The design of the Bitcoin core protocol is imperfect but may provide a level of utility meriting adoption. While well-designed systems often provide the desired requirements of the present, many fail to fulfill the unforeseen requirements of the future. The result is the incursion of undesirable cost in the form of chronic inefficiency, disruptive redesign and potential failure.

As a former Boston resident, it was always difficult to visualize the city’s original footprint at the time of the American Revolution. In 1776 Boston’s physical foundation was little more than a series of islands and marshes spanning an expansive bay. Much of what modern occupants consider the heart of the city was in fact underwater. It is interesting to imagine how the 15,000 inhabitants of the period may have designed the city had they the foresight to imagine its future growth; today the greater Boston area serves host to over 6.5 million. What significant costs may have been avoided by incorporating key elements into the original design?

Graphic 1.0 Satellite image of modern day Boston, Massachusetts overlaid with the historic footprint of the peninsula from 1776 highlighted in red.

Like a young city on the verge of relatively unfathomable growth, the Bitcoin protocol faces some recognizable design challenges moving forward. The growing ecosystem would be wise to contemplate the long term benefits that may be achieved by striving for a more perfect design.

Boston’s Big Dig and the Cost of Redesign

The deliberate design of Boston’s famous streets reflects the needs of the era; pathways to provide as direct a route as possible between points of interest amidst an array of physical obstacles. Traces of the original hills, marshes, and ocean barriers have long disappeared as the city’s peninsula was aggressively expanded with landfill up until 1890. Today 70% of the city is built upon landfill.

Graphic 2.0 City limits of Boston, Massachusetts displayed over time. The two primary modes of expansion include landfilling existing marshes and mudflats and the annexation of adjacent communities.

If modern planners could go back in time they may have requested several design considerations of early inhabitants. The list would likely include the request for a wider central artery downtown. In the absence of this foresight, with each passing generation the infrastructure of the city grew in such a way that respected existing design while most often only accommodating the immediate needs in the short term. Another way of looking at these developments is as a series of workarounds and compromises.

Due to the chronic and suffocating traffic of the 1950s, city officials commissioned a 6-lane highway named the John F. Fitzgerald Expressway. Regarded as an innovation at the time, the project displaced over 20,000 residents and cost over $772 million dollars ($6.2 billion today adjusted for inflation). By the 1960s the average daily volume of vehicles on the expressway surpassed the capacity of 75,000 per day and by the 1970s grew to over 200,000. The resulting traffic inspired nicknames including the “Distress Way," the “Largest Parking Lot in the World” and my personal favorite the “Other Green Monster”. In many ways, the construction of the John F. Fitzgerald Expressway can be viewed as no more than an expensive bandaid on a wound that required stitches.

The next attempt to address Boston’s congestion would become one of America’s largest, most expensive and technically challenging public works project in history. The Central Artery/Tunnel Project was more widely known as the Big Dig and spanned from 1982 to 2007. The project replaced the former expressway with a series of tunnels that effectively navigated the new central artery beneath the city. The costs associated with the Big Dig were greater than those of the Panama Canal and Hoover Dam combined with final estimates over $24 Billion.

Despite fantastic costs and the controversies surrounding them, the Big Dig was considered a feat of modern engineering. It is clear that the city is better off today than it would have been had the project never occurred. That being said, wouldn’t it have been better if they didn’t have to deal with this problem in the first place? Had earlier Bostonians the incentives and knowledge to plan for significant growth the city could have avoided over $30 billion in redesign efforts, 20 years of disruption, and a half-century of costly traffic. A seemingly unlikely premonition for the Bostonians of the 1700s, such insights are not so far fetched for Bitcoin developers when contemplating the future requirements of the core protocol.

Ideal Future State and The Bitcoin Dream Protocol

A popular approach to innovative design and redesign is to imagine an ideal future state without limitation. The approach can be applied to any product, process, system or service and frees designers from the trappings of perception. In this way design can work backwards from an envisioned state of perfection and truly challenge what is possible. Table 1.0 retrospectively displays what the developers of Boston’s Big Dig may have envisioned when designing the future state of the central artery.

Table 1.0 A former state and future state comparison of Boston’s central artery design. The future state features reflect the achievements of the Big Dig. Undesirable features are highlighted in red while more desirable alternatives have been highlighted green.

Like the city planners of Boston’s Big Dig the developers of the Bitcoin core protocol are looking ahead and identifying the future requirements of bitcoin’s design. Table 2.0 evaluates the current state of the protocol and displays an ideal future state that can be referred to as the Bitcoin Dream Protocol. Some may scoff at this proposal but it is important to keep in mind that this is simply a proposed display of perfection, not expectation.

Table 2.0 A current and ideal future state comparison of the key features and functions of the bitcoin core protocol and ecosystem. Less desirable features are highlighted in red while more desirable alternatives have been highlighted green.

The Costs of Adopting Imperfect Design

The phrase “there is always room for improvement” reflects the reality that every design ever adopted has been imperfect. The adoption of imperfect design comes with three distinct forms of cost; inefficiency costs, failure costs, and opportunity costs. These costs are defined as follows:

Costs incurred over time as a result of chronic wastes. Examples might include low productivity, wasted resources, or poor gas mileage.Costs due to a fundamental failure of a design to fulfill its purpose. Examples range from disasters such as the Fukushima Nuclear Plant or the Hindenburg to simple failures such as your computer screen freezing.Costs of a designs inability to fulfill the full potential that could be provided by an alternative. Examples could include using a skateboard instead of a car for a cross-country trip.

In his address at the Bitcoin 2014 Conference in Amsterdam, Holland, Gavin Andresen discussed what he perceived to be the key challenges facing the Bitcoin protocol. Among them the communication process for enacting change to the protocol, the structure that incentivizes the centralization of mining pools and the fact that there is only one core implementation. Table 3.0 considers Andresen’s concerns in addition to other prominent imperfections of the existing core protocol from table 2.0 and displays estimations of the potential costs associated in the context of inefficiency costs, failure costs, and opportunity costs.

Table 3.0 The potential costs associated with adopting the existing bitcoin core protocol are difficult to quantify given the exponential nature of bitcoin’s possible impact. What can clearly be estimated is that the lower limit of a failure cost begins at a low of $8 billion.

While the ultimate cost is undeniably tied to the significance of the Bitcoin ecosystem, it can be fairly stated that should a fundamental failure occur, the lower limit of associated cost would be at least $8.5 billion. Taking into account the potential scale of Bitcoin’s potential, the opportunity cost of a limited market and the possibility of chronic inefficiency costs over time, it is justified to estimate the sum of potential costs to be in the trillions of dollars.

Third Parties and Avoiding the Big Fork

Bitcoin’s true promise as described in Satoshi Nakamoto’s original white-paper was to eliminate the need for fallible third parties. Ironically to achieve its full potential may require that third parties provide services to account for its imperfections. Despite these imperfections, a host of indictors and innovations foreshadow scenarios where the widespread adoption of the Bitcoin protocol are plausible. Like the engineers of Boston’s Big Dig, these developers understand that with infrastructure comes limitation. Let’s hope they can solve Bitcoin’s biggest challenges to everyone's benefit. Boston’s Bitcoin users would be twice-scorned if they were forced to endure a “Big Fork” after all they’ve been through.Credits & Citation:

Graphic 2.0: Boston City Limits

http://en.wikipedia.org/wiki/File:Boston_annexation_landfill.gif

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