Author: jolestar, Rooch Network Chief Architect
Bitcoin core developer LukeDashjr’s tweet calling for a ban on Inscriptions has sparked intense debate, with his main argument being that it’s a bug that could compromise the security of the Bitcoin network.
The dispute over whether it’s a bug or a feature has far-reaching implications. If it’s a bug, then the version that fixes it continues the current legitimate version of the software. However, if it’s considered a feature, fixing it means removing this feature, making the repaired version a fork. Therefore, this issue merits in-depth discussion.
Whether something is a bug or a feature has no objective standard; what matters is whether it is harmful or beneficial to the software system. Let’s discuss this issue from two perspectives:
(1) Whether Inscriptions affect the security of the Bitcoin network.
(2) Whether Inscriptions bring benefits to the Bitcoin ecosystem.
Do Inscriptions Really Affect the Security of the Bitcoin Network?
Measuring the security of blockchain networks has always been a controversial topic. A commonly used measure is the number of block-producing nodes (miners or validators). In this respect, Proof of Work (PoW) systems are often seen as less advantageous and are ridiculed by proponents of Proof of Stake (PoS) systems. Remember the articles mocking Bitcoin for not being decentralized or secure enough compared to EOS’s 21 nodes?
Bitcoin developers often use the number of full nodes as a metric. To allow personal PCs to run a full node, it’s crucial to strictly limit block size and the UTXO set, reducing the cost of running a full node. But how many full nodes are enough? To what extent does Inscription impact the number of Bitcoin full nodes? Interestingly, current statistics show that due to the popularity of Inscriptions, many people need to interact with Bitcoin RPC, which has actually increased the number of Bitcoin full nodes.
From the perspective of full nodes, we can’t say that Inscriptions have impacted the security of the Bitcoin network.
Let’s delve further: Is it really the full nodes that keep the Bitcoin network safe? Without incentives, why would users run a full node? If I, as an individual, run tens of thousands of nodes at my own expense, does that make the Bitcoin network more secure? In reality, what we need is not just the full nodes, but the people and organizations they represent.
Blockchain is a public ledger. The more people care about the correctness of this ledger, the safer it becomes. And why do users care about this ledger? Because it records things related to their interests, whether it be BTC or something else. As long as they find value in it, they will care about the ledger.
Indeed, users’ interest in the ledger isn’t limited to running their own full nodes. Any direct interaction with the Bitcoin network can have a similar effect. For instance, the security benefits are greater when users install on-chain wallets or view on-chain transactions, compared to leaving their Bitcoin in CEX or custodial wallets.
Observably, the recent surge in interest in Inscriptions has significantly increased direct interactions between users and the Bitcoin network (e.g., browser wallets). It’s also led to the early development of a DApp ecosystem (websites featuring Inscriptions initiating on-chain transactions through PSBT), and a heightened interest in the contents of the ledger (evidenced by the emergence and increased traffic of blockchain explorers).
Therefore, even from a security perspective, Inscriptions appear to have enhanced the security of the Bitcoin network.
Inscription and Its Derived Protocols: Technological Value to the Bitcoin Ecosystem
At first glance, Inscription may seem technologically simplistic, merely writing data directly onto the Bitcoin network and relying on a centralized indexer. However, it can be understood as a kind of Sovereign Rollup that uses Bitcoin as a Data Availability (DA) layer. In this model, clients write directly to the DA (a ‘DA first’ approach), with the indexer functioning similarly to the execution layer in modular blockchain systems. Thus, the indexer could be considered as an layer 2 for Bitcoin.
The drawbacks of this model are clear: the absence of a sequencer to batch transactions results in a poor user experience, high transaction fees, and questionable security due to the lack of fraud proofs. If a technical team proposed such a model, it likely wouldn’t attract investors. However, the market’s charm lies in the fact that users have embraced and utilized it. The recent inconsistencies in BRC20 balance data across different exchanges, which were resolved through community consensus via social media, exemplify its viability.
The advantage of this model is its protocol-first approach. It designs open protocols and data formats, storing only essential data on-chain, with execution and verification occurring off-chain. Any team can develop an indexer to connect to this L2 execution layer network, sharing the DA’s data. In contrast, in Ethereum’s L2 solutions, each L2 effectively cordons off a section on L1’s DA layer, operating independently without data sharing.
To draw an analogy, if L1 is like an old king, then L2s are like the king’s sons:
Ethereum King: “You vie for space and users on my land. Whoever wins them, gets them, along with the MEV and gas revenues.”
Bitcoin King: “The land is mine, the users are mine, and the transaction fees are mine. However, the data is shared. Let’s see who can pioneer new territories and entice users to their new domains.”
This analogy illustrates a completely different competitive landscape. Since the space in any L1 is always limited, if L2s fail to carve out new, trustworthy spaces for users, they essentially don’t achieve scalability.
Thus, Inscriptions represent a recognition of Bitcoin’s value as a Data Availability layer. Combined with the Indexer approach, it presents a novel pathway for constructing L2s, which is of significant importance to the Bitcoin ecosystem. It’s a feature, not a bug.
Of course, the concerns of Bitcoin developers regarding the bloating of the UTXO set are valid. However, the problem isn’t unsolvable, as the Inscription protocol is a form of off-chain consensus. With consensus among indexers and the community, there are numerous potential solutions. Here are a few ideas:
(1) Replacing Inscription Content with Hashes: Current Inscriptions include various media files and JSON data, which can be quite large. Once the indexer layer is mature, it’s feasible to write only the hashes to L1, while storing the original content in the indexer or user wallets.
(2) Designing a Protocol for On-Chain and Off-Chain Inscription Migration: This protocol would support the migration of Inscriptions between on-chain and off-chain. When an Inscription is moved off-chain, it’s effectively destroyed on L1, and the associated UTXO is consumed. To bring it back on-chain, users would need to provide aggregated signatures from the off-chain transfer, allowing for verification among indexers.
Another approach is to use a sparse Merkle tree verification method, similar to Taproot, for on-chain and off-chain migration. I previously designed a migration scheme for Ethereum NFTs, but unfortunately, since Ethereum’s NFTs are defined through interfaces rather than as data objects, it’s challenging to leverage this advantage. However, the model used by Inscriptions is highly suited for this kind of approach. Those interested can explore this concept further through relevant links and resources: https://github.com/rooch-network/rollup-nft
What I want to say is that technology is an ecosystem that needs to grow with user usage and feedback. Many innovations are not planned and designed by developers in front of computers, but rather emerge through random trials and interactions with user feedback.
Accepting that a system is decentralized means accepting that it will evolve in ways you might not like, and also accepting the various failed attempts that occur during its evolution.
Disclosure of Interest
Personally, apart from experimenting with BRC20 minting in May, I do not hold any assets related to emerging protocols on Bitcoin. My perspective is solely from a technological standpoint, considering their potential and impact on the Bitcoin ecosystem.
This article is not financial advice. Long-term investors shouldn’t feel the need to fear missing out (FOMO), as these developments are just beginning. Currently, most assets issued by these protocols fall under the category of memecoins. Whether memecoins can evolve from limited-time gambles into a long-term system largely depends on the gaming of several parties:
(1) Whether these early profitable participants are willing to continue investing in the ecosystem and provide application scenarios for the assets, similar to how early Bitcoin holders invested in various infrastructures. If they cash out and leave, it would remain merely a meme game.
(2) Whether infrastructure providers can offer such spaces and scenarios. This depends partly on the capabilities provided by Bitcoin L2 and other infrastructures, and partly on the attitudes of the Bitcoin community, including core developers.
The future is uncertain, but participants can make it more definite. This is the charm of entrepreneurship.