New Challenges Facing the Bitcoin Ecosystem: Removal of OP_Return Restrictions

The Bitcoin Core software recently proposed a significant change: to remove the limit on the size of OP_Return outputs. This proposal has sparked widespread discussion in the industry, as OP_Return is a special output type that allows for the storage of non-transactional data on the Bitcoin blockchain.

Currently, Bitcoin core nodes do not relay transactions that exceed the limit, but this is not a consensus rule. Nodes will still accept valid blocks that contain such transactions. Those who support maintaining the limits believe it helps prevent spam and wish to use Bitcoin solely for financial transactions.

However, the Ordinals craze that emerged in early 2023 has proven that there is a demand for storing images on the blockchain. Ordinals store images through the input script of Taproot spending, which is more economical in certain cases than using OP_Return. According to statistics, Ordinals have generated over 88 million inscriptions, resulting in approximately 660 million dollars in transaction fees.

There are differing opinions in the industry regarding whether these images should be considered spam. Some believe that if the creator's intention is personal entertainment or speculative profit, then these actions should not be regarded as spam. However, if the goal is to maliciously attack others, it can indeed be classified as spam.

From an economic perspective, publicly listed companies in the Bitcoin mining industry generally welcome the additional revenue brought by Ordinals. In a highly competitive industry, this is seen as an important source of income. Therefore, the view that Ordinals should be filtered out as garbage information is difficult to gain the agreement of these professional management teams.

Retaining the OP_Return restriction may lead miners to establish enterprises that directly receive non-standard transactions, bypassing the public mempool. This could negatively impact the Bitcoin network, such as undermining Compact Blocks technology, increasing block propagation delays, and exacerbating mining centralization.

For node operators, if we assume the blockchain is full, increasing the use of OP_Return can actually make running a full node easier. OP_Return outputs do not inflate the UTXO set and do not benefit from witness discounts, so blocks containing OP_Return outputs are typically smaller than the maximum limit.

The key to preventing spam is transaction fees. The core goal of Bitcoin is to resist censorship, and transaction fees form the foundation of the security model that achieves this goal. To enter the blockchain, users need to bid higher than others, which is currently the only viable spam prevention model.

In summary, removing the OP_Return restriction may be a necessary step to face economic realities and maintain competitiveness. This helps to ensure the effective operation of local memory pools and public p2p transaction broadcasting systems. Although this may present some challenges, in the long run, it could make the Bitcoin network stronger and more adaptable.