An opcode in Bitcoin's scripting language that allows data to be written onto the blockchain, while marking the output as unspendable.
OP_RETURN is an opcode in Bitcoin's scripting language that allows a small amount of arbitrary data to be written onto the blockchain. It marks the output as unspendable, effectively making it a mechanism for embedding data into the blockchain without cluttering the UTXO set. This opcode is crucial for enabling non-financial applications on blockchain networks while maintaining their primary monetary functionality.
"A simple use of OP_RETURN could be to record a short message or a hash of a document onto the Bitcoin blockchain, providing an immutable timestamp that can prove the existence of specific data at a particular point in time."
OP_RETURN is useful for building on-chain protocols to extend Bitcoin's functionality. It allows developers to create a wide range of applications, from token systems to decentralized social media platforms, by leveraging the immutability of the blockchain. Bitcoin Cash has embraced this functionality, with protocols like Simple Ledger Protocol (SLP) using OP_RETURN to create and manage tokens directly on the blockchain without requiring separate smart contract platforms.
"The Omni Layer protocol uses OP_RETURN to issue and transfer custom tokens on the Bitcoin blockchain. Similarly, on Bitcoin Cash, the Simple Ledger Protocol enables users to create fungible and non-fungible tokens that can represent everything from collectibles to loyalty points."
While OP_RETURN is a powerful tool, it has limitations. The amount of data that can be included in an OP_RETURN output was initially limited to 80 bytes in the original Bitcoin implementation. Bitcoin Cash has increased this limit to 220 bytes, allowing for richer data embedding while still maintaining efficient blockchain usage. This encourages efficient use of blockchain space and helps maintain the scalability of the network.
"If you need to store a large amount of data using OP_RETURN, you would typically store a hash of the data, rather than the data itself. However, Bitcoin Cash's increased data capacity allows for more complex data structures to be stored directly on-chain, enabling more sophisticated applications."
The use of OP_RETURN has been a topic of debate within the Bitcoin community. Some argue that the blockchain should be used solely for financial transactions, while others see value in using it as a decentralized, immutable data store. Bitcoin Cash has taken a more inclusive approach, recognizing that blockchain's utility extends beyond simple payments to include various data verification and storage needs.
"Despite the controversy, the use of OP_RETURN has grown over the years, with many innovative applications being built using this opcode. On Bitcoin Cash, developers have created social media platforms, document verification systems, and even simple games that leverage the blockchain's immutability through OP_RETURN data embedding."
All terms and definitions may update as the Cryptionary improves.