Bitcoin Miner Backed By Twitter Co-Founder Jack Dorsey Will Censor NFTs
11 December 2023
Welcome, and thank you for being part of the MyZucoins community! Let's get into an interesting piece of crypto, finance, or tech news to stay ahead.
Ocean Mining, a Bitcoin mining pool backed by Twitter founder Jack Dorsey, recently confirmed it will censor Ordinal inscriptions, essentially Bitcoin NFTs, sparking community backlash.
The company raised $6.2M, led by Dorsey, and is co-founded by "Luke DashJr", a Bitcoin core maintainer known for his anti-inscription stance.
DashJr stated that inscriptions exploit a vulnerability in Bitcoin Core, spamming the blockchain using a denial-of-service (DoS) attack.
These kinds of attacks typically make a service unusable by overwhelming its capacity.
To combat this, Ocean Mining is deploying the latest version of their software, known as Knots v25.1, to address this issue by effectively limiting the ability to create Bitcoin NFTs.
Most Bitcoin NFTs use a standard called BRC-20, similar to Ethereum's ERC-20.
It's a way to create NFTs and smart contracts on the Bitcoin blockchain.
The reaction in the crypto market was immediate and volatile.
BRC-20 tokens related to the Ordinals protocol, saw varied impacts.
The largest token, ORDI, initially dropped 10% but recovered to an all-time high.
Most tokens in the top ten remained bullish, some with significant gains.
The decision to censor led to debates in the Bitcoin community, especially as blockchain congestion worsened.
Around 263,000 transactions are unconfirmed, with median fees reaching $9.45.
Critics argue this move contradicts Bitcoin's decentralized ethos.
Bitcoin educator Dan Held and Trevor Owens, General Partner at Bitcoin Frontier Fund, expressed concerns over the impact of censorship on miner behavior and the inevitability of inscriptions.
Nic Carter, a prominent crypto investor, also commented, questioning the business sense of earning less revenue in a competitive space.
Ocean Mining's decision reflects the ongoing tension between innovation and consistency in the crypto space. Read more here.
Bitcoin fees skyrocket nearly 1,000% as NFT "Ordinals" popularity return causes congestion.
Lightning strikes: Major vulnerability exposed in Bitcoin's top scaling solution.
Blockchain's consensus problem: A Bitcoin mining pool accused of censorship, blocking transactions.
Bitcoin Mining: A pricey game of compute, energy and policy.
How to decentralize a system? What is Splitchain's approach?
How Zucoin's Splitchain Network Architecture Differs To Traditional Blockchains?
Contrary to the Bitcoin blockchain network, which relies on consensus, Zucoin's Splitchain network operates on a unique truth-based structure.
Blockchain spam, a pressing matter for Bitcoin's Ordinal inscriptions, is harder to achieve in the Zucoin world.
This is because two-factor transactions are used for every transaction on the Splitchain network.
Both a sender and a receiver have to agree to a transaction.
One-way transactions are how most systems work and they allow spam to flow much more easily, as the receiver doesn't have to confirm they want to receive those messages.
This is one reason why spam is prevalent in emails, blockchains and even your home letterbox.
The architecture of the Splitchain system permits network nodes to only cache data that peers have already agreed on, significantly lowering the risk of spam.
Excessive transaction costs and network overload, which are major issues not only with traditional blockchains but with any system—from gas in a pipe to electrical current flowing through wires causing them to overheat.
A system needs to be able to scale efficiently and easily, at low cost.
An early issue Splitchain solved in recent years, was to heavily reduce how much data flows across the network.
It's why the Splitchain node network usually only stores a copy of your last two transactions—to keep the network flow lightweight and fast.
The other side of it is that the network has to be able to expand capacity quickly and easily.
It's something Zucoin has been working on their roadmap—the "node scalability" milestone.
That milestone is a huge one as it's the second part of this common congestion issue that most crypto systems struggle with.
First is to reduce the size of each unit flowing across the network, then second is to expand bandwidth capacity for those units.
In electrical terms, the equivalent is to increase the voltage, lower the current.
Less wire and less heat.
It's how powerlines work over long distances and carry huge power.
Splitchain is working on a relatively easy and fast way to scale up network capacity, using commodity systems, while helping to improve the system's decentralization by reducing the barriers to participation.
Zucoin, supporting up to 32 decimal places for amounts, allows small-scale transactions without hefty fees.
Currently, the fees on the Bitcoin network are more than the price of a cup of coffee.
This means it's not feasible to use for everyday transactions.
More like gold, less like cash.
And the proposed solution, the Bitcoin Lightning Network, has serious issues.
Additionally, the Splitchain network avoids bundling transactions into blocks, speeding up node data synchronization and facilitating quicker transaction settlements.
For these reasons and many more, Zucoin's public ledger is referred to as Splitchain, not blockchain.
The two kinds of systems operate very differently, even though they are both types of public ledgers.
Zucoin's approach to Smart Assets, an umbrella term for all kinds of extendability including smart contracts and NFTs, will again operate very differently from how traditional blockchains do this.
Stay tuned for more news on this when the time comes (most likely after the node scalability milestone is completed).
If you liked this newsletter, please forward it to someone who might like it too.
What did you think of this newsletter? Reply to send us feedback on what you liked or want to see featured more. There’s more coming, so stay tuned.
—
All the best,
—Rob
MyZucoins
Disclaimer: Of course, this is not advice, financial or otherwise. It’s also important to consider the risks and challenges associated with any potential benefits.