First, the fact that the bitcoin community is even dealing with these issues, is unfortunate. It has brought the bitcoin world, to a toxic display of hyper-emotional screeching, extreme censorship, and propaganda battles even a typical bully, and Social Justice Warrior would be proud. There seems to be very little, “rational, and well-reasoned” discussions. The arguments are mostly twisted and skewed; seemingly, to step over glaring points of contention. All to argue their respective narrative, whilst delivering it to their respective echo chambers.

Now onto Jimmy Song’s post mortem. The people I’ve met, and interacted with over the years in the bitcoin world, mostly have that Austrian Economics way of thinking. They despise fiat currency, central power & banking, and inflation. They mainly feel that bitcoin was created to be an alternative to the debt-ridden-fiat-currencies of the world. I don’t know of a single Keynesian adherent, that would agree with that. So, why did Jimmy use Austrian Vs. Keynesian? Because it’s an insult, to just about any person that considers themselves in alignment with Austrian Economics. Not just any insult, but think of the worst insult you could give any group of people, and that is what it’s like calling an Austrian Economist a Keynesian. They are diametrically opposed.

The fact that Jimmy attempted to wedge Keynesian Economics in relation to bitcoin, is laughable. Pick any size blocks for bitcoin, and it would still be the antithesis of Keynesian Theory.

“If you think about the block size limit, it’s essentially a speed limit on money moving through Bitcoin.”

Block size should not necessarily be related to the velocity of money, it’s misleading. The block size is the capacity for the amount of people to freely spend money at any given time. Imagine the following:

A grocery store with a single checkout line, and clerk.

50 paying customers standing in line, that wish to pay for their items.

The customers have to wait minutes to hours, depending on how fast the clerk moves. Some customers will have to stay in the queue hours to weeks.

The customers have the option to pay a fee to be moved up the queue.

Often the fee can be more than the transaction. Current median fee is $12.99

Above, is the essence of what the current bitcoin block size allows. Again, imagine the following:

A grocery store with 50 checkout lines, and 50 clerks

50 paying customers standing in line, with wish to pay for their items.

All 50 customers can checkout & pay for their groceries simultaneously, and can go home.

The fee is much lower in this scenario

A larger block size allows for more people to utilize the bitcoin network at the same time. In this sense, the velocity of money is faster with larger blocks, but it’s not due to economic downturns, people saving, or any other economic reason.

The Small Block size is centrally planned, and physically limited by code. It enforces the amount of people that can transact at any given time, and thus raises the fees that people have to pay to use bitcoin. There is no economic reason to restrain people from using their money/bitcoin. This artificial limit, is akin to forced breadlines for everyone, except those rich enough to pay the high fees.

Now Jimmy has included various technical reasons, why he thinks the Small Blocks are better than the Big Blocks. None of which can be related to Austrian or Keynesian economics, and the technical points are nothing more than a distraction. For bitcoin to work as an effective monetary system, it can’t artificially limit the amount of transactions that are being demanded by the people using it, or those people will use something else.

I’m not going to get into any other of the technical reasons in this article. My main point was to show that Jimmy’s Austrian Vs. Keynesian analogy was woefully misplaced. We must judge the end result of bitcoin as it relates to a monetary system for everyone, not to mischaracterize technical aspects of the code, and attempting to place an economic-theory-label on it.

Jimmys article for clarity: https://medium.com/@jimmysong/segwit2x-post-mortem-divorce-of-crypto-austrians-and-crypto-keynesians-87960b11ce4c