Bitcoin has become extremely congested with transactions these days. And if you hadn't noticed it before, you couldn't have missed how Binance suspended BTC withdrawals twice this weekend, explaining it by network congestion and skyrocketing transaction fees.
But what's going on there?
Well, basically, it's all about the Taproot adoption, which was the most recent major upgrade to Bitcoin that was activated in September 2021 (here's a great primer on it). Because this is what made possible the Ordinals protocol appearance in January 2023, based on which, in turn, pseudonymous enthusiast @domodata made his experimental and inherently flawed token "standard," BRC-20.
Ordinals unlocked the gateway to hell two new primitives on Bitcoin: sort of NFTs (via Inscriptions) and fungible tokens (via BRC-20) – both written directly in the Bitcoin blockchain.
The idea behind the BRC-20 is really simple: all the data for contract deployment, token issuance and transfer is written to a JSON file and placed into the Bitcoin blockchain via Ordinals inscriptions (whose safety is also of concern, by the way). So "the best thing" about BRC-20 is that every coin starts as a free mint.
The idea of fast and easy minting their own memecoin using an experimental and inherently suboptimal (according to the author himself) "standard" has fascinated people so much that in a matter of weeks, the aggregate BRC-20 tokens market cap neared $1 billion (thread), and exchanges began adding these tokens to their listings.
You can publish your shitcoin on the Bitcoin blockchain, too – some find it "pretty cool."
Now Bitcoin is experiencing extremely high demand for blockspace, driven by BRC-20 tokens, utilizing text-based inscriptions and ordinals. And this is a big revenue boost for Bitcoin miners, of course:
Bitcoin obviously cannot handle the current demand. That means we need L2s. And this has already increased the Lightning Network usage, which continues to grow.
Even Binance announced LN support after recent troubles with BTC withdrawals treatment.
With all that hype around shitty memecoins and network congestion, the Bitcoin community appears to be really concerned: isn't it a DoS attack on Bitcoin?
Some devs even call for urgent action, but of course, it's hard to expect that from Bitcoin:
These frogs and dicks are "amazing" even (according to Ari Paul):
And "there's no such thing as high fees on Bitcoin," as Nic Carter explains. Because if you're upset about high fees on Bitcoin, then you never understood how Bitcoin was going to scale – it's an auction by design.
Therefore, "if any valid fee-paying transaction can actually damage the Bitcoin network, then there's a bug/problem since the whole point is that every fee-paying tx contributes to security and value is purely based on fee," – Ari Paul.