Project Description

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

BRL Working Paper No. 7

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.

Published:

10 Mar 2020

Outlet:

BRL Working Paper

Authors:

  • Elias Strehle
  • Fred Steinmetz

Correspondence:

Keywords:

  • Blockchain
  • Econometrics of Cryptocurrencies
  • OP_RETURN
  • Tether
  • Transaction Fees