Bitcoin’s blockchain developers find themselves embroiled in a contentious discussion regarding the influx of meme tokens, such as the popular Pepe, and their impact on the network. The recent surge in speculative coins has resulted in an unprecedented number of transactions, leading to an eleven-fold increase in processing fees on the blockchain during May. As a solution, proponents of a spam filter-like software suggest blocking these transactions, while others argue in favor of their preservation, citing wider potential applications.
Bitcoin Developers Debate Memecoins
Bitcoin developer Ali Sherief expresses his belief that the current system is being exploited, asserting that “Bitcoin was never intended to serve as a base layer for meme tokens.” He emphasizes that these seemingly worthless tokens pose a threat to the smooth operation of the Bitcoin network as a peer-to-peer digital currency. Sherief’s concerns were conveyed in an email to the largest digital asset developer group.
On the opposing side, supporters defend the software innovation known as Ordinals, which allows Bitcoin’s blockchain to accommodate a large number of meme tokens and non-fungible tokens (NFTs) for the first time. They argue that this innovation holds broader potential beyond the realm of meme coins.
Developer Casey Rodarmor created Ordinals to enable users to embed digital content, such as videos, images, and text, on satoshis—the smallest unit of Bitcoin. This development gained traction and led to the emergence of the Bitcoin Request for Comment (BRC-20) standard, resulting in the explosion of meme coins.
The Magnitude of the Phenomenon
Currently, the Bitcoin blockchain hosts approximately 25,000 meme tokens, with a combined market value of around $475 million (roughly Rs. 388 crores), as reported by brc-20.io. This figure soared above $1 billion (roughly Rs. 8,300 crores) in early May before experiencing a decline.
The prominence of meme tokens and NFTs is evident, with these tokens accounting for 65 percent of transactions on the Bitcoin blockchain at one point in May. Although the proportion has decreased, it remains elevated. Consequently, the average fee per transaction rose from $2.80 (roughly Rs. 200) in April to $30 (roughly Rs. 2,500) in early May before stabilizing around $4 (roughly Rs. 300) by the end of the month.
Differing Perspectives On The Issue
According to Gadgets 360, Jameson Lopp, co-founder of Casa, a crypto storage solutions provider, argues that the Bitcoin network is designed as an “auction market for the block space,” suggesting that Ordinals merely increased demand for this space. Thus, he dismisses the notion that meme coins constitute a denial-of-service attack on the network.
However, veteran Bitcoin developer Luke Dashjr disagrees, considering Ordinals transactions as spam that should be excluded from Bitcoin’s blockchain. Dashjr has even developed a program called Ordisrespector, which enables network nodes to block such transactions. He maintains that action should have been taken months ago, emphasizing that spam filtration has always been an integral part of Bitcoin Core.
The Future Outlook
The decentralized nature of the Bitcoin network complicates the possibility of unified action against meme coins and NFTs. It remains unclear whether sustained efforts will emerge over time, or if a hard fork—a diverging version of Bitcoin—will be created to exclude Ordinals support.
Nevertheless, the controversy surrounding Ordinals highlights the ability to utilize the Bitcoin network in innovative ways. It also underscores the need for scalability to avoid potential traffic congestion in the future. This development has caused concern among some members of the crypto community, who fear that the continued trading of meme tokens could congest the network, potentially disrupting Bitcoin’s functionality as a payment method and store of value.