So it is said that if you know your enemies and know yourself, you will not be put at risk even in a hundred battles.



If you only know yourself, but not your opponent, you may win or may lose.



If you know neither yourself nor your enemy, you will always endanger yourself.

– Sun Tzu, The Art of War

Before I get started, let me just state the obvious. I’m admittedly the furthest thing from a Bitcoin expert imaginable. Some people associate me with Bitcoin because I was relatively early in seeing its tremendous potential for positive change, writing my first public piece on the subject in August 2012, when the price was about $10. If you never read it, here it is: Bitcoin: A Way to Fight Back Against the Financial Terrorists?

For the next couple of years I wrote about Bitcoin extensively, proselytizing about it to anyone who would listen; especially to some of my friends who remained in the financial services industry, though most of these efforts proved fruitless. As time went by, more and more people became interested in Bitcoin, and I simply became outclassed as a commentator on the topic. I decided to opine less and listen more, especially since I started to spend much less time reading and thinking about Bitcoin, and became much more focused on politics. With so many far more knowledgeable Bitcoin thinkers out there, I’ve taken an entirely appropriate backseat on the punditry front. If I feel I have nothing meaningful to add to the debate, why enter the debate at all?

Vinny Lingham’s writings were instrumental in my decision to take a backseat in the realm of Bitcoin commentary. When I saw his deep understanding of the technology coupled with a track record for making accurate macro price forecasts, I knew how important his voice was, and I started highlighting his work as opposed to producing my own. Over the last week or so, Vinny has weighed into the Bitcoin scaling debate with two very important articles. I’ll admit, the first article freaked me out significantly for several days. Particularly this part:

It’s inarguable that Bitcoin is the single strongest brand in the crypto space. I believe it probably received $2–5bn in free media exposure over the years. A Hard Fork would create 2 brands of Bitcoin — essentially handing over some brand value to Bitcoin Unlimited. I wrote a post about Bitcoin’s power and network effect over 2 years ago — it’s worth reading if you haven’t. If a split is portrayed badly in the media and creates confusion, we will possibly go into another 2 years of sideways and down. Do we have that much time again with other competitors on the heels? And let’s be frank, a Hard Fork is not Bitcoin dying. It’s Bitcoin duplicating. Now we have two Bitcoins, both won’t die, maybe one will. Which one is the real Bitcoin? Do not underestimate how many enemies Bitcoin has — a fork will just give them all the ammunition they need to confuse the market. The whole point about Bitcoin being a long term store of value is that there are only 21m coins, ever. Stability, security and scarcity are the differentiation properties of Bitcoin, a contentious Hard Fork attacks these properties and will be strongly reflected in the price. After a Hard Fork, we will be sitting with 33m “Bitcoins”, on track for 42m and we’ll be having arguments about which one is the legitimate Bitcoin for years to come. You can expect legal cases to arise around the use of the brand, as the Ethereum Classic Investment Trust has shown. Imagine someone says: I want to buy Bitcoin. Next question is: Which one?! After that, the very next question will be : “What if one of these coins fork again — then we will have 63m coins, and so on and so forth.”

I can tell you with 100% certainty that a huge part of the appeal of Bitcoin for so many of us was the network’s stable, transparent supply curve. One of the biggest critiques of the naysayers in the early days was that it was just code, what’s to stop it from being nefariously altered in the future? Unfortunately, we’ve come to a point in the road where we’re being confronted with this exact contentious reality. So how did we get here?

First as Vinny explained in his Fork in the Road post:

Bitcoin was largely built on the premise that economic forces and self interest would help govern the security of the network. We talk a lot about decentralization but the reality is that the hardware that powers Bitcoin is produced by a handful of companies who also control mining pools which can be used against the network.

That was just an appetizer to more expansive commentary on the issue of centralization, which he outlined in his next piece, The Power of the Invisible Hand.

The goal of this post is not to get to the bottom of Andrew’s tweets or discuss the details around it. I’ll leave that up to the community to figure out. I want to instead focus on answering just 2 questions — “How did we get here?!” and “Where do we go from here?!” Now, before we all start blaming Roger, Jihan, John or anyone else for the current situation we’re faced with (an impending hard fork), let’s look inward. How did we get to the point where just a handful of players in a $20bn ecosystem could plausibly derail a peer to peer, globally distributed and seemingly decentralized network. It shouldn’t be possible. But it is. Even if their intentions are being misunderstood, and they mean well, the fact that it’s possible means that if it’s not them, it will just be another group in time trying to achieve the same outcomes. We need to fix this, but it’s not a short term fix. To a large extent, Bitcoin has been a victim of its own recent successes. Since the recent halving event in July last year, Bitcoin has already doubled in price. This has resulted in miners earning larger transaction fees and demanding larger blocks, which will result in more centralization as it gives larger mining pools an edge. The higher the price goes, the less likely we are to get to an agreement with miners. The market keeps rewarding them for keeping the Bitcoin network secure, because the price keeps rising? Or is it.

Irrespective of the scaling debate, we seem to have an uncomfortably centralized Bitcoin ecosystem in some important and meaningful ways. It is this backdrop which makes the current situation so concerning, and it is this backdrop that has made Bitcoin as vulnerable as it is right now.

Now here’s where it gets even more concerning. Many observers are warning that Bitcoin Unlimited (BU), if it happens, could make the centralization issue even worse. As Vinny notes:

Bitcoin has been criticized for a lack of governance or the ability to break a deadlock. So, in the example of the scaling debate, a group called Bitcoin Unlimited broke away to create what they believe to be true to the founding principles of Bitcoin. Unlimited wants to have larger block sizes, and this means that larger pools will benefit more, leading to more centralization of Bitcoin mining and higher fees for them (more transactions per block). Their argument is that block sizes were never meant to be constrained. Arguably, they’re right, but mining centralization with ASICs has meant that this is not an option right now. If we were to revert to another Proof of Work algorithm that was more decentralized, then I would be very supportive of larger block sizes.

If this is right (people I respect disagree on whether BU will make the miner centralization problem worse), this is a gigantic elephant in the room for Bitcoin Unlimited. It also makes it increasingly likely that behind the scenes the Chinese government is supporting BU as a way to either take over Bitcoin or destroy it from within. You may think this sounds like a crazy conspiracy theory, but after looking at this debate from all angles, I’ve come to the conclusion that this whole thing has seemingly morphed into a state sponsored attack (read more here). That’s not to say the whole push started out this way, but I think the Chinese government saw an opportunity and pounced on it. If this is true, BU shouldn’t be derisively referred to as RogerCoin, it should be called ChinaCoin.

While I’m no Bitcoin expert, I’m friends with several people who are. Big names in the space who I’ve gotten to know over the years, and whose opinions I respect and honesty I trust. All of them confirm my suspicion about the Chinese government even if they disagree on other points, which got me thinking further. If this is the case, then those arguing against BU and a hard fork are doing it all wrong. With all due respect, simply telling people to hold onto to their Bitcoins assuming it will all work out and demonizing Roger Ver and his ego is the completely wrong strategy. It’s both naive and counterproductive. Naive, because if we are indeed battling a state actor, we need to take off the rose-colored glasses immediately. Counterproductive, because we are spreading the narrative that there’s a civil war in Bitcoin that may not really exist. We should not mistake a coup for a civil war, these are two very, very different things, and they need to be addressed differently.

As I tweeted earlier today:

Strategy suggestion for BU opponents. Forget Ver, focus all energy on saying this is a fight against Chinese state and centralized miners. — Michael Krieger (@LibertyBlitz) March 20, 2017

At this point, I want to be clear about where I stand on this entire debate. I’m not knowledgeable enough on Bitcoin and the technicalities of what’s going on to make a cogent argument defending Bitcoin Core or Bitcoin Unlimited. What I can do is trust the judgement of the people I respect most in Bitcoin, and I’ve discovered that those people are opposed to BU and the idea of a hard fork. The point of this post is a friendly wakeup call pointing out that the current narrative against BU appears both childish and ineffective.

If the Chinese state is in any way involved in this behind the scenes, then those opposed to what is going on need to wake up and smell the danger. Understanding your opponent is a key component to winning a battle such as this, and if the message is simply “don’t sell your bitcoin, everything will be fine,” and “isn’t Roger Ver’s huge ego terrible,” the outcome may not be the one you desire.

In my mind it’s time to face the music and deal with reality. If you want to control the narrative around BU, then you need to associate it with the Chinese government. Not just because it will be effective, but because it’s probably true.

To conclude, this post merely addresses a near-term issue related to BU and a potential hard fork. I think those against such an outcome need to get control of the narrative and fight fire with fire. That said, preventing a worst case scenario in this specific instance doesn’t solve Bitcoin’s bigger miner centralization problem, it’s merely addressing a symptom of a larger issue. As Vinny noted:

How did we get to the point where just a handful of players in a $20bn ecosystem could plausibly derail a peer to peer, globally distributed and seemingly decentralized network. It shouldn’t be possible. But it is. Even if their intentions are being misunderstood, and they mean well, the fact that it’s possible means that if it’s not them, it will just be another group in time trying to achieve the same outcomes. We need to fix this, but it’s not a short term fix.

This is the big issue, and I’d be way out of my league to begin to chime in on how to solve it. I’ll leave that to the actual experts.

Thanks to Tone Vays for reading this piece before I hit publish. He assured me he has a very interesting blog post coming shortly, which he’ll publish at his website: Liberty Life Trail.

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In Liberty,

Michael Krieger



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