A significant ideological debate is unfolding within the Bitcoin ecosystem concerning the appropriate use of its foundational blockchain. This contention centers on the rapid proliferation of ‘inscriptions’ – digital artifacts, including non-fungible tokens (NFTs), stored directly on the ledger – which critics argue fundamentally diverge from Bitcoin’s original purpose as a peer-to-peer electronic cash system.
Adam Back, an early Bitcoin developer and Blockstream CEO, is a prominent critic, labeling this activity ‘JPEG spam.’ He asserts it undermines Bitcoin’s core purpose as money, viewing the network as ‘owned by humanity’ with developers as ‘stewards’ accountable to user consensus – a principle echoed in past network governance debates.
Enabled by the Taproot upgrade and the Ordinals protocol, inscriptions have surged. Embedded JPEGs grew from 88 million in May to 105 million in September, representing a 20% increase. Associated fees generated from these activities total approximately 7,000 BTC, valued at over $777 million.
Conversely, proponents argue that any use for which users are willing to pay for block space is legitimate. They emphasize Bitcoin’s permissionless nature and decentralization ethos, contending that usage restrictions contradict these core principles. Increased transaction fees from inscriptions are also seen as a vital economic incentive for miners, particularly as block rewards continue to halve.
Back, however, discounts the economic benefit, estimating inscriptions contribute a mere 0.1% to mining profits. He contends this minimal gain is far outweighed by potential reputational harm, elevated transaction costs for ordinary users, and diminished accessibility to Bitcoin’s primary monetary function. This fundamental disagreement highlights a deep community division.
To mitigate these concerns, Back proposes remedies such as outreach to mining pools to discourage inscription processing, and wallet-level modifications to redirect fees. While acknowledging inherent centralization risks, he believes strategic economic nudges could render JPEG inscription mining unprofitable, aligning network activity with Bitcoin’s original vision.
Maxwell Reed is the first editor of Cryptovista360. He loves technology and finance, which led him to crypto. With a background in computer science and journalism, he simplifies digital currency complexities with storytelling and humor. Maxwell began following crypto early, staying updated with blockchain trends. He enjoys coffee, exploring tech, and discussing finance’s future. His motto: “Stay curious and keep learning.” Enjoy the journey with us!