Dominating OP Returns: The Impact of Omni and Veriblock on Bitcoin

Elias Strehle,Fred Steinmetz

doi:10.1007/s10723-020-09537-9

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 in-depth 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.

Highlights

The Bitcoin blockchain was created to serve a single purpose: the operation of a decentralized and secure digital currency
We identify which services published OP Return transactions, how much they paid for them and how they contributed to the size of the Bitcoin blockchain
Almost six years have passed since Bitcoin Core developers released the OP Return operator as a

Summary

Introduction

The Bitcoin blockchain was created to serve a single purpose: the operation of a decentralized and secure digital currency. Whether intended as a political statement or 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. Bitcoin Core 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 the UTXO. The release notes emphasize that the introduction of the OP Return operator “is not an endorsement of storing data on the blockchain. Storing arbitrary data in the blockchain is still a bad idea.”

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