Bitcoin is fundamentally a database.

This observation reflects a profound technological principle. Money essentially serves as a ledger—an enumeration of ownership. Even tangible currency can be understood as a method of distributing that ledger in the physical realm. Verification no longer necessitates consulting a central ledger; the mere act of transferring currency between parties accomplishes this verification. The entries within the ledger circulate independently of any overarching record. In this context, Bitcoin functions as a digital database striving to replicate the fundamental characteristics of cash: the absence of a requirement for permission from a database operator to utilize one’s funds.

One may easily envision the futility of attempting to prevent the defacement of dollar bills. Many individuals have, for instance, stamped “Buy Bitcoin” onto banknotes. While such actions constitute a federal offense in the United States, punishable by up to six months in prison, this does little to deter defacement.

Is it realistic to believe such actions can be effectively regulated? The existence of initiatives like “Where Is George,” where individuals would stamp websites on dollar bills for tracking purposes, underscores this point.

Artists frequently create murals and collages on currency. It is fundamentally impossible to prevent this.

One must question the illusory belief that similar restrictions could apply to digital databases.

Inherent to Bitcoin is the necessity of accommodating arbitrary data, which aligns with the diverse transaction requirements users may have. Participants cannot predict in advance the transaction amounts (indicated by the satoshi field in outputs), the recipients (represented in the script field), or the block height for future spending (as identified by the nLocktime field or the nSequence field in a transaction).

Excluding allowance for arbitrary data would inhibit the very existence of Bitcoin as a functional system.

Metaprotocols

A Bitcoin metaprotocol comprises a set of rules layered atop the foundational Bitcoin protocol, enabling the interpretation of data and actions based on additional, external regulations.

A historical exemplar of this is the Counterparty (XCP) protocol. Utilizing OP_RETURN—an opcode within Bitcoin script that conveys arbitrary data and generates an unspendable output disregarded by the UTXO set—XCP embeds its own metaprotocol messages.

These messages facilitate the issuance and transfer of new tokens, detailing transaction specifics in terms of amount and destination, while enabling on-chain, trustless exchanges between XCP and any tokens issued under the protocol.

The core Bitcoin protocol itself remains indifferent to these messages; it neither comprehends nor engages with them. Users may generate entirely invalid XCP messages and have them confirmed on-chain, yet XCP software will disregard them as invalid. Those who create ineffective messages are merely squandering their own funds in fruitless transactions.

Notably, the interpretation of valid data on Bitcoin through additional external rules remains unpreventable.

Ordinals function analogously, as users assign distinctive ‘serial numbers’ to each mined satoshi, creating an accounting system that tracks the movement of “individual satoshis” throughout transactions.

The Bitcoin protocol itself is unaware of this external framework; thus, it is impossible to deter users from interpreting valid transactions in this manner. Users retain the freedom to interpret data published on the blockchain according to their chosen constraints, so long as they do not conflict with the fundamental rules of the Bitcoin protocol.

While individuals may create invalid or malicious metaprotocol messages and have these confirmed on the blockchain, users of metaprotocol clients will simply disregard them as invalid. This distinction underscores the difference between the Bitcoin protocol itself and associated metaprotocols: consensus rules within Bitcoin prevent invalid protocol messages from being incorporated into the blockchain, while metaprotocols lack such constraints.

Data Embedding

The two metaprotocols referenced differ in their requirements for on-chain data embedding (XCP necessitates it, while Ordinals do not). One might presume that by obstructing data embedding, such protocols could be thwarted.

Although it is feasible to eliminate specific mechanisms for data embedding through soft forks—thereby invalidating transactions reliant on such methods—preventing general data embedding is impossible.

Consider, for instance, the “Inscription envelope,” a particular technique that guarantees data embedded in a spending witness is not executed. This uses OP_FALSE, which places a 0 (representing a False value) on the stack prior to executing OP_PUSHes that embed data. The result is that the script interpreter overlooks the verification of data following OP_FALSE.

If this specific format were to be invalidated through consensus, alternative methods would likely emerge to place a 0 on the stack or to modify the execution of subsequent script segments. Efforts to eliminate this particular class of data embedding could devolve into a challenging game of cat and mouse, as users continually adapt.

Mitigating each method would necessitate a substantial coordination effort across the ecosystem via a soft fork—a daunting and costly endeavor. Consequently, users would quickly pivot to new methods. Metaprotocols exhibit adaptability that surpasses that of Bitcoin. It is important to underscore that this discussion only addresses one facet of data embedding.

Hypothetically, even if all OP_FALSE mechanisms were restricted (ignoring the complexities associated with identifying such mechanisms and coordinating the requisite fork), users could still generate fictitious public keys. The Bitcoin protocol does not impose validations regarding public key authenticity, merely accepting random strings within an output’s locking script.

Now, envision a scenario where Bitcoin incorporated a mechanism necessitating public key validation prior to fund allocation. Would this effectively resolve the issue?

Incorrect.

Embedding data indirectly through the private key remains viable. While private keys are not stored on-chain, a signature nonce is utilized—a random value integral to constructing a cryptographic signature. Without a nonce, the cryptographic signature becomes vulnerable, risking private key exposure to potential attackers. Even the intentional use of weak nonces can enable the arbitrary data to function as a private key. The only means to avert this reality would involve centralized authority over the approval of private keys, effectively subjugating Bitcoin usage to an authoritative entity.

These examples represent only a portion of the myriad possible methods for embedding arbitrary data in the blockchain. Numerous additional techniques undoubtedly exist beyond those discussed.

Efforts to prevent all forms of embedded data through constant intervention merely diminishes the available resources of the entire ecosystem, resulting in a burdensome, complex process that ultimately fails to address the core issue. There remain methods that cannot be prevented without fundamentally compromising the integrity of the Bitcoin protocol itself.

Perpetuation of User Behavior

It is likely that many will argue, “If we simply restrict this behavior a few times, individuals will cease their efforts.” Such a perspective is markedly detached from reality for various reasons.

Consider the two motivations driving individuals to engage in such behavior: either they derive concrete utilitarian benefits that fulfill a genuine need in their lives, or they are motivated purely by speculation.

In the case of genuine utility, individuals find that the protocol provides essential functionality unattainable by any other means or with inferior security guarantees. Why would such users not adapt their protocols to circumvent newly instituted restrictions at the consensus level?

Such protocols resonate meaningfully with these individuals, providing vital and valuable functionalities. They possess a clear incentive to modify the protocol to accommodate any limitations imposed.

On the other hand, in cases where motivations stem purely from speculation—such as NFTs or other collectible forms—individuals are often driven by fervent speculation. Substantial amounts of capital are invested, creating a volatile environment reminiscent of a game of musical chairs, where individuals strive to exit with profits before the speculative bubble collapses.

These speculative phenomena are cyclical and not consistently sustainable. What leads one to believe that restricting the creation of a particular asset form will deter new asset generation? It is noteworthy that the “transfer of ownership” concerning these assets on Bitcoin occurs via Ordinals, a metaprotocol that cannot be blocked or prevented by any means.

Efforts to restrict specific mechanisms for data embedding do not impede the transfer or resale of assets already created through those mechanisms; consequently, the market for such existing assets will persist.

Those who participate in these activities, often characterized as opportunists, will continue to chase every potential opportunity for quick profit. Do you genuinely believe that deterring them from forming new asset types will slow their pursuits? Rather, compelling them to adopt new mechanisms may increase demand for those assets, transforming obstacles into incentives.

The new mechanism may garner desirability due to its controversial nature. Thus, attempts to suppress such development represent a losing strategy, leading back to the paths highlighted earlier that culminate in methods that cannot be prevented.

A Rational Approach

Removing arbitrary data embedding from Bitcoin is unachievable. Although it is feasible to eliminate certain specific methods, the practice itself remains inevitable. So, why pursue these restrictions?

Ultimately, efforts to suppress such uses merely redirect them toward less efficient methods, imposing extensive negative repercussions on the network at large. Upholding presently sanctioned methods apportions much greater efficiency regarding network resource utilization, representing the most logical course of action.

Attempts to eradicate data embedding practices within Bitcoin are both futile and detrimental, steering the ecosystem toward constraints that undermine Bitcoin’s utility as money—and yielding failure.

This approach is akin to “cutting off one’s nose to spite one’s face.”

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