The Problem With Inscriptions

Oh for the good old days

There are two arguments about Bitcoin inscriptions: One is that it’s playing completely within the rules of Bitcoin and is fine. The other is that it’s massively increasing the costs of running full nodes and hence bad. Both are technically correct.

Rather than get moralizing and playing dumb cat and mouse games about letting them into blocks, which is what’s happening now, it would be far better for Bitcoin development to put together a soft fork to create a vbytes cost for UTXO creation. That should have been in there in the first place. The downside is that this reduces chain throughput even for people who have nothing to do with it. But they’ll get more space by having less inscription to compete with. And the vbytes cost necessary to keep UTXO size increase under control is small enough that there’s a sweep spot which doesn’t do much damage, nowhere near knocking down chain capacity to what it was pre-segwit.

If Bitcoin development were healthy the details of this would be getting hashed out in polite, highly technical, and frankly kind of boring discussions, but it isn’t. Back in 2015 such things got railroaded through so fast that even the core devs were alarmed at how much it smacked of centralized control, but now there’s the opposite problem, where even simple obvious fixes can’t get in.