Bitcoin Scale

“Most users should start running client-only software and only the specialist server farms keep running full network nodes, kind of like how the usenet network has consolidated.”

Satoshi Nakamoto

Bitcoin Scale

As I have written before, one big problem with crypto is the ability to fork (ie. clone) code. Say what you want about centralized code – it still makes more money than open source. Why? Because, open source encourages innovation at the expense of assurance. Hence Apple, Google, and Microsoft thrive though each has open source to thank for their existence.

Over the last 5 years there has been a completely unnecessary civil war within the Bitcoin community. The main point of contention is around scalability which is why Bitcoin Cash (BCH) forked from Bitcoin Core (BTC) in 2017 and why it split again into Bitcoin Satoshi Vision (BSV) in 2018.

Bitcoin Core (BTC) wants to scale off-chain using small 1MB blocks (via the Lightning Network) so autonomous full nodes can still exist to preserve a decentralized network that lowers the overall attack vector of the network and essentially preserves the 3 existing branches of BTC governance (via J. Lopp Oct 2016):

    • – Miners: can veto devs
    • – Full Nodes: can veto miners & devs
    • – Developers: can help others bypass some vetoes

This view of governance puts developers at the center of power since they can write (or in this case keep) code that can bypass vetoes of the other two. This position also had the added effect of turning Bitcoin into a held investment (i.e. HODL) and not a usable Internet of money, since BTC policy will not allow it to scale beyond 1MB blocks (7 transactions per second). Small blocks are meant to keep the protocol decentralized till the pay-go Lightning Network can scale Bitcoin transactions off-chain.

Unfortunately, the Lightning Network has seen about as much progress as ETH 2.0 over the last 4 years. Thus, Bitcoin as “digital gold” is the only avenue available now. Sovereign adoption helps, but those use cases are still at the edges too.

Bitcoin Cash (BCH) sought to expand the 1MB limit to 32MB as a step toward moving Bitcoin away from it being a held investment (like gold) to its’ original purpose as a peer-to-peer electronic cash system. It was born out of the ashes of Mike Hearn’s Bitcoin XT and later Segwit2x which was supposed to double the original blocksize, but never did. BCH’s leadership believes in retail adoption via education and grass roots utility projects, but they also support the altcoin universe that the BTC team essentially created by limiting its’ focus. Like BTC it still leaves veto power with a small group of developers. In less than 1 year it forked into BSV.

Bitcoin Satoshi Vision (BSV) goes much further with a 128MB blocksize growing to 2GB in mid-2019 which will eventually remove a default hard cap to support theoretically unlimited transactions on (or off) chain. Lifting the cap means expanding use cases beyond peer to peer cash. BSV also puts the balance of power into the hands of miners since miners secure the network and will be able to flag whatever blocksizes they want. In 2022 BSV devs continue to scale the protocol to online gaming, supply chain, and P2P payments. Unfortunately a fork of a fork is still just a copy, even if the ceiling for that copy is much higher.

There are also altcoin projects like Avalanche, Solana, and Hedera Hashgraph that scale by reaching consensus much faster and more securely than PoW and with very forward thinking governance models.

If UI is the front end secret sauce, scale is the backend version, because it makes utility possible which ultimately decides adoption. Users, businesses, & eventually governments will gravitate to the chain that resembles the Internet meaning:

1. The protocol changes very rarely.
2. The protocol can scale on demand.
3. Centers of power (i.e. big businesses & governments) still exist, but (like the Internet) there is no one center of power. A risk aware governance model plays a key role here.


REFERENCES

Utilization Sites:

Conferences, Articles, & Presentations:

3109 Web3 Bitcoin Satoshi Nakamoto

Top photo by alan KO on Unsplash