The Number of Entities Using Bitcoin to Store Arbitrary Data Has Declined
Three years ago there were a lot of discussions concerning data embedded in bitcoin transactions and the block size space consumed by these OP_Return transactions. However, in recent times, the use of OP_Return transactions has dropped a great deal and the trend has lowered network fees to some degree. OP_Return Transaction Domination Slows Significantly Alleviating Bitcoin Network Fees
Bitcoin transfer fees have dropped quite a bit over the last nine months since July 1, 2021. At that time, the average transaction fee to send bitcoin (BTC) was above $10 per transaction. Statistics show that at the end of April 2022, the average fee to send BTC is 0.000042 BTC or $1.62 per transfer. This month a report published by the lead at Galaxy Digital Research, Alex Thorn, explains there are a number of reasons why onchain transactions have been cheaper. Alex Thorn’s and Galaxy Digital’s report shows a decline in OP_Return transactions.
Thorn’s report explains there are a number of reasons why fees are lower including the use of transaction batching, increased Segregated Witness (Segwit) adoption, and Lightning Network usage. Another trend Thorn’s report covers is the fact that OP_Return transactions have declined. The researcher notes how after 2018, following the launch of Veriblock, the use of storing arbitrary data on the Bitcoin blockchain spiked. Tether transactions via the Omni Layer chain which uses OP_Return transactions have declined a great deal since USDT has been added to a variety of different blockchains.
In recent times, however, OP_Return transactions stemming from the likes of Veriblock and Tether via Omni are down. The Galaxy Digital Research study explains how most tethers have moved off the Omni Layer network that uses OP_Return transactions to alternative chains. While Thorn’s report briefly mentioned the spike in OP_Returns after Veriblock it doesn’t mention how controversial storing arbitrary data on the Bitcoin blockchain was at the time. Individuals and organizations have been storing data on the Bitcoin blockchain for years. The social media account @OP_RETURN_Bot publishes specific OP_Return transactions with messages on Twitter.
Essentially, an OP_Return is used to mark a transaction output and users can mark roughly 80 bytes of null_data to the Bitcoin blockchain in a given transaction. By using Bitcoin’s script and null_data, a great number of entities have used it to write messages on the blockchain and record important data. At the end of 2013 and into 2014, OP_Return use started to become more popular and controversial. Still, before 2017, research shows that OP_Return transactions only accounted for less than 2% of transactions.
Current daily data shows that OP_Returns have dropped in recent times and it is very different than when Veriblock captured 57% of Bitcoin’s OP_Return outputs in 2019. Bitcoin proponents were very concerned at the time about people and organizations storing arbitrary data on the Bitcoin blockchain. One paper published on December 11, 2020, discusses “dominating” OP_Return outputs in a paper called “The Impact of Omni and Veriblock on Bitcoin.”
Besides Veriblock, between 2018 and December 2019, the top publishers of OP_Return transactions stemmed from Omni/Tether, Factom, Komodo, Blockstore, po.et, Chainx, and RSK. Nowadays, while many of these projects still exist, they are not producing as many OP_Return transactions as they were in the past. Of course, there’s a chance the use of OP_Return outputs dominating BTC transactions could happen again. While reports like Thorn’s study and current data show OP_Return transactions have lowered, there’s no clear explanation for why this has happened. Tags in this story Alex Thorn, Bitcoin Blockchain, BTC, Galaxy Digital Research, Galaxy Digital Research study, Omni Layer network, OP_Return data, OP_Return transactions, OP_Returns, storing arbitrary data, technology, transaction cost, Transaction Fees, transaction output, transactions, Veriblock
What do you think about the decline in Bitcoin OP_Return transactions in recent times? Let us know what you think about this subject in the comments section below. Jamie Redman
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today. There’s an Insatiable Urge to Burn Crypto — A Look at Why Projects Burn Tokens and the Benefits TECHNOLOGY | 1 day ago Makerdao Plans to Integrate Ethereum L2 Solution Starknet to Lower DAI Transaction Costs TECHNOLOGY | Apr 20, 2022
Image Credits: Shutterstock, Pixabay, Wiki Commons Previous articleAttackers Steal $80 Million From Rari Capital’s Fuse Platform, Fei Protocol Suffers From Exploit Next articleBill Regulating Crypto Mining Submitted to Russian Parliament Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article. Read disclaimerShow comments More Popular NewsIn Case You Missed ItRipple CEO: SEC Lawsuit Over XRP "Has Gone Exceedingly Well"
The CEO of Ripple Labs says that the lawsuit brought by the U.S. Securities and Exchange Commission (SEC) against him and his company over XRP "has gone exceedingly well." He stressed: "This case is important, not just for Ripple, it’s ... read more.Central Bank of Brazil Confirms It Will Run a Pilot Test for Its CBDC This Year Bill ‘On Digital Currency’ Caps Crypto Investments for Russians, Opens Door for Payments Goldman Predicts US Recession Odds at 35% in 2 Years, John Mauldin Wouldn"t Be Surprised if Stocks Fell 40% Australia to List Bitcoin ETF After 4 Clearinghouse Participants Commit to Meet Stringent Margin Terms