"non-financial" transactions

[dzonikg28]

If I let a paper dollar bill fly into the air so I can take a picture of it with the clouds as a background, money is transferred from me and will most likely be received by another entity too. But my goal was never to send it to a receipient. Rather it was a legacy act and my sole intention was to take the picture. I couldn't care less if anyone actually received my dollar.

Ordinals/runes/BRCs pay a fee, but their outputs aren't having any intended recipient. Rather it's the act of spending, not spending AND receiving which is considered more Alice sends to Bob type of a transaction.

I'm wondering. What if a miner accepted a rune TX without any fee? Would we see a transaction with literally 0 BTC spend. No feed no nothing? I'm wondering if this is feasible at least in theory.

I can see some point into to calling this a non financial transaction actually. It's not as harmful to BTC to classify TXs based on their intention and I see it as a different act as promoting enforcement action against coins.

Again, it is not that I don't understand your point of view. I absolutely do and it is not really about disagreement here.

But Bitcoin, the whole way it works and how it is set up with skin in the game, with incentives for miners to act in the best interest of the network, makes that classification kind of unfeasible. I admit it is probably more philosophical, but I understand why someone would be against that classification. Because the Bitcoin network won't facilitate runes TXs without fees. It may do so, but not in general. This is why the classification is problematic. The network does what is best for the network and best for the network is when their are finances involved in any and all transactions.

You could go with this classification for the purpose of building some kind of overview, but that is why I said it is misleading and that is what PrivacyG was referring to, correct me if I am wrong. The network won't get clogged with 'non-financial' transactions because first and foremost every miner is primarily interested in the financial incentive, not in the message anyone wants to inscribe or get out there.

As I said we don't really disagree, no argument here. But there was a detail in the semantics that may mislead the average user with regard to their perception of what the Bitcoin network really does and why it tirelessly and flawlessly continues to operate. Skin in the game, it is all about the financial transaction and nothing else. The network has a variety of tools to neutralize miners including zero fee rune TXs. And you know that all those tools attack where it is most painful, and it is all about the financial level, not the non-financial level because it essentially doesn't exist.

If the 'non-financial' really were 'non-financial' transactions in the truest sense, the miners including those 'non-financial' transactions wouldn't last for long. They would be outcompeted as other miners would accept high-fee paying TXs and leave the junk on the table. They would have block propagation disadvantages, could suffer from fee-rate filtering and anti-spam relay policies. A couple of other things are possible and they all boil down to one thing and that is financial incentive.



You and I know what is being said here, but with the Bitcoin protocol in mind, it looks a bit like a misrepresentation. This would be even more true in times when the network is clogged and transactions cost a fortune.

[alani123]

To be fair, right now, even with cheap transactions, there doesn't seem to be much interest to transact BTC from point A to point B on chain.

In the meantime people make thousands of transactions in DeFi per second.
Perhaps the non-complex nature of BTC doesn't give much of an incentive to transact that much. Whereas in Ethereum with tokenization and smart contracts there's usually incentives to move your tokens around, shop for better yields etc. You make a preliminary transaction even to appove a transaction on-chain due to smart contracts. RN Runes fill space without raising fees or causing much of an issue.

But here we have a weird problem. Will Runes continue taking up block space if fees increase? And if yes, what happens to the other transactions?
I guess the point of those touting the "financial" transaction classification stems from the fact that the very incentive of miners to go for higher fees isn't necessarily what's correct. Just because miners can earn more fees doing something it doesn't mean it should be allowed. In fact, miners have a lot of power over the blockchain.

A group of miners could even act against their rational interest or against decentralization principles. At this point it's only up to other factors to decide what should be done. In other words, just because miners have the absolute hashing power it doesn't make it right.

Personally I think runes are a bit of a nothing burger. But I do see how data on chain could cause some problems especially under the current status quo of limited block-space and taproot OP_codes/discounts.

Now I must clarify that I'm no fan of any proposed fork of bitcoin as is. I didn't want to get this thread much to this direction tbh because now I have to clarify that I don't like BIP-101 as it's completely self-contradictory (itself being branded as anti-spam whilst allowing inscriptions so long as they pay more fees than the discount) and creates too much of a fuss for something that was an issue only once and hasn't felt like a problem over the span of many months or even a couple of years after the height of the ordinals craze. Let alone the fact that Luke has some very edgy opinions on what BTC should be, like making blocks even smaller, and surely I wouldn't want this guy leading the cause for improving bitcoin. TL;DR: The anti-spam diatribe has been too much fuss over a non issue. 

[PrivacyG]

'Financial' vs. 'non-financial' is probably to cumbersome to dive into for most.

Yes and no in my opinion.  They are trying to split transactions by intent.  'Financial' as in you wanted to spend money and 'non financial' as in your intention was not to spend money.

I would argue it may be even easier for average users to understand this concept than it was to understand what 'tainted Bitcoin' meant.  Tainted meant it came from an illegal source, although it is by default a subjective categorization of Bitcoin as all circulating Satoshis will eventually go through hands of crime at one point.  Just like Fiat Bank notes.  And it is easier to understand that intent differentiates whether your transaction is financial or not, compared to 'taint' which a Third Party usually has to tell you how 'tainted' it is and even they are subjectively doing it.

There is no objective way to do differentiate 'taint' and 'clean', unless you wanted to categorize any and all Coin Joins and similar Privacy enhancing 'tools'.  But you have to stop there and even then, will my Coin Joined Bitcoin be clean if I bounce it around for a month between a few tens of Addresses?  Whether yes or no, that is still subjective!  There fore, taint is not only difficult to understand and subjective but also a failure by default as it is very easy to find ways to bypass it.  Particularly when you have a tool telling you how 'clean' it is that you can use after every attempt to see what works for 'cleaning' your Bitcoin and what does not work, eventually finding a formula that cleans it little by little or even immediately.

But what should be under lined is that this subjective categorization of Bitcoin transactions by intent would no doubt be a precedent of multiple other future categorizations of Bitcoin transactions.  If the Bitcoin community grows ten times larger in the following year or two, it may end up being a great idea to BIP110 supporters that we should have restricted usage for personal Wallet management on chain spendings.  Such as limiting how many consolidations you can do a month because too many people are 'spamming the network' consolidating when Fees are low, which at a much higher usage will look like spam when other subjective categories of transactions are censored.  You remove 'non financial', now the next type of transactions that are often broadcasted becomes the new spam.  Will Centralized Exchanges have to move to a Second Layer in order to not spam the network every few minutes with withdrawals and other Exchange related transactions?  Yes the mempool would be cleaner with out them and yes I do hate Centralized Exchanges, but to me a Currency that is supposed to offer complete freedom should offer COMPLETE freedom.  Even the freedom of paying for dickbutt jpegs.  They pay for it, Miners earn a Fee out of it, the system continues and infinite spam is not possible either because eventually the 'perpetrators' will run out of Bitcoin and then finally Fiat to spend on purchasing Bitcoin for continuing the spam.

I agree there is no way you can say a transaction is non financial.  You PAY for it which implicitly is financial.  It would not be financial if you could some how insert data with out having to pay any thing for it.  For example, if you could have the option of permanently storing a signed message on chain for free.  As I always have argued in the past however, precedents are one of the most dangerous things and this is a precedent.  And like DaveF says, if there was a way to try to ultimately cunningly destroy Bitcoin then this could be one way to do it.

Anyway.  It is clear that BIP110 will fail.  But they are not showing any sign of backing down and how do we make the average person understands they are not 'saviors' when many of them are selfish and only care about their own difficulty of having to pay more Fees every time the network becomes congested?  BIP110 is offering them the beautifully colored poison drink showing them things will get cheaper for their own butt and telling them how the 'evil' will get kicked out of Bitcoin.  And the average person being selfish and naive, it may be actually very easy to convince them to drink it all up.

[alani123]

I agree there is no way you can say a transaction is non financial.  You PAY for it which implicitly is financial.  It would not be financial if you could some how insert data with out having to pay any thing for it.  For example, if you could have the option of permanently storing a signed message on chain for free.  As I always have argued in the past however, precedents are one of the most dangerous things and this is a precedent.  And like DaveF says, if there was a way to try to ultimately cunningly destroy Bitcoin then this could be one way to do it.

I agree with what you said but I find this part contradictory with the rest.
You said it's easy for a layman to understand the non financial classification.

Then why is there no way to say a tx is non financial?
If I spend some amount of BTC with the explicit intent of an inscription I just spend on fees. No amount of BTC I spend has an intended recipient. This is a pretty valid non financial classification for a transaction. It appears to be a sound definition no matter how you approach it.

My example still stands. If I were to find a miner that would theoretically accept a zero fee tx, could I inscribe without any BTC moving?
Since inscriptions have no spendable outputs it's pretty clear to make a distinction between them and a tx that has no fee but gets BTC from Alice to Bob.

To make a point, even if we accept the classification, does it matter? Let's look at the average fees paid over the span of time stretching many months back... Transacting on bitcoin's Blockchain has been cheap, we have had low demand and mostly small transactions that don't create much of a backlog. If non financial transactions were cloging the chain we could be talking in other terms, instead they seem to just be filling space that is otherwise empty.

Certainly not an issue as big as something that would require a risky fork immediately.

[dzonikg28]

I agree there is no way you can say a transaction is non financial.  You PAY for it which implicitly is financial.  It would not be financial if you could some how insert data with out having to pay any thing for it.  For example, if you could have the option of permanently storing a signed message on chain for free.  As I always have argued in the past however, precedents are one of the most dangerous things and this is a precedent.  And like DaveF says, if there was a way to try to ultimately cunningly destroy Bitcoin then this could be one way to do it.

I agree with what you said but I find this part contradictory with the rest.
You said it's easy for a layman to understand the non financial classification.

Then why is there no way to say a tx is non financial?
If I spend some amount of BTC with the explicit intent of an inscription I just spend on fees. No amount of BTC I spend has an intended recipient. This is a pretty valid non financial classification for a transaction. It appears to be a sound definition no matter how you approach it.

My example still stands. If I were to find a miner that would theoretically accept a zero fee tx, could I inscribe without any BTC moving?
Since inscriptions have no spendable outputs it's pretty clear to make a distinction between them and a tx that has no fee but gets BTC from Alice to Bob.

To make a point, even if we accept the classification, does it matter? Let's look at the average fees paid over the span of time stretching many months back... Transacting on bitcoin's Blockchain has been cheap, we have had low demand and mostly small transactions that don't create much of a backlog. If non financial transactions were cloging the chain we could be talking in other terms, instead they seem to just be filling space that is otherwise empty.

Certainly not an issue as big as something that would require a risky fork immediately.

I agree that it is strange to argue a fork is required immediately and what's more, isn't BIP 110 meant to be in effect only temporarily? What is the goal then? Try to test something that doesn't really get tested because there is no clogging anyway? I concur that there seems to be no need for immediate action.

I also thought about the longer time horizon and how competition for block space could be important in times of decreasing block subsidies. If Bitcoin were ever to be used as a full scale payment network, it wouldn't matter anyway whether there are ordinals etc. taking up block space or not because the capacity wouldn't ever be able to handle global payment traffic.

In my view competition for block space increases the incentive for miners to keep the network safe in times when block subsidies decrease and it should foster L2 development and facilitation. Large scale transactions, settlements and so on will still be feasible while the base layer is kept secure thanks to higher fees I suppose?

If BIP 110 goes through and it is supposed to take effect temporarily, what happens after that temporary period? Next fork? And what kind of insights are they hoping for during that period when the network isn't clogged anyway? 

[wmiran]

I just stumbled upon this website page:

https://thebitcoinportal.com/live/spam/overview

Supposedly they're trying to quantify what percentage of all bitcoin transactions are not made with the explicit intention of transacting BTC. For example an ordinal transaction is made with the intent of inscribing on the Blockchain rather than simply getting BTC from one address to another.


But I think the website authors are counting all transactions including OP_RETURN as "non-financial".
Does that make sense? Please explain your thought process if you could.
I'm just trying to understand

I think it depends on the definition they're using. OP_RETURN is often used to store data on-chain, so classifying those transactions as non-financial is understandable. However, some of those transactions are still connected to financial applications or asset tracking, so putting every OP_RETURN transaction into the same category could make the numbers less accurate.