Bitcoin developers have been scratching their heads recently, noticing a large number of OP_RETURN transactions on the blockchain over the past few days. OP_RETURN is a type of Bitcoin transaction that is used for embedding data into the blockchain.
The culprit, according to analysts, has been a new blockchain project called VeriBlock, one that piggybacks on the Bitcoin blockchain in an effort to better secure alternative crypto asset networks.
Source of the now-highest volume of OP_RETURN outputs has been identified as @VeriBlock "proof of proof" miners. They are creating around 20% of all BTC transactions now. Seems inefficient to me; will be interesting to see if the incentives work long term. https://t.co/LpjyhGKg2b
— Jameson Lopp (@lopp) January 5, 2019
The new project is versatile, enabling the issue of new assets such as Tether or simply proving the existence of data such as “proof-of-existence”. More significantly in terms of its effect on the blockchain is that VeriBlock is now generating roughly 20% of daily Bitcoin transactions.
Embedding alternative data into the Bitcoin blockchain is not a new development, and there has been plenty of discussion in the past between developers whether these sorts of transactions should be encouraged at all. That debate led to the introduction of the OP_RETURN operator in Bitcoin Core 0.9.
Ethereum creator Vitalik Buterin claimed he avoided piggybacking on Bitcoin feeling that Bitcoin developers might limit the extent to which data can be embedded in the Bitcoin blockchain. There is a current debate on this current version and whether those like it should even be defined as spam, however, the nature of Bitcoin means that those happy to pay can get their transactions on the blockchain.
VeriBlock itself is currently making it more expensive to make actual money transfers on the Bitcoin network due to the limited availability of block space, but those willing to pay Bitcoin transaction fees are propping up the project.
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