The next blockbuster horror film coming soon to a theater near you: “The Morphing“. It documents the disastrous transition of a fluid, decentralized, unified, team into a hardened, centralized, divided, team.
Assume you’re building a radical new financial system from the ground up intended to be useful to every human being on the planet – not just to the rich, powerful, manipulative, greedsters who lord over the current antiquated and rigged system.
In order to survive the continuous offensive onslaughts from those entrenched oligarchs, your goal is to onboard as many everyday users as needed as fast as possible to unambiguously prove that the ground breaking system is not just being used by “criminals, terrorists, pedophiles, drug dealers, and tax avoiders“. You need to surpass the World Wide Acceptance Threshold (WWAT) of, say, 1 billion users.
Satoshi Nakamoto’s Bitcoin “peer-to-peer electronic cash system” is currently the most popular system trying to reach and exceed the magical WWAT. It currently has millions of users, but the usability of the system (high transaction fees, long confirmation times) is deteriorating at an alarming rate due to network saturation triggered by the rate of growth of new users.
There are two solutions out there competing to relieve the pressure on the bitcoin network so that the rate of new user growth doesn’t go to zero (or negative!): SegWit and Bitcoin Unlimited (BU):
The SegWit solution provides a short term, hard limited, pressure relief valve to allow some network breathing room for orderly new user additions. The BU solution provides a dynamically variable pressure relief valve to achieve the same effect. It tries to adapt to the changing new user growth rate over time.
The above graphs indicate that the SegWit solution is agnostic toward the rate of new user growth and halts system progress toward the WWAT goal at some point after its introduction. The BU solution allows the system to gracefully expand in proportion to the rate of new user growth, providing friction toward progress to the goal, but not a hard stop like SegWit.
SegWit is less technically risky because it is a much more conservative approach and it has undergone more peer review and offline network testing than BU. The biggest risk that BU introduces into the system is the concept of an “Emerging Consensus“. The EC rules allow the market to dynamically decide the network saturation level over time.
Neither SegWit nor BU will push the Bitcoin protocol over the WWAT threshold alone. BOTH need another layer of help on top of the base Bitcoin protocol layer to achieve the goal. However, even though it is riskier than SegWit, I think BU allows more time for Bitcoin to grow before users start leaving in droves for alternative cryptocurrencies due to skyrocketing user fees and transaction times. But hey, that’s just my opinion.
Adam Back recently claimed on Twitter that the Bitcoin Core development team is “decentralized“.
However, that’s a dubious assertion at best, and a disingenuous one at worst. Mr. Back is the President of Blockstream Inc. His startup company is financed by $70M from traditional bankstas who could give a shit about billions of unbanked/poor people being given the ultimate tool to: bootstrap themselves out of poverty, participate in commerce with merely a cell phone, and dramatically increase the world’s GDP.
Here is a snapshot of some of the most influential and vocal members of the core development team directly employed by Blockstream. The big guns are Adam Back and Greg Maxwell. Interestingly, Mr. Back, who is now an” executive“, but somehow still strangely thought of as a major technical contributor, doesn’t seem to be actively involved in the design/coding effort. That’s because his presidential title makes him responsible for Blockstream’s financial performance over all else.
Admittedly, not all Bitcoin Core developers are paid by Blockstream, but some are contracted out by the private, for-profit, company. But, as the presented evidence shows, the Bitcoin Core development team cannot be claimed to be DECENTRALIZED.
Startup investors, especially bankstas, expect a high ROI on their risky investments ASAP. Regarding Bitcoin, their investment returns can only come from centralized technologies, known as L2 tech, layered on top of Bitcoin. L2 technologies are to Bitcoin like web sites are to the TCP/IP protocol. That’s where real big money is made. By design, Blockstream is an L2 technology product company that must use the Bitcoin protocol to build on top of.
Hence, by implementing and promoting the SegWit improvement to the Bitcoin protocol before a deterministic, time-dependent, dynamically increasing maximum block size policy, raises suspicion in the Bitcoin community that Blockstream is out to freeze Bitcoin L1 on chain scaling growth after SegWit is activated in order to get money-making L2 technologies deployed as fast as possible. Again, suspiciously, there is no unified, visible, commitment from the Core development team as a whole to pursue an on chain scaling improvement next as priority one to relieve network pressure and allow a marginally increased onboarding of a cluster of new, less well off, users. No room to breathe.
Meanwhile, the Bitcoin network is becoming more exponentially saturated as new users (Venezuela, Mexico, Greece, Cypress, China, Japan, Africa, India) try flocking to Bitcoin to use as cash but are turned back by wildly rising transaction fees and confirmation times – a massive decrease in usability to large swaths of people. The flight from Bitcoin to alternative cryptocurrencies resulting from the poor stewardship of the Bitcoin protocol by the Core development team is vividly visible in this market share chart:
Satoshi Nakamoto, the genius creator of Bitcoin, said something to the effect of:
In the future, there will either be massive BTC transaction volume, or zero volume.
Ironically, the anti-fragile Bitcoin system proven to be indestructible by powerful external forces over 8 years of 24 X 7 operation, may end up instantaneously imploding due to internal forces caught in the throes of a bloody death match.
Here’s my personal take on the SegWit (fixed, small block size) vs. Bitcoin Unlimited (dynamically determined block size) war of attrition that keeps raging on within the Bitcoin community:
- SegWit => Steers Bitcoin off of the “electronic cash” path Satoshi Nakamoto originally started it on, and towards an “electronic gold” niche that hard-limits the number of people that can use Bitcoin gainfully.
- Bitcoin Unlimited => Keeps Bitcoin on the “electronic cash” path, providing 2 billion “unbanked” people with the opportunity to bootstrap themselves out of poverty, participate in commerce, and boost the global economy.
The bitcoin core development team chose to implement the top option. The bitcoin XT, Classic, and Unlimited development teams chose to implement the middle option. Sadly, no team chose to implement the bottom option.
Two years ago, the XT, Classic, and BU camp(s) saw the high Tx fees and long confirmation times we have in place today – it was clear as day. But rather than paying attention to their concerns and incorporating a max block size increase into their SegWit design, the majority of the Core team and their backers chose to ignore, censor, and ostracize anyone who didn’t agree with their chosen path. As a result, we now have an existential crisis going on within the bitcoin community which may lead to the total collapse of the ground-breaking cryptocurrency. Bummer.
Remember this guy?
Well, Roger Ver (a.k.a Bitcoin Jesus) has a similar beef:
I’ve been a fan of Roger Ver ever since I got sucked down into the Bitcoin rabbit hole well over a year ago. His passionate, pro-Bitcoin words and startup investments have helped Bitcoin grow to where it is today. Roger has also been the most vocal Bitcoin celebrity to rage against the Bitcoin Core development team’s refusal to raise the maximum block size above 1MB.
Hard-limiting the maximum block size to 1MB causes more competition among users to get their transactions into a block – which causes the average per-block user fee to rise – which causes fewer people worldwide to use Bitcoin as “money” – which stunts the global growth of Bitcoin. In the worst case, fees may get so high so that we only see wealthy people using Bitcoin in the future.
As Roger has said, the more expensive it is to use a thing, the fewer the people are who will use the thing. Economics 101.
To support Roger’s claim, I submit a relatively recent tweet of his for your perusal:
And, if you navigate to the Bitcoin transaction that Roger links to in the tweet, you’ll see this:
At the time of the tweet, the BTC price was hovering around $1000 USD. Thus, the fee of 72 millibits that his company, Bitcoin.com, paid, translated to around $70+ USD. However, at 89KB in size, it sure is a big ass transaction to stuff into a block. 🙂