OK, it's "distorted" caused by many unsustainable ponzi schemes that operate in the Bitcoin network that's making fees surge temporarily? It's that the point you're making? What's the difference between that and the varying demand for onchain, censorship-resistant transactions? During months of high demand, should that also be considered "distorted" too?
My bad, I should have clarified what I mean with "normal incentive structure", before talking about the "distorted" structure.
For me the ideal basic incentive structure, regarding transaction fees and transaction size, is:
1) The fees should incentive the users to save blockchain space.
2) As a derivative of 1, the following incentive rule would be ideal: users should transact on-chain only for amounts greater than
X per kB. X measures value or purchasing power. This means in simple terms: The bigger a transaction is (in kB), the more value it should carry.
3) X is variable over time and depends mainly on the number of transactions others are sending. (This answers your last question: high demand for transactions in BTC is
not a distortion)
4) Ideally, X is a low amount in dollars, taking into account that you can send about 5 tx per kB, its ideal value would be 20$ to 50$, but it should not be higher than ~500$ (100 $/ small transaction) because this would already harm some use cases.
5) For X it's irrelevant if the amount transferred is in BTC or in some other kind of "valuable thing". So I'm generally
_not_ agains NFTs or tokens being sent on the Bitcoin blockchain. If it's really valuable, then it also can occupy space.
Taking into account part 5 of this little "incentive ruleset", what's the problem with Ordinals now and why do I consider it a "distortion"?
The problem is that X is
temporarily different for "fad/hype tokens" like Ordinals and BRC-20 because the expected value of these tokens in hype phases is much higher than the "real (long-term) value", and makes think people that X is lower for BRC-20/Ordinals transactions. *
So they think they're incentived to transact on-chain because even if they pay high fees compared to the low (or zero) value of the tokens they're moving (or creating), they
could generate profit with it.
If we could know the future and that Ordinals will be popular forever, then again everything would be fine: then Bitcoin contains incentives to be primarily a multi-token blockchain platform. Then the current value of Ordinals transactions would be their "real value", and X would not be distorted.
But I think this isn't the case. I think many of us suspect that the Ordinals pics and also BRC-tokens will have only a short lifespan (maybe a couple of months) and the peak of the hype may have been already passed. Once this becomes clear to the Ordinals community, the hype will collapse, nobody would like to transact anymore with these boring NFTs - and much less if the fees are high. (And something I forgot: Actually there's not really a point to waste fees on the Bitcoin platform if you could use cheaper blockchains which are also safe, other than the "hype value". Something like BRC-20 could be perfectly used on LTC.)
In contrast, BTC has a very long-term value proposition: to be a strong global currency on the world's most secure blockchain. So there is a permanent conflict between the relatively stable X value of Bitcoin and the drastically variable X value of "fad tokens".
*To look at the same thing in a different way: If people look back from 2030, for example, they will see a period in 2023 when people transacted on average a much lower value per kB (or per block) than at other times, because Ordinals will be dead a long time already and nobody would understand why they wasted so many fees for such low-value transactions. The same than if we look back to Ethereum in 2017 and the amount of space scam ICO tokens occupied.
