Dominating OP Returns: The Impact of Omni and Veriblock on Bitcoin
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Dominating OP Returns: The Impact of Omni and Veriblock on Bitcoin Elias Strehle · Fred Steinmetz
Received: 27 March 2020 / Accepted: 30 October 2020 © The Author(s) 2020
Abstract Bitcoin has always been used to store arbitrary data, particularly since Bitcoin Core developers added a dedicated method for data storage in 2014: the OP Return operator. This paper provides an indepth analysis of all OP Return transactions published on Bitcoin between September 14, 2018, and December 31, 2019. The 32.4 million OP Return transactions (22% of all Bitcoin transactions) published during this period added 10 GB to the blockchain’s size. Almost all OP Return transactions can be attributed to one of 37 blockchain services. The two dominant services are Veriblock (58% of OP Return transactions) and Omni/Tether (40%). Veriblock transactions pay only 14% of the average transaction fee, partly because most of them are submitted during times when overall activity on Bitcoin is low. Omni transactions, on the other hand, pay more than twice the average transaction fee and therefore compete with regular Bitcoin transactions for inclusion in new blocks.
E. Strehle · F. Steinmetz () Blockchain Research Lab, Max-Brauer-Allee 46, Hamburg, 22765, Germany e-mail: [email protected] E. Strehle e-mail: [email protected] F. Steinmetz Faculty of Business, Economics, Social Sciences, Universit¨at Hamburg, Von-Melle-Park 5, Hamburg, 20146, Germany
Keywords Bitcoin · Blockchain · Econometrics · Transaction fees
1 Introduction The Bitcoin blockchain was created to serve a single purpose: the operation of a decentralized and secure digital currency. But even its inventor(s) Satoshi Nakamoto could not resist using it for something else. The following text is hidden in the details of the first Bitcoin transaction: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” Whether intended as a political statement or simply as a timestamp, the text goes beyond the declared purpose of the Bitcoin blockchain as a store of payment-related data. Many other Bitcoin users have since found it useful to publish nonpayment data on the blockchain. Most early methods of data insertion on Bitcoin had the undesirable effect of permanently increasing the number of unspent transaction outputs (UTXO), forcing full nodes to keep a growing number of “fake” transactions in memory. Bitcoin Core1 developers reacted in 2014 and released the OP Return script operator. It allows users to add up to 80 bytes of arbitrary data to a transaction without negatively affecting 1 Bitcoin Core is the reference implementation for Bitcoin clients. Originating from Satoshi Nakamoto’s [13] first client, the source code for Bitcoin Core is open source. By 2016, more than 400 developers had contributed to the enhancement and continued upgrading of the Bitcoin system [1].
E. Strehle, F. Steinmetz
the UTXO. However, the release notes emphasize that the introduction of the OP Return operator “is not an endorsement of storing data on the blockcha
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