Ordinal Inscribers are now paying Bitcoin mining pools to construct blocks for them with zero or minimal financial transactions, so that all of their images get inscribed in sequential order. They are not using the normal block construction methods. They are including these in the next block over the counter or behind closed doors. This has happened 3 times so far with 3 different pools. Luxor, Foundry, and the latest one was from Terra Pool. These out of band blocks are creating a secondary marketplace outside of Bitcoin's normal block construction methods. Miners are now talking about selling blocks before they are found. Thoughts?
Discussion
it reminds me the fed selling dollars before printing
Of course this was absolutely gonna happen.
My thought is that Jihan Wu's playbook ends badly 😬
Who is going to use these pools?
Its their own choice, the fee market will regulate this
you are right the market regulates and purges itself very well...you can check history also in "The Enemies of Commerce" by A. Escohotado..
it won't help but it would be necessary
Bitcoin fixes this 😉🧡
It has begun…
I really don’t like it but I will let the free market decide
Some humans are easily corrupted
The large majority of humans are.
Gladly, bitcoin is anti-fragile!
It’s an interesting concept, but doesn’t that essentially mean future blocks become somewhat derivative?
Can pretty much guarantee that block 777777 has a bidding war.
I think ordinals popularity will die down and things will return to normal.
when the bull returns, it's possible, but these folks also pay millions of dollars for monkey jpegs. so i doubt it.
they dont actually pay that tho right😹
literally passing $1m as we speak
which would be $4M if they were paying for financial transactions.
Well, if other chains die off because they are deemed securities and nfts get vaporized from that chain as a result, it’s possible ordinals become more popular. 😅 I’m glad ordinals exist although admittedly I haven’t thought about abuse scenarios bc of ordinals.
🤣🤣🤣 Monkey 🤣🤣🤣… that just made me laugh 🫂🤙🏼
What is the “ Big Picture” on all of this ?
Will it be beneficial for the Bitcoin ecosystem ? will this fade ?
Is anybody getting ready for a rug pull somewhere by doing this ?
What can plebs do about all this ?
What can Nostr do about this ?
Do we have to watch it, fight it, worry about it ? 🧐
🫂🤙🏼✊🏼
Why are miners not abandoning those pools?
This is so wrong in so many ways and very much reminds me of a particular Chinese mining hardware manufacturer who thought (a few years ago) that mining empty Bitcoin blocks (to leech block rewards) is ok just because its possible.
If the default mempool does not include the highest bidding transactions (due to standardness rules limiting size), it makes sense for a miner to accept these transactions out of band in order to maximize the fees from the blocks they create.
This too will pass
Hope the market will realize this is dumb sooner than later.
If there's no way the miners in the pool gets compensation for this, miner will leave that pool making such blocks less likely to happen.
If they do get paid for it, in a transparent way, more miners will join such pools and it will be a form of income.
Not sure where it goes from there. It might boost Lightning which isn't a bad thing. It might polute the mempool for years which isn't great.
Personally I think this will blow over and the mempool will be empty again.
The eco system is expanding.
Eh, it’s fine. They will be priced out before long.
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Miners are in it for the money.
That’s what will direct their behaviour.
Don’t be fooled otherwise…
Not this one, Mr. Overly Broad Generalizations
General comment where general behaviour will make the difference.
Exactly and the incentives allow them to max their revenue if they behave rationally, meaning choosing transactions with higher fees. But now there's a parallel market outside of the protocol that directly competes with financial transactions in which 1 sat is not worth 1 sat anymore: pay a miner in FIAT and they'll mine a full block of JPEGs for you, without any financial transaction because the JPEGer knows they can "resell" each JPEG from that block at a much higher value.
It doesn't break the software, but it changes the incentives for sure, especially if it lasts.
Like block 776668? Mempool.space has that at 90% health. Wonder what they paid the miner out of the block.
at first worried, but miners were always free to choose which transactions to include and which not. the mempool is a free market place, they can have a closed one next to it... but highest bidder always wins , always has been
they are hijacking the blockchain bloating it with jpegs. The size of the blockchain is important so everybody can download it and keep their own node. the creation of financial transactions are the main goal of the blockchain. if they want an nft just go and mint it in other altcoin blockchain. give use to those useless projects as jpegs collectors. It's just my two cents.😅
Miners gonna mine. Pools gonna pool. There are only 21 million.
I hope this doesn’t go wrong at later stage when hype vanishes 👀
Mempool price discovery is going to be fascinating to watch
This has always been possible, and I’m sure has occurred on a smaller scale. I don’t think it’s a big deal.
Kinda crazy; but I feel pretty confident that the incentives will work themselves out with all this…
to be clear, foundry does not offer any such service at this time. pay market fee and you get included in the block
IMO miners will get richer. May invest in more mining equipment. Difficulty increase means harder bitcoin.
I see this as fiat injection to bitcoin economy.
The inscribers could also do regular meaningless bitcoin transactions with high fees to stop plebs. This is similar I think.
While the inscriber miners are taking those fiats, the old benevolent miners will reap the transaction fees.
Is this good for bitcoin? ---------------> YES
Miners need to punish these pools by leaving them in mass.
Blocks & actions within recorded eternally.
It won't be a problem in the future imo. They will get priced out.
Bad. Block space is real estate auction and there shouldn’t be any deals or advantages. Highest bidder wins.
This feels dirty 🤢🤮
It looks dirty.
Out of band payments does not really change the incentives of the miners. Wastefull blockspace usage will sooner or later be outcompeted by truely valuable use regardless of market structure.
This is one of the reason why we need more decentralization in mining pool operators..
Sure. But, Terra Pool has 0.37% of the hash rate.
Are you bullish af on stratum v2? I know next to nothing about it, except for that I think maybe it fixes this
How does a mining pool guarantee finding sequential blocks?
They don't, but they sell this service and the next time they mine a block, the load it up with all JPGs.
Ok, that makes more sense.
Out of band transactions seem like a bad bad thing. Not sure how to stop any of it though- people are technically using the Bitcoin protocol as defined. It’s a good test. Bitcoin will survive
Same old. Fine to buy expensive permanent cloud storage. Not fine with them getting the space cheaper than the transactions.
If Ordinals catches on like BTC caught on, it'll create a free & clear arbitrage opportunity for anyone on the inscribing end of these blocks.
Imagine a cartel of Amazon, MSFT, and , all colluding with a pool to inscribe BTC with a "Big4-flavored" inscription granting you discounts, access, rights, etc.
This creates an obvious monetary increase.
1 sat = 1 sat
1 Big4 sat = 1.3 sat,
for example
If we figure ordinal support isn't ubiquitous yet, most users will consider their Big4 sats indistinguishable from standard sats. And they'll spend them as such. While the insiders are selling them off into the market.
This is not very different from mints and offerings we've seen the last few years. But worse, it can be nearly 100% transparent. We see mining rigs' work & outputs, but we can't see how all mining rigs are conducting business and where their profits are being generated.
Bull markets fix this.
No, it makes it worse. WAYYYYYY worse.
Mining pools are incentivized to artificially inflate the fee market, whether onchain or not, especially in a bear market.
Shitcoiners are way more wealthy, numerous, susceptible to FOMO and willing to accept high fees in a bull market. By orders of magnitude.
Not good. Let's hope people move hash power away from those pools.
Your post is getting a lot of shares.
Added to the https://member.cash/hot feed
#[1] , wouldn't it be cheaper to pay very high transaction fees to ensure same outcome? fee market supposed to provide same service, but globally, non? or is there design flaw that i'm missing ?
The miners are accepting these out of band payments because they are bringing in more fees then on chain transactions. If pools do not share those OOB fees to miners, miners will eventually catch on and move pools.
As real financial transactions start to increase on chain, people will be willing to pay higher fees forcing "inscriptors" to keep up or stop. Although, I may not agree with it, we're seeing a free market in action right now. It's not always going to play out the way we want but the incentives behind #bitcoin should help to keep everyone honest and the network healthy.
FYI, "I may not agree" with inscriptions ... not a free market :)
So that means that btc txs will be executed in parallel? It will be like 2 blockchains in one?
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This is a problem, are they sharing these side deals with the hash providers 🤔 those pointing there hash power towards these pools are IMO getting screwed here, they should be incentivised to move to an honest pool
My concern is that this shows a path to a DOS: Contract with multiple miners to prioritize a large number of such blocks during a period of price runups/crashes and the frantic high volume of txns.
I'm not sure how they can constrict a block ahead of time that they may not win?
what are the implications?
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if so, someone should start to boycott those pools !😰
Miners are paid for doing their job. It is the same if they are paid the usual way (by tx fees) or directly. Not diference at the end of the day
The way to "quote post" in nostr (on Damus) is to long-press the post and then click 'Copy Note ID', then type your post, as I am doing here, then type @ and immediately following paste what you copied, and it will come out like this. That way, in this example, ppl can see thenOP was by #[2]
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Beautiful free market.. natural order., tied to its own natural evolution.
Bitcoin is fundamentally a market for block space, and out of band deals are part of that market. It isn't a new phenonema, I remember people complaining about this as far back as 2011.
The mempool is the most popular mechanism to bid for block space, but the market routinely experiments with other mechanisms and that's a good thing.
When reasoning about these types of issues, it's important to understand the security model: people who are infatuated with JPEGs aren't the adversary, the State is.
The "final boss" level of State attack is a hash war: the State will attempt to make Bitcoin useless by mining *empty* blocks. The only defence against this attack is to out-hash (out-spend) the adversary.
The more valuable block space is to the market, the more the market can spend to out-hash the adversary.