358,000 Ordinals inscribed on the Bitcoin Blockchain as the average block size
The arrival of the Ordinals protocol has led to a sharp increase in the average Bitcoin block size as users begin to enter images and larger files such as audio and video as Ordinals. Since the start of the year, the average block size of a Bitcoin has jumped 66% from 1.2MB to around 2MB.
What are Ordinals?
Designed and distributed by former Bitcoin Core contributor Casey Rodarmor, Ordinals is a new protocol on Bitcoin that allows users to send and receive rate, the atomic unit of Bitcoin, which can carry optional extra data.
The protocol uses “inscriptions,” which are arbitrary content such as text or images that can be added to sequentially numbered satoshis to create unique “digital artifacts.” These artifacts, which are NFTs in effect, can be held and transferred over the Bitcoin network like any other stake.
Since the launch of the Ordinals protocol earlier this year, Bitcoin’s average block size has been on the rise. In mid-February, the average block size of a Bitcoin reached an all-time high of over 2.5MB for the first time since the inception of the leading cryptocurrency, data from YCharts shows.
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How Ordinals Affect Bitcoin Block Size
Bitcoin blocks, data structures in the blockchain used primarily to store a record of transactions, were originally designed to hold up to 36MB in size. But for security reasons, Satoshi Nakamoto, the pseudonymous creator of Bitcoin, reduced the block size to 1 MB in 2010.
In 2017, Bitcoin’s block size limit was replaced by a block weight limit of 4 million “weight units” with the implementation of the Segregated Witness (SegWit) upgrade. This changed how data in Bitcoin blocks is “counted”, – giving some data more weight than others.
Perhaps more importantly, the upgrade represented an effective increase in the block size limit. Bitcoin blocks can now have a theoretical maximum size of 4 MB, consisting of 3 MB of signature data and 1 MB of transaction data, and a more realistic maximum size of 2 MB.
While this limit remains in place, the average Bitcoin block size increases as users fill it up with inscriptions. Since January, more than 358,000 Ordinals have been entered into the Bitcoin network, per a Dune Analytics dashboard.
A look at recently recorded inscriptions reveals that the bulk are simple texts or image files. However, there are also increasing GIFs, videos and other larger files that take up larger size.
It is worth noting that Ordinals provide additional financial incentives to miners, who have generated more than $1.5 million in transaction fees from these NFTs so far. That’s because Ordinals introduce miner extractable value, or MEV, which is the maximum value miners can achieve by producing new blocks over and above the block rewards and transaction fees.
According to a report by research firm FSInsight, Ordinals could eventually create a sustainable demand for block space. This could address a reasonable criticism of Bitcoin’s security model: the lack of miner revenue attributable to fees.
Even so, Bitcoin purists have been critical of the Ordinals project, arguing that it may price out actual economic activity and thereby damage Bitcoin’s image as a reliable P2P payment network.
“Bitcoin is designed to be censorship resistant. This doesn’t stop us from mildly commenting on the sheer waste and stupidity of a coding. At least do something effective,” Blockstream CEO and long-time Bitcoiner Adam Back so.
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About the author
Ruholamin Haqshanas is an accomplished crypto and financial journalist with over two years of experience writing in the field. He has a solid grasp of various segments of the FinTech space, including the decentralized iteration of financial systems (DeFi), and the emerging market for non-fungible tokens (NFT). He is an active user of digital assets for money transfers.
