Bitcoin’s ‘BRC-20’ explosion sends users scrambling for alternatives, including lightning
One lucky miner raked in 6,701 bitcoin (BTC) or nearly $200,000 in transaction fees on Sunday night, surpassing Bitcoin’s current block support of 6.25 BTC – an extremely rare event that illustrates how a recent burst of activity on the blockchain related to the Ordinals protocol has led sky-high costs for users.
Late last year, Ordinals introduced “inscriptions” or arbitrary content such as text or images that can be added to sequentially numbered satoshis or “sats” — the smallest units in Bitcoin — to create unique, non-fungible tokens, or NFTs. Ordinals are now also used to mint BRC-20s, which are essentially fungible tokens.
All of these new symbols have quickly exploded in popularity, but at a high price. They have overloaded the Bitcoin network and pushed it to its operational limits, offering a real-life test of how the world’s first and largest blockchain can cope with the need to scale quickly.
Fees for sending coins are skyrocketing, transactions are waiting longer in queues, and some users and exchanges are already considering alternatives. These include the Lightning Network, a so-called “layer 2” scaling solution designed to make Bitcoin transactions faster and cheaper.
“Can someone explain how to board people with these fees?” tweeted Anita Posch, Bitcoin Educator and Founder of Bitcoin for Fairness. “I mostly board people in Africa. They do not have the privilege like you to pay these high fees. They really need BTC, while you are just playing.”
BRC-20s are inscriptions of JavaScript Object Notation (JSON) data—bits of code that port data structures across different platforms. And since the JSON inscriptions are actually code, they can be programmed to create huge token supplies – one small block size at a time – effectively creating fungible tokens via a non-fungible protocol.
That ability to create massive amounts of tokens out of thin air is what’s behind the hysteria—and, for blockchain users, anxiety. Recent blocks have been jam-packed with BRC-20 transactions, with fees of $20 per transaction, up 800% from the $1-2 per transaction fee that was typical for most of 2022.
This increase in fees sent shockwaves through the Bitcoin ecosystem, prompting Binance, the world’s largest cryptocurrency exchange, to temporarily halt bitcoin withdrawals due to miscalculation of fees and causing frustration and distress in certain parts of Africa and Latin America where some citizens depend on bitcoin on a daily basis. payments.
Bitcoin’s high fees have an undeniable impact on users who rely on base layer payments. This is where the Lightning Network comes in. The Lightning Network is a Bitcoin layer 2 scaling solution where a collection of interconnected computers routes bitcoin payments off-chain, resulting in cheaper and faster transactions.
Binance said it is in the process of integrating Lightning given the sudden increase in bitcoin fees.
But even Lightning requires an initial on-chain transaction to establish a payment channel, and Posch says the costs are so prohibitive, even the single transaction is now out of reach for many.
“Can’t use on-chain, can’t open channels,” Posch tweeted. “Make detention Lightning the only option. And all because someone thinks it’s fun to mine Bitcoin.”
The latest point about breaking Bitcoin has been a recurring theme on Crypto Twitter, following the chain’s NFT Coin Party.
While Posch suggests that meme-loving hackers are having fun testing the limits of Bitcoin, others have adopted a more conspiratorial interpretation, suggesting without evidence that the BRC-20 phenomenon is actually a coordinated attack on the world’s dominant blockchain.
