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Is Knots The Ordinals Killer?
New Bitcoin software addresses the issue that critics call an ongoing "spam" attack on the blockchain.
Ordinals, or (to put it simply) NFTs on Bitcoin, have proven incredibly popular. But they're also controversial. Purists say that taking up block space with such a frivolous use case and driving up fees for everyone detracts from Bitcoin's first and core use case as a P2P transaction network and store of value.
To date, most critics have simply voiced their concerns on Twitter/X. Relatively few have actually done anything about it—but that may be about to change.
Mining Pools Take Action
One school of thought is that miners should like Ordinals, because it's good for business: More transactions means more fees.
A week ago, however, Ocean—a mining pool that recently raised $6 million in seed funding, led by Jack Dorsey—admitted it was effectively filtering Ordinals transactions. Ocean team members characterized these transactions as "spam".
Ocean also confirmed it was using Knots as a node: Software created by Bitcoin Core developer Luke Dash Jr that can block "spam". In a recent tweet, Dash described the ability to create Ordinals as a "vulnerability" that needs to be fixed.
PSA: “Inscriptions” are exploiting a vulnerability in #Bitcoin Core to spam the blockchain. Bitcoin Core has, since 2013, allowed users to set a limit on the size of extra data in transactions they relay or mine (`-datacarriersize`). By obfuscating their data as program code, Inscriptions bypass this limit.
This bug was recently fixed in Bitcoin Knots v25.1. It took longer than usual due to my workflow being severely disrupted at the end of last year (v24 was skipped entirely).
Bitcoin Core is still vulnerable in the upcoming v26 release. I can only hope it will finally get fixed before v27 next year.
Knots: The Death Knell For Ordinals?
Data from Dune Analytics shows that over 46 million Ordinals have been "inscribed" on the Bitcoin blockchain so far, generating over 3,365 BTC in mining fees, or an average of 0.000073 BTC per Ordinal ($3 each at current prices).
After an October lull, daily Ordinals inscriptions picked back up to all-time highs.
Filtering out Ordinals has not hit Ocean's profitability, since what they call "real" transactions tend to be more lucrative anyway.
Should enough nodes adopt the same approach, the Ordinals ecosystem would essentially cease to exist. There's no indication that's about to happen, but the first blow has been struck in what might turn out to be a long and bitter battle.
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