Early Bitcoin dev says MEV coming to Bitcoin ‘fundamentally breaks’ it

The recent revival of NFTs on Bitcoin has opened up a distinctly uncomfortable prospect for many bitcoiners: it could lead to priority transaction ordering on the chain. 

Priority ordering — where some people pay more to have their transaction confirmed before others — is very common on Ethereum. It has led to an entire industry trying to game the system to their advantage, by reaping so-called maximal extractable value (MEV), and forced others to protect themselves against the practice. But this hasn’t really been a thing on Bitcoin, because it doesn’t matter which way unrelated transactions are ordered.

With the rise of Ordinals, analogous to NFTs on Bitcoin, developers are starting to realize that new layers and applications can be built using the type of ordering system it has pioneered. It started with talk of Layer 2 rollups running on Bitcoin and there’s now some discussion of tokens being built on Bitcoin. But these innovations could bring the kind of MEV that’s common on Ethereum over to Bitcoin — and some core believers are worried this could have serious consequences.

“This breaks bitcoin," Matt Corallo, one of the earliest Bitcoin developers and an open-source engineer at Bitcoin-focused development company Spiral, part of Block, said on Twitter this week. "It's not like it's some minor thing that isn't worth going to great pain to disrupt — rather it fundamentally breaks the main goals of the Bitcoin system!”

MEV creeping in

Corallo added that there was a big difference between simply embedding data in Bitcoin — like putting a JPEG in the chain — and creating systems that interpret the ordering of data in specific ways, which is where MEV might creep in. He suggested that developers should try to introduce a network change to prevent the latter from occurring.

“As we've seen repeatedly with ETH, material MEV causes huge damage to decentralization. Absent success with social pressure, yes, we should endeavor to fix things which are seeking to break Bitcoin's key properties,” he said.

Eric Wall, former CIO at Arcane Investments and strong supporter of the Bitcoin-based Taproot Wizards NFT project, said MEV is coming to Bitcoin "regardless if people like it or not" but reckoned the consequences will be both good and bad.

He argued there’s upside in so far as it could provide further subsidies for Bitcoin miners, making Bitcoin less reliant on block rewards for its long-term sustainability — something that could become important as the rewards continue to halve every four years. 

Keeping Bitcoin decentralized

On the flipside, Wall noted that the Bitcoin ecosystem would have to adapt to dealing with MEV. Particularly it would need to focus on preventing centralization of mining pools, in order to keep the network sufficiently decentralized.

That said, he predicted the emergence of Ethereum-like meta-protocols built on top of Bitcoin that could help to spearhead demand for the network — and bring "fun" back to Bitcoin.

“The battlefield of bitcoin has changed,” Wall said.

Not everyone was so quick to agree that MEV is inevitable. Synonym CEO John Carvalho said it's unlikely MEV will gain traction on Bitcoin.

"It is much more likely none of this will happen in any meaningful scale because scammers can't print BTC and putting things 'on' Bitcoin has pretty much never lasted," he tweeted, setting a reminder to look back at this moment in four years' time.