The Forked Tongue of Bitcoin Core
When a city is facing increased traffic and it wants to relieve congestion, it can choose from a number of possible solutions. These options generally fall into two categories: (1) improvements to the road infrastructure; or (2) changes to affect driver behavior.
Improvements to the road infrastructure are relatively straightforward: either build additional lanes on existing roads or build new roads. Changes to impact driver behavior are a bit more complex. The city could build HOV lanes, hoping to reduce the number of cars on the roads (a popular strategy that isn’t really as effective as it’s promoted to be). Or it could build out more public transit systems, and encourage residents to use them rather than their cars (another popular strategy which doesn’t really work as well as its proponents claim).
There is another option as well: do nothing, and as the road infrastructure reaches a breaking point, people will simply move away from the city, thereby reducing congestion. This strategy brings about some other less satisfactory consequences, of course.
From Excitement to Disillusionment
I’m not writing an article about handling a city’s traffic congestion, however. I’m writing about Bitcoin and its congestion issue. I’ve been involved with Bitcoin since 2013, and I’ve been enough of a Bitcoin fanboy that I even wrote a book on the subject in 2015. However, not long after the publication of my book I became disaffected by the increasingly divisive nature of the Bitcoin community, and more importantly, the inability to resolve the scaling debate. For me, the turning point came when the main communications channels of Bitcoin — the /r/bitcoin subreddit and the Bitcointalk forums — began to censor debate on the grounds that any non-core implementation of the Bitcoin client was an “altcoin.” These heavy-handed tactics left a sour taste in my mouth, so I began to look elsewhere.
Eventually, I became most interested in Dash and Ethereum, Dash because it appeared most driven to fulfill Satoshi’s original vision, and Ethereum because it could create an ecosystem that would allow for blockchain-based solutions to so many common problems. So I sold about half my Bitcoin holdings for Dash and Ether.
Diminishing Network Effect
Due to Bitcoin’s network effect, I continued to use Bitcoin for payments and transactions: I always wanted the ability to use cryptocurrency for my day-to-day purchases, and only Bitcoin had the network effect to make this possible. Using cryptocurrency day-to-day isn’t a reality for most people yet (including myself), but through the Shift card, I took at least one step in that direction. The Shift card only worked with Bitcoin at the time, so I continued to fund my card with the original cryptocurrency, often exchanging Dash I earned for Bitcoin in order to fund the card.
However, I’ve grown weary of the fees and slowness involved in transferring Bitcoin. I encounter them when I exchange Dash to Bitcoin and I encounter them when I transfer Bitcoin into my Coinbase wallet. Because I’m not dumb enough to store any significant amount of cryptocurrency in a hosted wallet, I usually send at most a few hundred dollars worth of Bitcoin at a time, sometimes even less. Yet I pay upwards of $5 to do so. The “future of money” seemed pretty similar to Western Union.
But recently I realized I have other options. Coinbase offers an Ethereum wallet as well, so I switched my Shift Card to that wallet. Now I use Ether instead, thus greatly reducing my transaction fees and making the process faster. Thus, with very little effort, I had a less expensive and more convenient experience, all because I abandoned Bitcoin.
This is a perfect example of the dwindling network effect Bitcoin enjoys. It took me about two minutes to stop using Bitcoin for another cryptocurrency, and the end result is the same user experience with reduced costs. Bitcoin has enjoyed a strong network effect, but as my own experience shows, that effect is diminishing. As more and more exchanges and merchants accept alternative cryptocurrencies, and with the advent of ShapeShift, the number of use cases for Bitcoin decreases dramatically. It might be difficult for technologies to overcome network effect, but it’s not impossible. Just ask MySpace or IBM. So why should I stay with Bitcoin? How is it superior to other cryptocurrencies?
Perhaps the promised Lightening Network will create new use cases for Bitcoin that don’t exist today (like small transactions). But why would a merchant wait for something that has an unknown release date and might involve significant infrastructure changes, when another coin like Dash or Ether could more easily be implemented now?
Forking the Code; Forking the Community
What believers in the free market must want above all is for the best solution to succeed. There’s no room in the free market for sentimentality. Nevertheless, it’s hard not to be a bit melancholy about Bitcoin’s state of affairs. After all, since its inception Bitcoin has been seen as the savior to overcome the antiquated and corrupt financial system we currently live under. Not Ethereum, not Dash. Bitcoin.
As Bitcoin succumbs to in-fighting and stagnation, it’s hard not to put its issues at the feet of Bitcoin Core. I am not among those who believe Core wants to destroy Bitcoin. I believe they want what’s best for Bitcoin, although I do believe their vision for Bitcoin’s success is fundamentally flawed. Nor are those opposed to Core’s vision always innocent and angelic.
But Core, for better or for worse, has been charged with shaping the direction of Bitcoin, and its attitude towards any who oppose its vision since Greg Maxwell and Adam Back took over reflects an almost pathological social disorder. Core and its minions ridicule, attack, and then ultimately censor any who disagree with them.
As a result, a large segment of the Bitcoin community has flocked to Bitcoin Cash and altcoins (Bitcoin dominance has dropped from almost 90% to under 50% this year). Anyone who’s worked in a toxic environment will tell you: the best talent simply leaves the project. I once worked for an organization which had extremely high turnover. People would be hired, remain for a few months to a year, then leave for another job. When this happens once or twice, it might just be bad luck. But when it occurs over and over again, management needs to realize that the problem might not be with the people leaving, but with those in charge (and, sure enough, at this organization the top brass were abrasive micro-managers).
This has occurred in Bitcoin, with the primary example being former Core maintainer Gavin Andresen. When Bitcoin luminaries such as Andresen, Mike Hearn, and Roger Ver — who each did so much to establish Bitcoin — are now considered pariahs, perhaps Core should realize that there is a problem…not with everyone who is leaving, but with those who remain. And the exodus isn’t confined just to big names. I encounter it over and over as I talk to other regular cryptocurrency users: although they began with Bitcoin, they got tired of the bickering and Bitcoin’s diminishing usefulness for real-world transactions, and went elsewhere. Some embrace Dash, others have moved to Ethereum, and still others dabble in various new cryptocurrencies.
Core supporters like to insist that the “community” is almost unanimously behind Core (other than those evil miners, of course), but this is only true because they’ve ousted all “non-believers” from that community. Even before the Bitcoin Cash hard fork, Core had already “forked” Bitcoin by dividing the community into “true believers” and critics, who were no longer welcome. And of course, the toxic environment that Core has created already caused one major fork, Bitcoin Cash, with another (Segwit2x) looming on the horizon. While some might simply say “good riddance” to those who break away from Core’s stranglehold, how will Bitcoin transition into a mainstream technology if Core is unable to keep its own small community together?
Fleeing the City
The condescending attitude of Bitcoin Core has real-world consequences. It appears to be leading to reduced traffic on the Bitcoin blockchain. Like me, users are simply transitioning to other more reliable solutions. Bitcoin Core is like the city planners who have let their road infrastructure stagnate, leading people to move en masse to other “cities.” As more people seek alternative routes for their financial transactions, Bitcoin could easily find itself an empty town, inhabited only by the rich seeking a quixotic investment vehicle. But the original vision of Satoshi Nakamoto would live on, in solutions such as Ethereum, Dash, or Bitcoin Cash. Cryptocurrency is unstoppable, but specific implementations of it are not.