The battle for the future of Bitcoin rages in real time on Twitter as we are on the cusp of global economic contraction, thanks to over 50 years of US dollar fiat rule, and are eagerly awaiting the approval of a Bitcoin spot ETF from part of the SEC. Yet, in the trenches on Twitter, the skirmish being fought is over what bitcoin is and how it should and should not be used. I’ve covered this battle in detail on Orange Label, but to summarize there are two sides in this battle: monetary maximalists and blockspace demand maximalists. The big question is: should subscriptions be a part of Bitcoin and how can they be stopped?
The purpose of this piece is not to sway you one way or another, but rather to share some numbers that demonstrate that enrollments will be discounted over time. Over the past year, we have seen a doubling in the price and hashrate of BTC and during this time signups have caused some big changes in demand for blockspace. We saw rates rise to a 4 year high as mempools were eliminating reasonable rates1, meaning that there were so many high-fee transactions in the mempools that lower-fee transactions were eliminated from the mempools. In other words, there was no possibility to include low-fee transactions in the blocks. What started as a ridiculous novelty 12 months ago has brought in legions of new bitcoiners. This is an undeniable fact if you look at the number of reachable nodes on the network in the last two years.
As Bitcoin Twitter has begun to divide on the topic, a meme has emerged suggesting that signups will be discounted as the NGU technology takes its toll. This leads to the next logical question: At what point are memberships discounted? The market will decide this. For now, we can simply crunch the numbers and see how many dollars a membership will cost as the price of Bitcoin rises.
The calculator
I’m a big fan of desktop calculators23 and use them quite often when creating a story. For this piece I wanted to understand how much it would cost to subscribe a 100kb photograph at various prices. This then turned into a question about how much these BRC20 scumbags are spending and when will this nonsense stop. They are approximately 50 bytes or 0.05 kb in size for reference. I managed to track it down4 a simplified formula for making a registration:
Formula for calculating the cost of ordinal registration
Total cost in USD = ((((Signup size in kb * 1000) / 4 * Fee)) / 100,000,000 ) * Current price BTCUSD
The important variables for this calculation are the file size in kilobytes, the fee in sats/vbytes and the current price of BTCUSD. With this little information I was able to create a simple static table to see how different size memberships will increase in USD cost such as NGU for fees and BTCUSD.
This graph reveals a lot of information and the most important thing for me is how expensive it will be to put data into blocks in the not too distant future. Let’s take our 100kb image as an example. At current rates around 100 sat/vbyte and 50,000 dollars BTCUSD whose registration will cost 1,250 dollars. This is a big pill to swallow. Now let’s look at the BRC20 bullshit token used for money laundering… It is about 0.05 kb in size. ‘At current rates around 100 sat/vbyte and $50,000 BTCUSD, registration of which will cost $0.63. This is a small amount, but these things are inscribed by the truck load. We are talking about collections with 1 million units. So not a small amount and there is not a single BRC20, tons of them are popping up. The question about liquidity for these things is for a different post.
As you move down the chart towards higher BTCUSD prices for each subscription size, you can see how ridiculous things get. Recording our humble 100 kb jpg will cost $62,500 when BTCUSD reaches $1 million and 200 sat/vbytes. Likewise the BRC20 themselves would increase to $25 for a single token. These types of prices start to value really stupid things like monkey pictures and asshole memecoins.
As you can see, the cost of producing these memberships increases linearly with increases in BTCUSD. This alone will price out large portions of the market, however you need to ask yourself, as the overall size of the market increases will this bring in new entrants which will stimulate additional demand, in other words the pond will get bigger and the fish will get bigger, the small fish simply won’t be able to eat.
What to expect?
Thinking about what happens next is difficult, as there are many plausible outcomes, but the one I come back to is the meme I mentioned at the beginning of this article, memberships will be discounted. Just analyze the numbers, they don’t lie. I don’t think we’re close to the death of subscriptions any time soon, but there will come a time when it will simply be too expensive for stupid things to exist on chain. Low time preference activities will prevail.
I see the overall membership ecosystem continuing to evolve, and that means people’s minds and opinions will continue to change as well. We’re seeing thoughtful comments from developers5 warning6 how changing the protocol to address or eliminate subscription usage will only push people to “exploit” other parts of the protocol for its precious blocking space. We’re seeing new ways to raise subscription funds and drive data seeding via bitcoin + torrents like ReQuest, Durabit, and Precursive Inscriptions. Memberships are one thing, blockspace is valuable and people are willing to pay for it. Bitcoin is for the haters and it will get weird(er). Cope and seethe, but remember to have fun.
- Reasonable is subjective, markets are clear. I think I’ve seen transactions with fees as high as 20 sat/vbyte being eliminated, which in recent memory seems absurd. ↩︎
- Demystifying Hashprice ↩︎
- Satsflow Scenarios ↩︎
- Someone has done this and it’s pretty useful. I used this formula to build my table in Google Sheets. https://instacalc.com/56229 ↩︎
- “NACK concept.
I do not believe this is in the best interest of users of our software. The purpose of participating in transaction forwarding and having a mempool is to be able to make a prediction about what subsequent blocks will look like. Intentionally excluding transactions for which there is very clear (however stupid) economic demand disrupts that ability, without even eliminating the need to validate them when they are mined.
Of course, anyone is free to run or provide software that streams/holds/extracts whatever they want, but if your goal is not to have a realistic mempool, you can also run it in -blocksonly mode. This results in significantly greater resource savings, if that is the goal.
To the extent that this is an attempt not only to not see certain transactions, but also to discourage their use, this will cause, at best, such transactions to be routed around nodes that implement this, or at worst will result in a practice of transactions being sent directly to miners, which poses serious risks to the centralization of mining. While non-standardization has historically been used to discourage burdensome practices, I believe this is (a) much less relevant nowadays where full blocks are the norm, so it still won’t reduce node operating costs, and (b) powerless to stop transactions for which there is already an existing market, one that pays dozens of BTC in commission per day.
I believe the demand for block space that many of these transactions make is grossly misleading, but choosing not to see them is burying your head in the sand. – Peter Wuille Link ↩︎ - “Ever since bitcoiners from the infamous Taproot Wizard 4MB block have been charging around, fighting to try and stop signups. Subscriptions are definitely not good for Bitcoin, but the way bitcoiners are trying to stop them will be far worse than any damage the subscriptions could have ever caused.” – Ben Carman Link ↩︎
