Last week saw the Bitcoin network under fire—both computationally and ideologically. Stemming from the new Ordinals and BRC-20 token standard, the network has seen inordinate amounts of congestion, with sky high fees and hundreds of thousands of unconfirmed transactions.
At one point, people were even claiming there was an “attack on Bitcoin.”
It reignited a fierce debate among Bitcoiners—one that goes back years. To really understand what the current controversy is all about, we'll need to revisit the history of the "block size wars."
Block size wars
By 2017, Bitcoin miners, developers, and users had been arguing for years about whether to increase the protocol’s block size. The block size is the amount of transaction data individual blocks on the network can hold.
The short of it is that “large blockers” want to keep fees low by increasing blockspace and allowing for more transactions per second.
“Small blockers” argue that it’s essential to keep the system resistant from state actors or private interests by making it cheap to validate transactions. These developers acknowledged and actually accepted high fees in times of congestion as a necessary tradeoff for maintaining decentralization.
The disagreement led to what is called a hard fork—and two new cryptocurrencies were born: Bitcoin Cash (BCH) and, later, Bitcoin Satoshi’s Vision (BSV).
'Attack on Bitcoin’ Claims Circulate as Transaction Fees Climb Higher
But fast forward to 2023, and it feels like a similar conflict is rearing its head once again: What exactly should Bitcoin be used for? Were such a thing to happen again, would it be a success? “That approach [a hard fork] was tried back in 2017, and I think the outcome is fairly clear at this point,” Craig Raw, developer of the Bitcoin Sparrow Wallet, told Decrypt.
Today, both BCH and BSV have a much smaller market cap than the original BTC and have been largely dismissed by many in the Bitcoin and larger crypto communities.
Enter: Taproot and Ordinals
From hardcore maxis, to core maintainers and your classic Twitter troll, everybody seems to have a say, especially now the network is “suffering” from high fees and extreme congestion.
At the time of writing, there are approximately 327,900 unconfirmed transactions, with a low priority fee of roughly 140 sat/vB, around $5.16. That’s double what low priority fees were before they spiked this week. Transactions of 18 sat/vB, or $0.66, or less were getting purged, or ignored, by miners because they were too small to be worth processing.
The transaction backlog has seen a huge decrease from the past couple of days, when there were more than 400,000 unconfirmed transactions and high priority fees hit 654 sat/vB, or $26 dollars, according to mempool.space.