The real root of all evil in Bitcoin

Introduction

As I think it is very important for the community to resist against attacks by exposing deception and incompetence, I think it is unfair to consider any individuals or companies as the root of all evil.

Maybe some of them are really evil, but they are not the root of our problems in Bitcoin.

All of this fight is the symptom of a way deeper cause which is purely technical and logistical and NOT political, and completely unrelated to technical scalability of the Bitcoin network.

The good news is that technical and logistical challenges can be solved by bright minds without arguing. And Bitcoin is full of bright minds.

Scaling socially, not technically

Nick Szabo wrote an essay recently about blockchain as a way to achieve social scalability. It got me thinking quite a while about this interesting concept, and I am now convinced that this is what should be Bitcoin’s community biggest fight.

You may have heard that Bitcoin’s problem is all about technical scalability: Supporting more users exchanging Bitcoin (not IOU) via on chain and off chain solution.

But by thinking about it, technical scalability is not the real bottleneck.

When Satoshi started developping Bitcoin in his cave, was there any opposition to any soft fork or hard fork he wanted to do? No. Because nobody cared. Reaching consensus was very easy, and, as you know, become harder and harder once the community is growing.

Now, as any system grows, and more people care about things, people starts fighting. This infight is the biggest pressure on any system to grow. This is why there is frontiers to countries, why there several languages, why there is several currencies, the reason of the Brexit and… why there is forks to open source projects.

I advise you to look this recent video “Keynote: A Conversation with Linus Torvalds”, most people only remember the famous quote “Talk of tech innovation is bullsh*t. Shut up and get the work done” from this talk. But actually this is NOT the relevant part of this video as far as Bitcoin is concerned.

This video is fascinating for Bitcoin, because Linus managed to create the biggest collaboration of people around a project, and if you look this video Linus Torvalds, is indeed saying that his biggest role and challenge is to make sure people does not step on each other toes. Yes this is exactly what scaling socially means.

When people do not step on each other toes, then there is no fight inside the system, which allow it to growth further.

What is limiting Bitcoin growth right now is social scalability.

The solution

Internally, Bitcoin Core managed to scale development by making the code more modular. This mean less contention on changes, which allow more developers to join and contribute. This is the reason why there is now hundred of contributors to each release without major fight. But this is only about the Bitcoin Core project. It can scale Bitcoin Core, but not Bitcoin.

Our major point of contention right now is Consensus Rules. Contrary to what you might think, a crypto currency can have more than one Consensus Rule at the same time. The possibility of having several consensus rules at once, make it more easy to not step on each other toes, and thus not to fight.

ConsensusRules1 + SF change= ConsensusRules2.

ConsensusRules1 and ConsensusRules2 can exist simultaneously only if majority of hash power is following ConsensusRules2.

If it is not the case, then ConsensusRules1 and ConsensusRules2 have a risk of split making User Activated Soft Fork a risk for the network.

Some people defends “the economic majority will follow ConsensusRules2”, which to me, is as reckless than to say people will follow Bitcoin Unlimited because it has the most hash power. Maybe it is true, maybe it is not but I don’t want to fuck around with Bitcoin. Bitcoin need to be perceived as solid if we want it to grow socially, and the three outcomes will provoke causualities (Outcomes are: Split or ConsensusRules1 win or ConsensusRules2 win). To which I advise you to read Vinny Lingham article “A fork in the road”.

For segwit, it is unsafe to use User Activated Soft Fork for a simple reason: Jihan Wu, Bitmain, will attack it with their soon or probably already 51% mining power, causing disruption.

User Activated Soft Fork activating. Bitmain keep mining original Bitcoin, without validating ConsensusRules2, causing ConsensusRules2 and ConsensusRules1 to fork Panic on the market ensues, which might resolve either way but in any case with big causalties as Vinny Lingham pointed out.

Would Bitmain be evil doing that ? No they would not. If Bitmain disagrees with Segwit, then it is their right to not enforce it.

So until there is not clear, uncentralized majority hash power, I think User Activated Hard Fork will cause wave that I personally do not want.

So what if the economic majority wants ConsensusRules2 but that Bitmain refuses to enforce it?

No, actually this is not the right question… The right question is why does the will of economic majority would diverge from hash power majority ?

And the response is the following: Because mining is a professional activity, highly centralized.

Right now, Bitmain owns most of the market share of ASIC manufacturing, and might decide to priviledges buyers that enforce Bitcoin Unlimited. Is it bad ? No.

Not only that, but Antpool, also controlled by Bitmain probably conceals their hash power with the sudden creation of several pools in the space of the last six months. On top of that they plan to expand their business.

Now Bitmain is in the position, not necessarily to force any fork, but to cause disruption on the market. (which they can profit by shorting)

I have no evidence they do that, it is not the point. The problem is that they can.

Now the goal should be to realign economic majority with hash power majority. And the ONLY way to do that is by competing Bitmain on ASIC Manufacturing and Mining power, such that normal people can start mining without being subject to the will of Bitmain, and giving money to a company that does not support their ideas. Mining need to be amateurish.

I like to draw a parallel with Athenian democracy, which kept politics amateurish by selecting their board at random. It seems Bitcoin, in some way, designed to do the same.

I have hope that ASIC efficiency will stop drastically increasing, making it easier for the market to catch up with Bitmain.

As a user, what can I do if I do not agree with hashing majority

First, do not send your money to Bitmain. Sadly I don’t know if there is good alternative.

Second, stays away from SPV wallet, like breadwallet and Bitcoin Wallet for Android and Multibit. (this is a shame as breadwallet was for a long time my favourite)

Third, if you can, contribute to the mining community with your knowledge about distribution, manufacturing, investment, coding to make an Open source ASIC design which can compete.

People who knows about ASIC design should come together as a single community, and fight back with their technical knowledge. (on dedicated slack, IRC, or whatever other channel)

Conclusion

Bitcoin is not ready for mainstream. Not only because it can’t scale technically for now (will come soon though) but because it can’t scale socially until monopoly is broken.

I have hope that this monopoly will not stay forever, I cross finger for the community to prevent a devastating coin fork until this monopoly is broken.

What the community can’t do at this point is preventing Bitmain to make a mess and deligitimize Bitcoin if they want to. I just hope that Jihan will take a responsible decision to not make a mess until his monopoly is broken, but we should not expect it, as I have no doubt he thinks doing something right.

The whole issue is not political. It is technological problem caused by a company being widely better than his competitors, and it is not their faults.

I want Segwit to pass. But I want it to pass in a boring way. User Activated Soft Fork with Bitmain monopoly, is all but boring. (I want to Make Bitcoin Great and Boring Again)

Please stop hoping for “Let’s bring this community coming together” until the underlying problem is not fixed. If Bitcoin grows bigger without the underlying problem solved, it will just make it more probable to have devastating split.

PS: I am not a miner, nor I know how mining industry is working now, except that Bitmain is almost alone on the market (BitFury does not sell retail AFAIK).