The Bitcoin market; is a place where dreams can come true or be shattered in an instant. Your fate is entirely up to you and the decisions that you make. As your experience in this market grows, you begin to notice something very important that continues to happen over the years. History in Bitcoin often rhymes, and sometimes even repeats. That is exactly what is happening right now. We seemed to have gone back in time, and are repeating Bitcoin’s darkest time period. The only question is if it will tear apart the Bitcoin community once again, or if we have learned from our mistakes.
The Problem
Before 2023 began, fees on Bitcoin were relatively cheap. But everything changed this year with the introduction of Ordinals, (Bitcoin inscription NFTs), and BRC20 tokens. Bitcoin changed from a blockchain that most people were buying and holding, into a chain that was being heavily used. The demand for block space had skyrocketed, and so did fees.
This has caused the Bitcoin mempool to be severely clogged, with at times more than 400,000 transactions waiting to be included in blocks. An amount that surpasses even the highest amounts during the bull runs in 2021 and 2017. And this is all happening during a supposed bear market.
The hardcore Bitcoin maximalists have come out against Ordinals and BRC20’s taking up block space on the main chain. Considering it a waste of space, junk, and not what Bitcoin was intended to be used for. This is the opposite of what they normally claim; that Bitcoin cannot be controlled and is a pure free market.
With fees rising to such a high point, they have claimed that normal people are getting priced out of using Bitcoin for how it was actually intended. As a means of transaction.
Flashback to 2017
If you have been in the market long enough, this should give you a feeling of deja vu, and flashbacks to 2017. When the Bitcoin community had a civil war, the blocksize war took place. During that time, fees on Bitcoin were once again soaring. Often costing $30, $40, or even $50 per transaction. People on the left wanted to keep the blocksize smaller to maximalize security and make running a node the most accessible for normal people. People on the right wanted to raise the block limit, which would not only make Bitcoin faster but much cheaper. Allowing Bitcoin to be used for everyday transactions. Eventually, the left side won out and kept the block size smaller, and the right side forked off to make Bitcoin Cash.
The Harsh Reality
The harsh reality is that in 2017, when the last blocksize war was decided, the Bitcoin community came to the conclusion that Bitcoin on the Layer 1 wasn’t meant for daily transactions. It wasn’t meant to be used for your coffee, meals, or things like that. It was meant as a means of saving your wealth and a means of settlement. It was always in the game plan that eventually Bitcoin’s fees would rise to astronomical levels, and that regular users would be priced out of transacting like it; similar to how regular users are often priced out of using DeFi in Ethereum during peak gas periods.
This was always in the plan, and it is actually necessary for Bitcoin’s survival. Once the Bitcoin halving continues taking place to a point where the mining reward is next to nothing. That means that we must rely on transaction fees, even more, to pay miners to secure the network. There must come a time when fees not only eclipse mining rewards but go far and above.
Thankfully to Oridinals and BRC20 tokens, this is on the verge of happening. While some select people are complaining about high fees, and certain exchanges like Binance delaying withdrawals. The truth is that this may be the best thing to happen to Bitcoin in the last few years. The future of Bitcoin may have been saved.
The Solution
But just because Bitcoin isn’t meant to be used for daily use, that doesn’t mean we can’t have cheap and instant transactions. That is why we have Lightning, and other Layer 2’s in the future. Perhaps this is the greatest marketing campaign Bitcoin has ever had for the need for Lightning.
In fact, due to the congestion of the market, and high fees. Binance was forced to delay Bitcoin withdrawals. In response, they have announced that they are actively working on adding Bitcoin withdrawals through Lightning. A major development that will send shockwaves throughout the industry. Once Binance implements this, other exchanges will have no other choice but to do the same.
In the near future, using Bitcoin will be similar to having a savings and checking account in the bank. Layer 1 Bitcoin will be like your savings account. Where you only use it to save your wealth or for important transactions. Large companies will also use Bitcoin for their most important transactions that require the most security. Layer 2 chains on Bitcoin like Lightning will be similar to your checking account. This is what you will use to buy coffee, meals, and all of your daily transactions.
While you may like or dislike Bitcoin Ordinals and BRC20 tokens. The truth is that they have brought innovation and development back to the Bitcoin ecosystem. And has sped up Layer 2 development by years.
How about you? What do you think about a possible Bitcoin Blocksize War 2.0 happening?
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As always, thank you for reading!
