Analysis of the Impact of OP_Return on the Bitcoin Ecosystem

Recently, a proposal to remove the size limit on OP_Return outputs has been put forward in the Bitcoin core code repository. OP_Return is an output type that allows for the storage of non-transaction data on the Bitcoin blockchain. Currently, Bitcoin core nodes do not forward transactions that exceed the limit, but this is not a consensus rule, and nodes will still accept valid blocks that contain such transaction outputs.

This proposal has sparked controversy. Supporters of retaining the restrictions believe it helps prevent spam and want to use Bitcoin solely for financial transactions. However, a trend has emerged of storing images on the Bitcoin blockchain, known as "Ordinals." This method uses the input script of Taproot outputs to store images, which in most cases are standard transactions and have lower costs due to the Segregated Witness upgrade.

According to statistics from the data platform, the usage of Ordinals is high, with over 88 million inscriptions and transaction fees paid exceeding 7,000 Bitcoins, which amounts to over $660 million at current prices. This field has attracted significant investment, resulting in the emergence of many related tools and services.

Although some view these images as spam, from the creator's intent, they seem to be primarily for personal entertainment or speculation purposes. According to the theory of subjective value, the value of these goods depends on individual assessment, and the market should determine their value.

Bitcoin mining has evolved from a hobby into a mature industry. Many management teams of publicly listed mining companies hold a positive attitude towards Ordinals, viewing it as an important source of revenue. They are unlikely to support the idea of treating Ordinals as junk information that should be filtered out.

Retaining the OP_Return restriction may lead miners to establish direct transaction reception systems that bypass the public mempool. This could undermine technologies such as Compact blocks, increasing block propagation delays and exacerbating mining centralization. Furthermore, the costs associated with establishing such systems may raise the barrier to entry for mining, further promoting centralization.

From the perspective of node operators, if the blockchain is full, increasing the use of OP_Return may actually make running a full node easier. OP_Return outputs do not cause UTXO set bloat, and blocks containing OP_Return outputs are typically smaller than the maximum limit.

The key to preventing spam is in the transaction fees. The censorship resistance of Bitcoin comes from its fee model, not from nodes filtering specific transactions. Regardless of the nature of the transaction, the only way to enter the blockchain is to bid higher than other users.

Removing the OP_Return limit may help maintain the competitiveness of Bitcoin software and prevent miners from building proprietary algorithms and private memory pool businesses. This could be beneficial for maintaining an effective public memory pool and transaction broadcasting system.

Overall, removing the OP_Return restriction may be a way to face the current economic reality. It could help maintain the competitiveness and efficiency of the Bitcoin system while allowing the market to determine the value of data storage. However, this change may bring new challenges that require the community to continue paying attention to and discussing.