Tag: bitcoin

This is my response to the article On Antony Zegers’ “Bitcoin Core Cargo Cult”. I have enjoyed reading the article. The article mentions twice that Zegers’ arguments are a “red herring”, but I don’t see an explanation on why that is true. It’s very easy to dismiss an argument as a red herring without never explaining why.

Believers in a fixed block size appeal to consensus, but I argue that consensus is not a guarantee of good ideas. For instance, the general consensus, or what the majority of the people believe, is that we need government. As an anarchist, I know that thinking by oneself and governing oneself is by no means easy, but it is way more rewarding than being told what to do.

• A statist will say that we need government. The statist will also say that government is good because it is the consensus.
• A minarchist will say that government is a necessary evil (note the contradiction, as if evil could ever be necessary or desirable).
• An anarchist will say that government is an unavoidable evil.

Believers in fixed block size are right in that the 1 MB hard limit is the current consensus. But they miss that they are not just spectators, but also actors in the Bitcoin ecosystem. They choose supporting the status quo just for the sake of it, and then they justify their choice by saying that it is what the majority supports. That is circular reasoning.

The fixed blocksize believer is debating about what is. The dynamic blocksize proponent is debating about what could be. Without people thinking about what could be and acting on it, humanity would have not advanced a single bit.

I also think the statement that the Lightning network seems to be a better scaling solution is a fallacy. On-chain scaling doesn’t invalidate the Lightning network. I actually think that, in the long term, scaling will be achieved by a combination of both. Lightning, on its own, cannot provide the security and censorship resistance that proof of work provides. If a Lightning transaction is the same as a transaction on the blockchain, then, why is a blockchain even needed at all? Why not just use Ripple instead?

Moreover, there is no consensus among experts that Bitcoin cannot scale on-chain. Several experts say that Bitcoin can scale on-chain, and they have worked on identifying the existing bottlenecks and what optimizations need to be done to the Bitcoin software in order to scale on-chain without increasing linearly the resources (bandwidth, CPU, memory) needed. What happens is that those experts are working on their own projects, as their ideas are rejected by the Bitcoin Core community, and their work may go unnoticed among those who live in the Core echo chamber.

Bitcoin will (probably) always be the biggest cryptocurrency

What is then the reason that Bitcoin is still the non-contested leader? I believe that the reason is that, despite its current flaws, Bitcoin is providing utility for its users, mainly as store of value. I think that the value of a cryptocurrency comes from two components: its existing utility and the speculation on its future utility. Cryptocurrencies are currently in the speculative phase, where investors are mostly speculating about the future utility of each one of them. In the long term, a cryptocurrency must provide actual utility to justify its capitalization. With a 1 MB block, I believe the utility of Bitcoin will be very limited, as almost nobody will be able to write on the blockchain.

Altcoins are the testbed for new ideas. I think that Bitcoin will always remain the most capitalized cryptocurrency. Why? Because if any other cryptocurrency offers improvements over Bitcoin that are so dramatic that it threatens to overtake Bitcoin, then Bitcoin will copy those improvements and neuter the advantage of the competing coin. Bitcoin has the advantage of having the chain with the most cumulative proof of work, the most known brand and the biggest network effect. As defined on the Bitcoin whitepaper: “The majority decision is represented by the longest chain, which has the greatest proof-of-work effort invested in it.” This means that any hard fork will be Bitcoin if it satisfies this condition, according to the Bitcoin whitepaper.

Core Cult is slowing the transition to a better monetary system and a better world

I acknowledge that Bitcoin is very resistant to change, and that can be both a good thing and a bad thing. It’s good because it can stop the spread of bad ideas. It’s bad because it slows innovation and adoption of Bitcoin.

I think that, fortunately, Bitcoin is resilient to agents and ideas that try to destroy it, even if those come from within the Bitcoin ecosystem. We will have to wait for more people to realize that 1 MB is just an arbitrary number and not the result of careful consideration after objective analysis.

I see Bitcoin as an embodiment of the collective consciousness of its holders. Bitcoin is just a tool, and it will only be as powerful as free are the minds of its holders. This is a battle about ideas. As long as the minds of the Bitcoin holders are indoctrinated into validating the status quo and not believing that a better world is possible and achievable, the impact of Bitcoin in society will be very limited.