Bitcoin is a Payment Network and Gold and Smart Contracts and The Internet of Things and a million of other things we can’t even imagine.
TL;DR Bitcoin is highly competitive against gold due to the limited number of bitcoins and a very efficient and highly competitive payment system against VISA as it offers cheap and fast transactions because it automates away man. Software is cheap, man is expensive.
As it is soon decision time I thought to lay out my vision as I can discern it from Satoshi’s writings and give an overview of what I think stands underneath and therefore are the real arguments.
I believe, as I think does Satoshi as shown by his writings, as does Gavin and Jeff, as did Pieter Wuille back in 2013 “My suggestion would be a one-time increase to perhaps 10 MiB or 100 MiB blocks” as do 80% of users by any poll, almost all prominent bitcoin companies, wallet developers etc., we believe that bitcoin can scale and that transactions should be made on chain for the highest level of security, privacy, convenience, and for the utmost competitive edge for bitcoin which ensures the open ledger remains global and accessible to all.
Gregory Maxwell however disagrees and has maintained the same opinion. He is on record as stating that he proved a system like bitcoin is impossible. It appears that he became of the opinion that it is possible only because of the 1mb limit: “Absent [the 1mb limit] I would have not spent a dollar of my time on Bitcoin”
He thinks that bitcoin should be turned into some sort of settlement system where the current open chain is restricted and thus turned into a closed chain, with transactions happening on Lightning (an IOU system similar to ripple original) which can only operate through centralised hubs/processors due to the economies of scale. The other problem is of course that lightning does not even exist, so we can not judge it, but that is irrelevant as far as core is concerned because they want the settlement system in whatever way it is implemented.
The root of the disagreement in regards to the two visions and the reason why core wants a settlement system concerns the question of the role a node plays. Core believes that everyone should be able to run a node on a laptop because that is the only way to transact fully securely and with full privacy. Even if we take core at their word, the problem with a settlement system is that although one can run a laptop node, the node becomes in effect useless, because all transactions would occur within Lightning, therefore the node operator can not verify his own transactions, nor gain any security by transacting or receiving payments through a full node because all he would see is the settlement payment which congregates all the transactions that have happened in Lightning in one onchain and verifiable transactions. The role of a laptop node therefore would be turned into basically a research node, to verify that the hubs etc are behaving, but all you need for that is 10 or so researchers.
I think that there are only two nods that matter as far as bitcoin network security and decentralisation is concerned. The miner’s nodes and the business nodes. The laptop node, which just serves one individual, can effectively be forked off from the network as far as the code is concerned with no technical recourse whatever. The recourse of that individual who was running a node on his laptop therefore, if say 100% of miners and 100% of businesses agree to follow a different chain, is only social, but you do not need a node to have social recourse. The laptop node therefore does not benefit the network or decentralisation because if it did have any effect on the network there could be a Sybil node attack as it is fairly easy to deploy tens of thousands of nodes. That is why thus nodes have no say on the network rules, nor any effect on decentralisation.
They do however benefit the individual who runs the node in providing him security and privacy, but that individual should pay the market price for that security and privacy. There is no reason why we should punish millions with higher fees just so that 1000 individuals can run a node on their laptop. Not to mention of course that storage is extremely cheap and we have 1gb fibres as it stands, therefore you can run a node even if blocks were full at 8mb today which would mean the bitcoin network effect would have increased considerably, and all of that for the price of 100 dollars or so.
However, the business nodes, as congregations of users, do have an effect on security and decentralisation by so accepting payments on the chain of their choice, thus rewarding miners or depriving their coins from having value, so acting as a balance against miner misbehaviour. Therefore, decentralisation benefits from increasing the number of businesses who just as they currently pay Visa $30 or more a month, can instead pay the bitcoin node costs.
The argument therefore that laptop nodes have any effect does not stand light to scrutiny in my view and in Satoshi’s view who stated that eventually it does not matter how large the nodes get as they are inconvenient for individuals to run (there are barely 5k nodes as it stands under 1MB while we have millions of users) who can just use super convenient SPV wallets.
Underlying the question of the role of nodes is the question of whether bitcoin is tor or firefox. Core believes that bitcoin should be kept as small as possible so that it resists government intervention by hiding behind tor (which, as many takedowns of darkmarkets have shown is probably broken when the adversary is the empire itself) which of course paints a world where bitcoin is in effect illegal and we all are declared criminals for using it. We do not live in that world in the west. Some countries, such as Russia, have tried to criminalise bitcoin and have failed because you do not need to run a node to use bitcoin when you can just use an SPV wallet.
Moreover, almost no one uses tor because it is very inconvenient as it takes forever to load a page and in bitcoin’s case it would be forever to confirm a transaction.
I think bitcoin is firefox. Agile, fast, flashy, convenient, privacy conscious, customisable, and highly highly competitive. Bitcoin is decentralised, fully secure, it can be highly private, it is permissionless, open and accessible to all, global and for the man on the street it offers not only a gold like value but also very cheap and almost instant transactions.
Cheap and fast are a huge competitive selling point for bitcoin. The only reason why there is any media and silicon valley buzz about this great invention is because it can save billions if not trillions in fees and convenience so lubricating the world’s trade and increasing the well-being of us all, while protecting from inflation.
Bitcoin is such a genius invention because it is competitive in all ways and forms. It competes with gold and Visa, it competes with centralised entities by being decentralised, it competes with private blockchains by being open and global and on and on. Take one away and this is sent to the dustbin of history.
Furthermore, bitcoin is highly efficient because it automates away man himself. Current payment processors have huge overheads with highly expensive employees who need to run their centralised services. For bitcoin, all is done by software, which is incredibly cheap by comparison and will only get cheaper.
So while there is smearing of humans and all sorts of bogus technical arguments, the real argument is one between ideas. The choice that is offered today, while technically a 2MB increase, it is in fact a choice between two very different ideas and visions as I have tried to highlight above.
On the one hand you are offered Satoshi’s vision, which fully works and needs no theology to protect it as mathematical analysis has shown that economic incentives keep mining decentralised, running a node is super cheap, etc. A vision which sees bitcoin as gold and Visa, scalable for smart contracts, the Internet of Things and a million of other uses while remaining open and decentralised to all.
On the other hand you are offered a settlement system with higher fees due to the lightning middle men, less convenient to use, less secure or private, where the role of a node becomes fairly useless for personal use, where the blockchain becomes a closed system, accessible to only a few, thus a private chain in itself.
I have been told that this issue is to miners like us choosing between S3 antminers or whatever mining equipment. I hope the above helps to clarify the real issues and I hope they understand that this decision is extremely important as the fate of bitcoin itself fully depends on it. I hope they follow the genius of Satoshi who has managed to create such an elegant and beautiful system which manages to compete on all fronts thus making its success inevitable. I hope too they fully understand that staying with core is an existential risk as most of us — some 80% — are interested in bitcoin because of Satoshi’s and Satoshi’s visions/ideas alone. A settlement system is to me as interesting as the centralised Ripple currency which currently operates by some form of a settlement system of its own.
The choice is not mine to make however, but for everyone, especially the miners as the judges who have now been burdened with making their choice between the two visions, but then again, that is the beauty of bitcoin:
“The network is robust in its unstructured simplicity. Nodes work all at once with little coordination. They do not need to be identified, since messages are not routed to any particular place and only need to be delivered on a best effort basis. Nodes can leave and rejoin the network at will, accepting the proof-of-work chain as proof of what happened while they were gone. They vote with their CPU power, expressing their acceptance of valid blocks by working on extending them and rejecting invalid blocks by refusing to work on them. Any needed rules and incentives can be enforced with this consensus mechanism.” — Satoshi
I hope we all decide to go with the vision which changes the world for the better by offering easy to transact hard money to the entire globe thus bringing tomorrow’s future, today.