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Bitcoin number and inscription

One of the most controversial applications of Bitcoin in the near future is the integration and innovation of Taprot soft fork, which is used to be included in the agreement in 2021. The basic theory of ordinal number is a way to instantiate every enterprise of Bitcoin and mark this particular satoshi as "ordinal number". Casey Rodarmor, the founder of the serial number strategy, said in his blog, "Satoshi carries out serial numbers according to the order of mining, and transfers from trading input to trading export in the order of first in, first out."

According to the instantiation of this independent satoshi and the use of Taprot update, Bitcoin customers can also directly include arbitrary data information on the blockchain. Although OP is applied_ RETURN functional text can already do this, but these new "inscriptions" can be other things, including jpegs, short sound wonderful clips, and even simple small games.

For the practical significance of storing all this information in Bitcoin immediately, and what this means for customers who need to operate detailed archiving nodes, the development and design circles have increasingly fierce disputes. Although this discussion is very important, we want to fully understand how the inscription affects the charging sales market of Bitcoin at this stage and its future market prospects.

Reasonable utilization of block area

In general, the inscriptions are more documents, thus occupying more restricted space in each Bitcoin block. The consumers who establish the inscription need to pay the necessary fees to push them to buy or sell. However, due to the soft bifurcation of SegWit in 2017, the inscription is included in the verification information, so there will be a slight cost discount.

The bill was officially announced on January 21, 2023. Pierre Rochard, senior vice president of scientific research at Riot Platforms, said that less than three weeks later, inscriptions had occupied 50% of the Bitcoin block area.

The charging and selling market of Bitcoin is a constantly changing natural environment. If the demand for trading on the chain is very high, customers expect to include their trading in the next block, the cost will increase. Conversely, when the requirements are relatively low and the customer should not confirm the transaction process in time, the charging rate will drop.

Whether this inscription should be called an "acceptable" application of Bitcoin or not, the sales market also determines the appropriate price for those who want to include this random data information in each block. If the transaction fee increases more, the transaction of bitcoin that is not very critical or of a small scale is likely to be priced, and then the second layer agreement, such as Lightning, will be applied. This extra layer has always been the game theory assumption of Bitcoin fee structure, even predicted by Hal Finney in 2010.

History time block weight value

This is not the first time that more transaction management has added the memory pool. As mentioned above, the charging market of Bitcoin is dynamic. The high charging cycle time will lead to the reasonable use of the block area, the low charging, the inefficient use of the block indoor space, and the high charging will be endless

The figure below shows the memory pool data information and cost price in early 2017. During the bull market period, the interior space of the block is usually in the equity premium situation, because many people push Bitcoin back and forth in the trading center or frozen warehouse, or trade Bitcoin at a relatively high rate

In the past three months, it was obvious that there were many transactions at the end of November. Since Bitcoin flew out of the trading center, customers protected themselves from any other potential infection events

Except for the abnormal situation, the transaction fee has always been low. With the reduction of block subsidies, the cost must account for a higher proportion of Bitcoin mining income, which also caused people's confusion about the long-term security cost budget of Bitcoin. Similarly, the proponents of Bitcoin assume that with the rise of Bitcoin and business expansion, the demand for block indoor space will change over time, which may lead to more applications being transferred to other layers above the protocol.

In the past few weeks, the average block operation scale has soared sharply.

Even though the scale of block operation has increased significantly, the competition in the toll industry still needs to be improved. It is very likely that those who expect to push the coin transaction will also increase their costs to more effectively include it in the transaction, or those who want to forge inscriptions without waiting will do the same. Either way, if the cost increases, the mining operation capacity will increase, and it will have higher transaction fees to obtain additional income from the block reward.

The transaction fee still accounts for a small proportion of the ore reward, about 1% to 3%. With more and more people trying to use Bitcoin to remit money and forge inscriptions, will the cost start to rise?

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