Contrary to suppositions, ordinal token registrations on the block space do not disadvantage money transfers. Glassnode explains that this is probably due to the fact that registration users tend to set low fee rates. They express their willingness to wait a little longer for confirmation. More registrations also mean more revenue, but there's a downside.
The effects of registration and competition among miners
Registrations boost the basic demand for block space and increase fees for miners. At the same time, Glassnode reports that the Bitcoin network hashrate has increased by 50% since February. This development is leading to fiercer competition between miners seeking to earn revenue:
- Extreme competition between miners
- The imminent arrival of halving
Glassnode points out that if BTC prices don't rise in the short term, miners' profitability will be put to the test.
BRC-20 versus alternative protocols
Currently, most registrations are made using BRC-20 tokens. They were introduced a month after Casey Rodarmor launched the Ordinals protocol on Bitcoin in February. On September 25, Rodarmor introduced Runes as a potential alternative to BRC-20s. He suggested a fungible token protocol based on unspent transactions, unused transactions on the Bitcoin network will be limited.
Optimum use of block space with Runes and its comparison with BRC-20 tokens
The Runes tokens would enable the best use to be made of the space available in the blocks, thus reducing network congestion. Here are a few key points about Runes:
- Operation based on unspent transaction output (UTXO)
- A non-generation of unused UTXO on the Bitcoin network
- A potentially more efficient alternative to BRC-20 tokens
If you think about it, the Runes protocol will relieve the pressure on Bitcoin's block space. However, the concept of ordinal token registration is retained.
Conclusion
Ordinary tokens have not supplanted monetary transactions in terms of block space on the Bitcoin network. Miners continue to struggle to earn revenue and maintain profitability. Moreover, alternatives to BRC-20, such as Runes tokens, are being presented to optimize the use of block space. It remains to be seen whether it is really possible to reduce network congestion while enabling the continued development of uses for the Bitcoin protocol.
