The blog post this morning by a group calling itself the Bitcoin Roundtable composed of some prominent bitcoin businesses, exchanges, wallets, miners, and mining pools, is a powerful statement that Bitcoin will impose decentralization.
This statement almost all but eliminates the likelihood of Bitcoin Hard Fork for 2016 and perhaps beyond.
Below the most crucial points of the statement;
We think any contentious hard-fork contains additional risks and potentially may result in two incompatible blockchain versions, if improperly implemented. To avoid potential losses for all bitcoin users, we need to minimize the risks. It is our firm belief that a contentious hard-fork right now would be extremely detrimental to the bitcoin ecosystem.
We must ensure that future changes to code relating to consensus rules are done in a safe and balanced way. We also believe that hard-forks should only be activated if they have widespread consensus and long enough deployment timelines. The deployment of hard-forks without widespread consensus is dangerous and has the potential to cause trust and monetary losses.
Rational actors are realizing that a Hard Fork implies leaving the protocol for a new one, and you cannot attempt this without a high level of certainty that you are bring along the entire network with you or you run enormous economic risk.
The continued failure of so many to attempt to fork the protocol is a positive event. Bitcoin today is almost impervious to internal or external political theft. There are few assets in the world today that can make such a claim.
I will make a note however that you cannot call for consensus, when it comes to a hard rule change. While this maybe a highly abstract point, even calling for someone to “come to consensus” implies that they must agree with your point of view.
In Bitcoin the only agreement all participants make is a self evident one, they agree to use the protocol and its rules today.
Consensus in a decentralized political system is something that arises, it cannot be imposed or coordinated. Either there is consensus or there is not. This is why hard rules changes are almost impossible to implement in the manner which many have been attempting, by trying to coordinate a sudden network change, or trying even to using the threat of majority hashing to do it.
No matter how benevolent or innovative this change is Bitcoin is anti-change, anti-political because that is what makes Bitcoin and this is what truly secures Bitcoin.
As such the approach to future changes to Bitcoin must one that focuses on working within the existing rules and one where a hard rule change if it ever comes will be the result of organic deprecation over an extremely long time horizon.
If you are still under the impression that Bitcoin “refuses” to innovate or some participants seem to be dragging their feet, it is because you are viewing Bitcoin through the lens of the existing world paradigm, and Bitcoin requires a new approach.
It would seem that 2016 is offering the perfect confluence of events for Bitcoin to take its place on the world stage of global assets.
The Bitcoin network has been in continuous operation for 7 years, a Bitcoin mined in 2009 can be perfectly traded in 2016. Bitcoin’s issuance rate, its block reward of 25 coins to miners, will be cut in half some time during the year. Gemini a Licensed Bitcoin exchange has come online with expectation of offering institutional investors access to Bitcoins. China’s collapsing economy and collapsing currency would seem to provide a ready audience desperate to secure part of their wealth with an alternative asset like bitcoin. It seemed that Bitcoin was showing signs of exiting its long bear market briefly touching $500 last year in the early days of November. Yet since that brief rally bitcoins performance has been ambivalent to say the least. Despite the fact that worldwide trends are conducive to a rising bitcoin price.
There have been a series of events however that could be viewed as diminishing Bitcoin’s claims of being a immutable and secure store of value safe from the prying hands of desperate governments. Primarily Bitcoin’s current debate which has flared into a civil war. A war over which direction it should take, the current development process offered by Bitcoin Core developers or an alternative process offered by Bitcoin Classic that is based on a hard fork of the protocol.
Below is our subjective assessment of key events in the Bitcoin Forking process with the closing price of Bitcoin on Bitfinex
December 7th Bitcoin Scalability Road Map Posted
Bitcoin Price $422.00
December 19th Bitcoin Road Map support is posted
Bitcoin Price $437.52
January 7th Bitcoin Core Segrated Witness testnet live
Bitcoin Price $454.00
January 9th Bitcoin Classic announced
Bitcoin Price $449.59
January 13th Gavin Andresen posts support for Bitcoin Classic
Bitcoin Price $429.25
January 14th Mike Hearn infamous quit post
Bitcoin Price $359.16
January 22nd Bitcoin article is published showing that some miners are concerned about a PoW fork of Bitcoin and may not support Bitcoin Classic.
Bitcoin Price $385.57
February 5th Bitcoin Classic Beta 2 Binaries released and Gavin Adresen posts on why classic will use a fork of 75%
Bitcoin Price $373.75
Now it is a dangerous path to select events and try a determine some causation to the price of an asset. However it appears that the fork debate because it introduces uncertainty to bitcoin’s future is having a suppressing effect on the price. Particularly when one considers that almost 3 years ago a far smaller Bitcoin economy had a market cap that was double the current market cap.
Proponents of a hard fork now approach will contend that Bitcoin’s price is representative of a market that does not believe Bitcoin can scale. They believe that continuous delay in increasing the blocksize is preventing Bitcoin from growing and attracting new users that will drive an increase in price.
However if that was the case the price should be responding to each future development that supports a fork bitcoin and in fact the opposite is happening. It appears that Bitcoin price was in a more positive trend just after the Bitcoin core road map was presented.
Additionally Ethereum which is considered to be the only true credible alternative to bitcoin has risen from a price of just 90 cents at the start of the year to almost $3.20, while Bitcoin debates a hard fork.
As discussed in Hard Fork Risks as Bitcoin gets closer to a contentious fork the price of bitcoin will continue to decline as investors flee all the potential risks both short term and long term that will be introduced to Bitcoin. So far the continued poor performance of the price of Bitcoin continues to reinforce this thesis. Like a corporation fending of a hostile takeover the Bitcoin economy will be fractured and damaged by a contentious hard fork. With the real possibility of triggering a full fork into two competing protocols.
Erik Voorhees, a Bitcoin Entrepreneur and CEO of Shapeshift.io has a reddit post that calls of Core Developers to end the Civil war by meeting two demands.
Move 1) Core clearly commits to a hard fork block size increase, by adding it to its formal roadmap. The specific plan should probably be the 2-4-8 plan, as proposed initially by Adam Back, and which achieved widespread consensus after the scaling conferences. The time to add it to the roadmap is now, and the time to execute the HF should then, within reason, be up to Core’s stewardship. This needn’t interfere with, and is certainly not a replacement for, the much beloved SegWit.
Move 2) Core formally, publicly, and clearly denounces the censorship that has plagued community discussion, and should apologize for not having done so earlier. Core is not responsible for the censorship, but stood silently by as it happened, allowing widespread mistrust to grow out of control.
Sadly this post in misguided in several ways;
Adam Back proposed a hard fork to scale Bitcoin over a period of several years, called the 2-4-8. While there is no doubt that Back’s proposal was sincere, the reality is that any hard fork of Bitcoin as we have argued in the past will ultimately fail, and the results could be catastrophic. At this stage no credible roadmap should propose hard forking of Bitcoin short of an emergency flaw with the protocol. The reason is simple, Bitcoin is practically un-forkable, there is no way at this size of the network to coordinate a full network upgrade across the globe without experiencing serious problems that in the end will undermine the stability of the coin. Either Bitcoin is a global decentralized consensus-network in which case a hard fork would be contentious and un-workable or Bitcoin is a semi-centralized coin whose entire network can be coordinated by reddit and a few round tables in china. The reality is that Bitcoin is the former and as such an attempted hard fork will probably result in severe disruptions to the ecosystem. Finally, any developer who plans on forking Bitcoin would really be a full time politician as almost 99% of their time would be spent convincing the network to fork, as opposed to actual development.
On the 2nd request, asking Core developers to formally denounce something they have no control over can be construed as a backhanded smear tactic. Like asking a man who has never hit his wife, to formally denounce ever beating her. Greg Maxwell lead developer for Bitcoin Core responded as follows:
On the topic of “denouncement”, I think this note is regrettable: It is both unprofessional and a crass move of disrespect towards fellow human beings.
I called out Theymos on the moderation policy and counciled against it. Yet the poster here claims there was only silence; this is flat out untrue.
At the same time, when moderation was temporarily discontinued before aggressive moderation was first instituted the flooding attacks on the /r/bitcoin were so bad that you could flip three pages before seeing something that wasn’t an (often untrue) advertisement for Bitcoin XT along with a myriad violent insults and conspiracy theories. That same embarrassing non-professionalism and near zero SNR now plague the alternative subforum today.
How loud can I continue to oppose when the “uncensored” alternative is both uselessly bad and, yet, also “censored” itself? I still think the aggressive moderation is a bad move, but would we be better served by turning /r/bitcoin into/r/btc? Absolutely not: And even to someone who believed that the /r/btc way was better: it already exists. Probably the most essential element of free speech online– where the ability to speak at all is nearly a physically inalienable right– is being able to have your own space, where attacks can’t bury your words in tripe. In that sense the constant bragading attacks on /r/bitcoin and against the Bitcoin Core project’s own communication tools are some of the worst kind of censorship possible online.
Against this backdrop; people from the bigger-blocks-at-any-cost community run with smears and insults against myself and the longstanding developers of the Bitcoin software and protocol the network uses today. Though that community mostly acts through pseudonymous throwaway accounts, some of the attacks are by well known names. Does the poster here denounce it? No, not that I’ve observed. Do they denounce the threats against my lives of myself, my family and other Bitcoin developers? Do they denounce the lies being spread to attack my reputation and others who have supported Bitcoin so many years? Do they denounce the flooding of the Bitcoin Core communications channels and github by sock accounts? No, seemingly not.
Of course, there are an effective infinitude of things going on in the world that any reasonable person finds reprehensible. Waging a campaign of disagreement with most of those things has no effect beyond wasting time that could instead be used to inform or make the world a better place. So, I don’t expect the poster to have denounced all the vicious and sometimes unlawful attacks performed in the name of his interests. But I do find it ironic that he criticizes others on the basis of a higher standard than he seems to hold himself to.
Emotionally, the argument that Bitcoin Core has an affirmative responsibility to denounce a social networking forum choosing a foolish moderation policy makes the lack of his own opposition to all the vile attacks against us conspicuous by omission. Was it the intent to suggest a degree of implicit support for the parallel attacks that he hasn’t denounced? I doubt it, but I can’t deny feeling a little bit that way. But if I really expected it done, I would have asked in private; not via an unprofessional public list of demands.
Much of what drives the Bitcoin “civil war” is due to a mis-characterized perception of what Bitcoin is. Bitcoin is not a standard open source software project, Bitcoin is a decentralized consensus system, a global political system composed of voluntary participants. Developers do not manage bitcoin, instead they provide code which the network is free to adopt or not.
This “civil war” is really an attempt for some to try and wrest back control of a system that has evolved past any group of developers, communities, or companies. It is interesting to note that today Bitcoin trading occurs all over the globe in every language, yet the epicenter of discussion is two message boards which at any time have a combined 500-800 active users. This shows how out of touch most in the Bitcoin ecosystem are.
And just like that the Bitcoin system asserts it’s decentralization on all participants.
Bitcoin Magazine is confirming that F2POOL has decided for the moment to support the existing consensus rules and abandon it’s support to Hard Fork the protocol.
Speaking to Bitcoin Magazine, F2Pool operator Wang Chun confirmed this is indeed the case.
“The rumors are true,” Chun said. “Miners in China were scared by Luke Dashjr’s proof-of-work changing pull request.”
As we just discussed in “Why a Hard Fork should be fought” a minority party must assert it’s position to contest any rule change to the protocol via a Hard Fork by exploring all options. Because a Contentious Hard Fork is effectively a system reset against the interests of the minority, if successful it is centralizing.
Many will view this as obstructionist, and potentially harmful to Bitcoin’s ability to innovate. But in fact this is a momentous development which is showing that Bitcoin is becoming a truly decentralized protocol.
A Hard fork, really is a misleading name. It connotes the idea of a train traveling on the tracks and the conductor makes a decision to change the rail switch, and choose a another track to go down. While the trains directions changes, the passengers cargo and train remains the same. Everyone enjoying a happy trip, maybe the destination changes, but nothing else happened. You can imagine who today we think is the conductors of Bitcoin, and who tomorrow some hope will be the new conductors.
But in reality Bitcoin is supposed to be a decentralized system, and in those systems, its not a train, but a group of participants with guns drawn at each other. More on that later.
In the world of protocols, which Bitcoin is supposed to be, a Hard Fork, is really what a hardware engineer would colloquially call a Rip and Replace, the minute you change one rule that requires a complete network upgrade, you have in fact a new network. Now while the hardware is not changed, the players are the same, the rules of the game have changed and every participant is in effect starting from scratch in a new field.
While we have a distinction between Hard and Soft Forks, and Peter Todd does a great job explaining, the difference. I will discuss, why hard forking, which some celebrate as the epitome of bitcoin resilience is pernicious and dangerous in a decentralized network, particularly if the minority simply accepts it. Hard Forks should be a last resort and should be something self-evident to the network. If they are not it is incumbent on the minority to threaten to break the network if needed.
But before we even state why a minority should fight, consider the following:
Shower thought: Hard Forking a decentralized protocol, means its not very decentralized.
In fact Hard Forks, should be practically impossible in Bitcoin, if it is truly a decentralized network. Consider that in a truly decentralized trust-less network , there is no central authority and the participants do not know each other. How can you signal to an entire network it must replace its protocol at a specific date and time? Who would make this signal?
Take the debate of encryption on the internet as example. Encryption is many different protocols, which some governments now want backdoor access to. Except there is no possible way they can have access to all systems because encryption technology is decentralized and evolving, there is no way to signal to all participants to accept a specific standard. There is no way to even “hard fork” to one standard encryption protocol even if all the governments of the world somehow wanted to. Doesn’t mean they won’t try, but this is the nature of a truly decentralized system. Hard Forks in decentralized systems cannot be imposed they must emerge.
Recall the Y2K bug, for those who weren’t around, it was a potential bug embedded in what was an emergent standard (not dicated or set) of how data was stored in computer systems. Computer systems once deployed operate and exist in decentralized global system. In this case there was was a common practice, of using truncated 2 digit years to save space. So that, a document with the date of October 26, 1985, would be stored as 102685. This worked great for about forty years, particularly in the days when space was measured in bytes and kilobytes. Then around 1995, despite it being a known issue in some circles for years earlier, technology professionals began realizing that in the year 2000, some computers would mistakenly read the date of 01-01-00 as January 1st, 1900. On the face of it not the end of the world, but then people began realizing how date systems were anchors to all kinds of functions within programs and computers, and it became apparent it could be catastrophic. There were concerns people could not get paid, social security checks would not be sent, medical benefits revoked, flight control systems in airlines disabled, traffic signaling systems, banking, on and on. Well once again the governments of the world could not really mandate this change although they attempted via laws and committees. Overall because it was in everyone’s self-interest to avoid a computer failure on January 1st 2000, an emergent hard fork occurred, where pretty much every computer system was either updated or replaced, and still many were not. This is an acceptable hard fork, while the Y2K bug in the end was overblown, it was apparent from game theory that it was not an attempt by one party to gain, but all parties where affected equally and possibly fatally. It was truly a once in a life-time, possible do or die, situation that necessitated a hard fork. This should be the standards for Hard Forks, it should be an unknown event because in a decentralized network where all parties are equal it takes an external event or threat of that no one has control over to signal to all parties equally to change. If not one must conclude the network is not decentralized.
Above I stated that if a hard fork attempt is made on the network without self evident consensus then in fact the minority needs to view this as an attack of the network and now has a choice to make.
Consider a simple consensus network of 3 parties. All Parties are in equal position of relative power as they perceive it. The parties are not identical however their benefit received from the network is.
Party A participates for perceived reward Ar
Party B participates for perceived reward Br
Party C participates for perceived reward Cr
The total value of the network reward expressed as Ar+Br+Cr
Party B now determines that if they can change one rule in the system they can receive Reward Br+1, thereby improving their results and those of C, even though they believe it may not benefit party A.
Party A view the change as Ar-1, thereby a loss to them.
Party C views the change as Cr+1, indicating that they will work with B to override A.
The resulting value of the network reward being (Ar-1) +( Br+1) + (Cr+1)
Clearly B and C were correct to engage, even at the expense of A, they benefit, and the network may benefit, assuming their calculations are correct.
Party A has the choice to accept the change, or exit the network. Party A’s only ability to stop the attack is to either affect the value of B and C’s Reward to where one of the attacking party perceives it will be a net loss if it continues. Additionally consider that parties B and C will signal that no matter what A does they expect to be victorious. Although no party in fact knows how one will act and what the result will be until after the process is complete.
A now signals, that in fact it maybe willing to even further impair its own reward if the possibility exists of any way impairing one of the participants own rewards, and the overall network reward. So that for example it becomes (Ar-2) + (Br+1)+ (Cr ), where now even C’s reward expectations can be impacted thereby affecting his expected reward. A has now effectively created the possible scenario that in fact the overall network will lose rewards. Notice that B may still move ahead, because it is still a positive for itself at the expense of the network, but now C sees no gain, and in fact sees possible future impact to the network. (This is common defense for the coin limit where removing the cap in theory would not be possible because A the non-miners would signal that they will suffer greatly thereby impairing the network, by dropping the price of bitcoin and abandoning their investment)
The reason this is legitimate is because all three parties entered the system to play by the same rules, by B and C changing the rules, a new system emerges, A must now choose to stay, exit or signal to B and C that they are wrong and A must show B and C how their assumptions are incorrect.
If Bitcoin permits a Hard Fork of the network, and if a majority can hard fork the network against the wishes of the minority then what is happening is that Majority has effectively discovered a loop hole in the consensus rules and is engaging in a network attack to reward itself from the benefits of the attack. Regardless of how altruistic B claims their intent is, regardless of whether B believes that their solution will bring peace on earth, and caviar dreams and limousines to all, one has to assume in a decentralized system that all participants act out of self interest first, and if one party sees no reason for a consensus rule change and the other party does then more than likely the majority party is looking to increase its benefit at the expense of the minority.
Any result where the minority cedes to the attackers concludes the network is centralized because either A concedes and remains in the network thereby signaling that in fact B and C own the network and will manage future changes to their benefits, or A exits the network which has the same result in centralizing the network to B and C. Only by A successfully signaling that the attack will result in a loss for all can the network be restored to a decentralized state.
Shoot the Hostage
Pop Quiz Hot Shot!
In the 1990 cult classic movie Speed with Keanu Reeves and Sandra Bullock, the movie deals with a villain, played by the late Dennis Hopper, who masterminds No-Win scenarios, in a game of wits against Keanu’s character a Swat Officer called Jack. Jack must figure out how to catch the villain while escaping his traps, disarming his bombs and not killing civilians in the process. In the famous scene above, Jack in order to stop the villain from taking his partner hostage uses the unconventional tactic of shooting the hostage (his partner) in the knee.
In a foreshadowing to the above event the following exchange takes place between Jack and his partner
Partner: All right. Pop quiz. The airport. Gunman with one hostage.
He's using her for cover. He's almost to a plane.
You're 100 feet away.
Jack: Shoot the hostage.
Take her out of the equation.
Go for the good wound. He can't get to the plane with her
You're deeply nuts. You know that?
"Shoot the hostage."
As Hollywood as the scenario is, it is a legitimate game theory option. This is asymmetric warfare, where the opposing force’s only chance of success is to communicate to the larger force that it will pursue unconventional tactics, that were likely not part of the large forces calculations. This can then bring into question if the successful attack of the larger force will provide the results it seeks.
Similarly those who oppose the hard fork maybe forced to signal to the attacking party that they may attempt different techniques which could undermine the overall results, the hostage in this case Bitcoin.
Some would be horrified at this discussion and indeed it is being discussed on reddit. But the reality is in a decentralized network, all participants are free to play by any rules within the consensus, and if they can change it to their benefit than the consensus rules were not properly balanced or decentralization never existed.
One scenario discussed in reddit, is forking to an alternate PoW with all the pending hard fork changes proposed by Core, thereby giving the market 2 clear choices, a 2mb increase via contentious fork, versus a coin that has serious improvements on the bitcoin protocol with a PoW that locks out all existing hardware, while this would lock out hundreds of millions in hashing investment, it opens the possibility of capturing wasted hashing locked away in worth-less altcoins and because it is forking as a last resort, a nuclear option, the only reason a hard fork should ever be attempted, it may signal to the overall market that this new coin is the more decentralized alternative.
The fact is, that the market has incorrectly assumed that core development is a centralizing force for not implementing a hard fork, and in fact it is not. Core Development correctly concluded that Hard Forking a protocol, without the hard fork being emergent and self evident, would be an act of centralization with the potential to break bitcoin, so they did not do it. Additionally, others have mistakenly perceived Core’s inaction as centralization, and are now themselves acting in manner to centralize the network by imposing a consensus change to the network without actual consensus.
Again, unless a self-evident, consensus emerges, the “Oh my god a Giant Metor is Coming”, there is no reason to hard fork an operational consensus protocol. And as such the minority power has every right to pursue all options as much as the majority power.
Now I am not advocating deliberate sabotage, or anything illegal, nor am I spitting sour grapes. But I do believe that in a decentralized system like Bitcoin that decentralization must be maintained at all costs and it is up to each participant to defend that, any party which is acting to exert influence on the others outside of the consensus rules is in fact attacking the network regardless of hashing power. To the extent that people view core development as a centralizing force they have every right to decentralize from them, notice however that core never imposed anything on the network it merely played by the already existing consensus rules.
With each successful hard fork of the network, one has to assume that either independent miners or full nodes have been lost, or combination of both or the network is centralizing on some sort of signaling. Typically the signal being that with each successful contentious fork the winning hashing power will be emboldened to continue attacking the network in successive self-reinforcing victories.
Hard Forks, in effect break the rules of the protocol, it invalidates all previous game decisions made by participants, and in effect creates a new network, with the reality that it is just a matter of time before the rules are invalidated again. Now someone would call this anti-fragile but this is wrong this is run away centralization, and in fact will lead to an inevitable black swan event. Because, the resiliency of the network the counter balance is being attacked and chipped away to accrue benefits to majority, while they are blind to the ever increasing danger of centralization.
This does not even take into account the negative signals to outside forces of seeing what is supposed to be a decentralized censorship-resistant protocol in fact centralizing and ejecting elements out of the system in pursuit of non-participant actors. One of the biggest sponsors of a contentious hard fork is in fact an entity that shouldn’t even exist in a Bitcoin, Coinbase. The fact is if that if the majority of keys where held by independent parties with at least some running full nodes, and bitcoin mining was not 10 guys in a room, contentious hard forks would be impossible to coordinate.
Now Hard Forks would clearly have less risk again, if they did not have a centralizing effect, or they where a net neutral, i.e. to address a catastrophic bug, a protocol flaw. However those would still come with potential new changes and unintended consequences, but they are pursued when the alternative is typically fatal to the network.
The 1mB limit as stupid and arbitrary as it may be is not a flaw, it does not break bitcoin, and in fact blocksize is inherent to bitcoin, since it was imposed by Satoshi on the network, so one cannot say that a catastrophe has been avoided by doubling a number.
As we previously discussed in a Dangerous Path Ahead, nothing good will come from this contentious hard fork of Bitcoin, and the laughable 2mb increase may come at irreparable harm to bitcoin and its claims to be a decentralized censorship-resistant currency.
We are a victim of our own success, and I fear that the pressures brought about from bitcoins growth are rushing us headlong into one manufactured crisis after another, that may lead to more centralization.
Already, we may be setting a dangerous precedent of pushing through a contentious hard fork with a low limit, something that has never been done before. Peter Todd makes a reasoned case why Soft-forking with a high threshold, should be the standard, because it is the safer approach and insures that the entire network upgrades at its own pace, not via threat.
It’s clear that raising the block limit is contentious, and galvanizes Bitcoiners on both sides of the debate. A contentious fork combined with a low threshold creates a real risk that this can cause problems for the network during the reorganization. One has to ask, at what threshold is a contentious hard fork not viewed as an attack on the network?
Advocates for raising the limit argue that it is strangling Bitcoin’s growth. That hitting the limit has the potential to cause an economic change in Bitcoin with rising transaction fees and that this arbitrary limit implies central planning or artificial scarcity. However raising the limit places a greater resource burden on the network, particularly on node operators who receive no compensation for running nodes. The concerns are that raising the block limit will lead to greater centralization.
In many ways we already see a divergent bitcoin system, one with actual participants, that run nodes, hold keys, and one where the participants have ceded their votes and trust to third parties, where they face all the same rules, regulations and loss of privacy that come with the current system. These third parties in effect have pooled the votes of hundreds of thousands if not millions of participants under the banner the “economic majority”. However is this how Bitcoin was intended, while Satoshi advocated SPV wallets, the keys where retained with the user, and theoretically acted as independent users. The idea of trusted third parties holding they keys of hundreds of thousands if not millions of user and making decision on their behalf begs the question, is Bitcoin already too centralized?
Despite the headlines, Bitcoin is not broken, it works. Bitcoin rejects no one, there is no account subscription limit, we have not run out of invitations. Instead we have half-truths being pushed by some who don’t like the current development process, and by some whose business model is based on a walled Bitcoin economy. Is their sense of urgency driven because bitcoin is not delivering the right growth numbers or because of the perceived competition from a Paper Tiger Consortium?
The only chance Bitcoin has of achieving Satoshi’s goals, is of thoughtful moderate growth, where Decentralization is put first, and then growth. It’s not up to anyone to decide when Bitcoin will achieve the target of global dominance, or even a 100 million users. That is up to Bitcoin, but if we keep it free and de-centralized it will market itself and it will get there.
When Satoshi was challenged, that cryptography could not achieve political goals, he responded with a realist view, but one grounded in cypherpunk ideals:
“You will not find a solution to political problems in cryptography.”
Yes, but we can win a major battle in the arms race and gain a new territory of freedom for several years. Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.
This response made clear what Satoshi’s intentions for Bitcoin were. Satoshi did not create Bitcoin merely as a tool for speculation, to make people wealthy, or to fund new companies. Bitcoin was built to liberate, to establish a new frontier for those who believed in individual liberty.
I am not arguing for or against the block limit. Personally I believe it needs to go up and it will in time, but I leave the debate to those who know.
54 developers signed a road map that has actual code, that was deliberate, thoughtful, and balanced the risks; of a bitcoin that is strangled by technical limits vs one that grows at the expense of decentralization. But sadly, due to recent events some have abandoned the road map.
What we should all be against, is artificial timelines, manufactured threats, and propaganda campaigns which takes a process that should be a deliberate and thoughtful, guided by science, math and empiricism and turn into next quarter’s deliverable.
Satoshi always offered a balanced view, they recognized that some micro transactions, would not be processed, and at the same time eventually data farms may evolve to process bitcoin transactions. But these were things to evolve over time as Bitcoin emerged as a dominant system and the risk of it being co-opted by internal and external forces were lessened. Satoshi never set specific timelines, though they did make a prediction early on that some form of E-cash could be in use within 10 years,
I would be surprised if 10 years from now we’re not using
electronic currency in some way, now that we know a way to do it that won’t inevitably get dumbed down when the trusted third party gets cold feet.
However predictions aside, one may presume that based on Satoshi’s own actions, their vision was to unfold over decades, not mere years.
Satoshi worked on Bitcoin privately for years before going public, they set the distribution of Bitcoins to occur over 100 years, they envisioned that 100,000 independent nodes would support the bitcoin network.
Only 7 years in and many in this community have espoused unrealistic expectations that bitcoin would take over the world like the latest social media app. This short sighted view does an extreme disservice to what Bitcoin’s original intent was. In fact, Satoshi themselves, advocated against rapid expansion of bitcoin
“No, don’t ‘bring it on.’ The project needs to grow gradually so the software can be strengthened along the way. I make this appeal to WikiLeaks not to try to use bitcoin. Bitcoin is a small beta community in its infancy. You would not stand to get more than pocket change, and the heat you would bring would likely destroy us at this stage.
This was not a one-time appeal, this was in-line with Satoshi’s development process from day one, from the gentleman’s agreement to keep GPU mining at bay, to implement the 1mb limit, and then their rejection of early appeals to lift the limit, because it was bad marketing.
Think about that, someone proposed that a technical decision be made in order to meet a marketing goal? Sound familiar? Developers should be careful about driving technical decisions based off marketing appeal, or even what the “competition” maybe doing. If Bitcoin owns the decentralized currency space, it will never need to worry about marketing.
Satoshi’s actions and continued in-action point to a person that had long term views and may have even appeared to have sacrificed personal gains in order to serve Bitcoin’s growth.
Time and again, Satoshi made technical decisions, driven by keeping bitcoin decentralized, not by political decisions or artificial goals.
So many are now espousing the dangerous meme, that Bitcoin is anti-fragile and can survive any type of contentious hard fork. “Lets test it and find out”, “if Bitcoin has to rely on altruism, it will fail” have been common response to opponents of the hard fork. Or now the idea that we need multiple Bitcoin implementations to compete. But it’s not even clear how that would work, are forks coming quarterly now, do we try hard forks at 60%, 55%. What does that say to the stability and immutability of the network? Does Bitcoin development devolve into a media campaign, where there is now a continuous battle to win hearts and minds on coding, something that is kind of hard to explain over twitter.
I am not claiming that Bitcoin Code is some tome to be interpreted by a council of elders, but we must be very careful how we proceed. Immutability, and Stability are also core tenets of Bitcoin, there has always been a community agreement, that hard forks would not be done if they were contentious, because of the risk of undermining that. It is hard to argue for someone to store their life saving on a network, if this weeks 60% fork accidentally froze you out of it for 2 days. Sure Bitcoin keeps working, but is that stability?
It also says something about how centralized Bitcoin is already, when 3 developers who have had limited contribution to the code base in recent years, have now galvanized a portion of the community to attempt a hard fork in a manner that’s never been done before.
But it’s not clear how a migration to a competitive development cycle will actually work, How often are participants going to be politicked by developers to adopt their new changes, and vice versa. How could Bitcoin function via some kind of cola war. It has always be understood that competitive forks of Bitcoin were alt-coins. Some compare it to Linux Development which has separate flavors, but that’s a false comparison since you cannot run multiple Bitcoin networks.
In a highly decentralized Bitcoin network, all these concerns are irrelevant. Bitcoin’s anti-fragility works if the majority of the community makes rational decisions that are in their self-interest, driven presumably by bettering the network and reflected in an appreciating bitcoin price. However what happens with a declining bitcoin price, where investments have been made and not realized, where external fiscal pressures may drive a core group of participants to make short term decisions that may be beneficial to them only, even if has the potential to damage the network in the long run. The key to mitigating these risks is decentralization, the greater the decentralization the less likely that bad actors can coalesce and effect the entire network, or the less likely that fatal decisions can arise.
Centralization is a runaway affect, once unleashed it is impossible to contain. If I get to vote to grant myself more votes, guess what? The only way the market can correct too much centralization in Bitcoin is by abandoning it to another system. Clearly we don’t want to get to that point. Some would argue that signal would pause bad actors, but that has never been the case, in fact human history shows that run away panics are self-fulfilling cycles. Interestingly, Ethereum price has seen a rapid rise in the past week from .99 cents USD to over $1.55, as the Bitcoin price has collapsed, are we already seeing this process play out? Too many make the dangerous assumption that at this early stage, of the network, any decision can be made and we will somehow be insulated from bad consequences. Clearly even Satoshi’s own actions contradicted that line of thinking.
So yes, altruism is part of Bitcoin and in fact that it is what brought us bitcoin. Satoshi did not rush out and create “defensive” patents on bitcoin technology as some bitcoin companies have (we now rely on their altruism that they won’t abuse those patents). Satoshi, did not wall off licensing, or create a consulting model around Bitcoin code (models that are being discussed). As far as we know they didn’t line up VC capital before releasing the code, they didn’t take pre-mine orders for preconfigured GPU’s, and then mine with those GPUs, before delivering them, they could have done all those things, and more. Some would say these things were not done because it would have affected Bitcoin’s value, but the fact is that these things have happened in Bitcoin and other networks.
The fact is that then and now, the community of Bitcoin relies on altruism; from the Bitcoin Relay Network, to volunteer teams of developers. The reason for this is that Bitcoin is still growing, and still a small community.
Bitcoin will only work if the majority of participants, ideally all of them, believe that a decentralized censorship-resistance system is needed. That is the experiment, if in the end, a majority decide we really don’t need the decentralization that much, and that Satoshi was a nice person(s), but a little high minded, and instead we vote for centralization, or mistakenly believe that somehow bitcoin can self-correct on centralization, well then then as Satoshi put it, our “ few years” are up.
It’s interesting that the very moment that world may be on the brink of another financial crisis, we are having our own crisis. Bitcoin was created to provide a lifeboat, a way to exit the current financial system. Yet at the very moment that the world maybe turning to our community for a way out from the madness, we are at risk of sinking the lifeboat.