The great people of bitcoin are congregating in all places, across continents, languages, cultures and civilisations, to reach the greatest decision that bitcoin has ever faced and probably ever will.

The question on its face is simple: shall we change one number from 1 to 2, but the ramifications of this decision reach to the heart of bitcoin and the viability of this experiment, for what is at stake is the real question: Does bitcoin as a decentralised system actually work?

The Great Test

The 1MB limit is a test, by the genius behind the nickname Satoshi, on the viability of bitcoin to operate in a decentralised manner. He knew that the decision to lift the 1MB limit would be difficult as the argument was made at the time, but he replied with a simple statement that we can just lift the 1MB limit with his now famous if, then.

As anyone could have easily predicted and did at the time predict, the decision would be anything but easy as it is a decision to be made by so many actors, across continents and cultures. That is, however, the test. Can bitcoin reach a decision which improves bitcoin’s value and the value of the miner’s reward in a decentralised manner, or must bitcoin be centrally controlled, and thus the experiment declared failed?

We will find out in the next few days. Thus, to aid with the decision that we all must make, and most importantly the miners must make, I will try to address some recent comments by an influential Chinese miner who re-iterated the arguments that core developers have been making, who, as we all know, want a settlement system.

The Solution to the General’s Problem

The current core argument in vogue is one of principle, that 90% should not be able, as a principle, to force 10%. Therefore, presumably, we need 100% agreement before hand. Under such system, we give 1% the power to force the other 99% to do what the 1% wants, which currently means a settlement system. One must ask however, under what principle or logic should the 1% be given such right? Where is it written that the way to solve the byzantine general’s problem, and thus the way the nakamoto consensus operates, is by giving 1% the right to over-rule 99%?

Some miners argue that, rather than 100%, we need 90% agreement so as to not force the 10%, but a coin has two sides. On what basis of logic or principle should 10% be able to force 90% onto a settlement system? And much more crucially, why should we in any way trust that this 10% is honest?

I impugn no character, nor do I have any doubt that everyone wants what is best for bitcoin. However, from a principled analysis, there is no reason whatever to assume that 10%, as opposed to 51%, is honest and thus to give them the right of veto. There are millions of ways one can imagine 10% to benefit from over-ruling 90%. One of them being to restrict bitcoin in a certain manner and then offer their own product to cater to whatever was restricted — the oldest and most profitable trick in the book. Other ways are more troubling — such as authority influence — and some are outright dangerous — such as blackmailing or ransoming the 10%.

There is another threshold to be analyzed from a principled view. The threshold that Classic uses, it being not 100% or 90%, but 75%. I would have stuck with the whitepaper and the code and would have chosen 51% instead, for, if 25%, which is just one bitcoin pool, over-rules 80% of users, almost all prominent companies, all wallet developers, the wishes of Satoshi himself, there is no hope for bitcoin and it is time for bitcoin 2.0. That is why that genius who invented this whole system made it explicit in the whitepaper and in the bitcoin code itself that 51% and 51% alone can be trusted to be honest for 51% will always choose to act in their self interest and so give priority to bitcoin’s incentive and values. Yet we have no reason whatever to think that 25%, a far lower threshold than 51% or 75%, would act honestly.

Due to the confusion and misunderstanding caused by flawed arguments however, and so as to make the process absolutely safe, Classic went with 75%. Yet now we are told that Satoshi was wrong with 51%, Classic is wrong with 75% and that we instead need 90%! Where is it written that a 90% agreement is required? On what basis does such a system functions when 10%, who can be either self-interested in a conflicted way (say huge investment in altcoins), who could be stupid, who could of course be lied to or manipulated, who could be coerced etc, where is it written that such system actually works? Certainly not in the white paper. Certainly not in the code.

It is also argued by our priests, who do not think bitcoin works therefore seem to have developed some unwritten theology, that if bitcoin is forked when 10% disagrees, the unwashed majority can be persuaded to increase the limit of bitcoins, or to take away someone’s coins, therefore this tiny minority of 10% or 26% should be given a veto.

The assumption in this theology is that 51% of miners can not be trusted to act in the benefit of bitcoin, nor 75% of miners. However, 10% or 25% of miners can so be trusted. The priests therefore are arguing against Satoshi directly, and against the bitcoin code that we all run, which says that 51% alone can be trusted, not 10%, not 25%, not even 49%.

If these priests and if 10% or 25% think that Satoshi, who persuaded us all to be involved in bitcoin, that his whitepaper, which convinced us all that bitcoin is the greatest invention of this century, and that the code, which made it clear all works, if they think we all are wrong, then this 10% or 20% has the full freedom to create its own altcoin where they can prove us — and Satoshi — wrong, rather than impose their will upon us.

Furthermore, and as I hope is obvious, these upside down arguments can not stand the light of analysis and it is somewhat sad that they have to even be addressed. For example, we all remember the MT Gox saga. If there was ever a time to try and convince everyone that we should steal someone’s coins, it would have been once MT Gox declared the hundreds of millions of losses. There was a minority who tried — a minority who according to the priests should actually veto everyone — but the majority knows where the value of bitcoin comes from, the majority knows what is in it’s own financial interest, the majority knows that if they take someone’s bitcoins they will be next, that if the 21 million cap is increased bitcoin retains no value. The majority knows what is in its own interest and thus, since it benefits most people, what is in the interest of bitcoin, not a tiny minority of 10 or 20%, who could, for all we know, be trying to kill bitcoin.

The Priesthood of 20%

The 20% that the priests speak of want to fully transform bitcoin into an untested, unproven, and conceptually flawed settlement system, which has unanimously been rejected by the users, and I hope will be rejected by the miners. This 20% is in no way forced of anything for they are free to create a 1MB altcoin or a 1MB sidechain.

Yet, if the miners wish the 80% of users to leave instead for some bitcoin 2.0 which the free market will certainly provide, and in the process drop the price to pennies, so giving priority to this deeply misguided 20%, if the miners wish to over-rule Satoshi himself, or Gavin who Satoshi trusted with steering bitcoin, or Jeff, or all prominent bitcoin companies, if the miners wish to over-rule the only way bitcoin is known to work and decide to transform the system into a centralised settlement nonsense, then that is fully the miner’s choice.

But the 80% has a choice too. People are already leaving bitcoin as capacity is now full. As soon as price slightly increases, such as when it had its mini-bubble to $500, complaints of confirmation delays flood r/btc and other forums. The price tanks, because bitcoin no longer works. It tried again to go higher and reached $470, but following complaints of confirmation delays it tanked again. Only a week or two ago, when price started trying to go higher, a considerable backlog of transactions started forming, thus price tanked again because capacity is full. A higher transaction fee does not change this as it can not increase capacity — it only forces people to leave, with some already leaving as shown by altcoin markets increasing 33% in value in the past few weeks.

We argued last summer that this will happen, and we were right, with core being proven wrong. Core at the time publicly stated that once blocks are full we can have an emergency hardfork. Well, blocks are now full, and Classic proposes the emergency hardfork. Yet core continues to refuse because they want a settlement system, but we, the users, the companies, the wallet developers, the most senior core devs such as Gavin and Jeff, reject the settlement system.

The miners thus are now to choose whether they wish 80% of users to leave, or 20%. Whether it is Satoshi who is to prevail, or some unproven settlement system which does not work and no one has tested. They must choose whether they wish the value of their coins to increase, as it most certainly will if bitcoin passes the test as bitcoin’s fundamentals would improve by an incredible degree as capacity increases, thus keeping bitcoin open and a global ledger accessible to all. Moreover, it would prove to the sceptics that bitcoin is in fact decentralised and functions in a decentralised manner by showing to all that some misguided 20% (whoever they are and of whatever influence) and their nonsense theology which finds no basis in the code or any writing can not coerce the 80% to act against their own interest and centralise bitcoin into a settlement system which does not work.

Or the miners can prove the skeptics right by giving prevalence to a tiny minority and thus showing to all that bitcoin is not in fact decentralised, but controlled by the few, and thus reducing bitcoin’s value to that of nothing for its main differentiator is its decentralised nature and that 51% alone can be trusted, not 10 or 25%.

The choice therefore is not of what some 10% of miners prefer or on what some nice theology argument can be made. The choice is for 51%/75% of miners to objectively decide what they think is in the best interest of bitcoin and their mining investment.

“They vote with their CPU power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them. Any needed rules and incentives can be enforced with this consensus mechanism.” — Satoshi