than transaction fees, and it is very unlikely to find a case, where you pick some starting date and amount, you pick some frequency of transactions (for example, one transaction per day), and in some long period of time you will end up with a higher amount in dollars for BCH than BTC.

Sorry but almost nobody cares about anything else than the price per tx in $, the same the "we" whoever they are don't care even about the sat/b fee, all they know is that to send money they need to pay x $ and it's a pretty normal thing, just throwing random numbers here do you think a 500 million RON house is expensive or that paying 1 million Vietnamese dongs for a burger is cheap? Without checking how much that is in your local currency of course you won't know it! All those users who bitch about fees want to pay $0.00025 as the are fees now over the meme coin while the cheapest one in BTC in last block is $0.24, nothing else.

And if we bring security and stuff in the equation then we're back to what Phil said and which probably too many ignored:

in 2056 if fees do not grow and efficiency doubles we can have 640 eh hashrate mining .
the value of the vault and guards protecting the 40 trillion cap will be the same 6-13 billion that protects the network now.

So, to make things clear and show a better picture, you will have a network worth the GDP of EU, USA and China combined, protected by gear worth the budget of Charlotte. Yeah, the price keeps the reward up by negating the halving, but you have more and more value pilling up with the same protection, and hash rate alone as in exahash or petahash doesn't mean a thing when you don't factor in how much it cost!
Because if now at 300exh it cost 5 billion to attack it then obviously at 150Th/s in 2013 you could attack it for $2500? Oh wait!

in 2013 the network still used some gpus and a few fpgas with asics.

asics burned 10 watts for .333 gh or 30 watts for 1 gh or 30000 watts a th.

these were the first usb asic sticks.

I had 150 of them running for a while which were burning about 10 watts each.

long time ago.

the power improvements since then have been remarkable.

they are not going to happen at that level.

One could argue the watt efficiency improvements super charged price.

[pooya87]

Stompix is correct, YOU want the change, not him, Ordinals are real, they are already in the blockchain, and no change is required to keep them there, on the other hand, a change is needed to ban them,

You are confusing a fix with a change. The Ordinals attack was not easy to perform before Taproot fork and the mess up by the devs implementing it. If anything there needs to be a fix to the mess left by the previous change (aka the soft fork).

Oh, and as for your little poll thread, please don't take that too seriously, the percentage of Bitcoin users who are going to see it rounded to a whole number will be zero, the only way to find out is to wait a few years and see, if Ordinals stay alive it means enough people wanted them - if they die, it means the opposite, simple free-market capitalism.

I agree with the first part not the second. Take ICO scams, nobody really wants them and yet they have managed to stay alive for many years.
It is very naive to think the problems are going away on their own if we ignore them lol. It's like finding a cancerous tumor and instead of aggressively fighting the cancer and removing the tumor, you sit around and hope for it to go away!

[cryptosize]

One could argue the watt efficiency improvements super charged price.

True.

Without ASICs Bitcoin could have not reached thousands of dollars.

[mikeywith]

I agree with the first part not the second. Take ICO scams, nobody really wants them and yet they have managed to stay alive for many years.
It is very naive to think the problems are going away on their own if we ignore them lol. It's like finding a cancerous tumor and instead of aggressively fighting the cancer and removing the tumor, you sit around and hope for it to go away!

The nobody wanted ICOs claim is absurd, it makes think you live in a different world, those ICOs still have a huge market worth tens of billions of dollars, they did not get their value out of thin air, a dozen people wanted them, it is about time to differentiate between what you and a few forum members want vs what many others want.

And I agree, it is naive to let time fix your problems, except that I do not think Ordinals are a problem, which is why I count on time to prove if they are worthy to stay on the blockchain, if you think they cause problems  then thats on you to fix them.