Understanding Bitcoin and the False Consensus Effect

When you read about Bitcoin and consensus, the first thing that comes to mind is agreeing on the true version of the Bitcoin blockchain.

This post is not about that, it’s about a Bitcoin bubble. Not a price bubble, but a “technical bubble” that many long-term bitcoiners live in. It is a bubble of assumptions that everyone understands technical explanations.

If you’ve been into Bitcoin for a while, you’ve probably read a lot of these technical posts, because understanding Bitcoin, cryptocurrency and blockchains is hard.

I think there are 3 reasons why.

1. It is complex technology.

Jameson Lopp wrote a great post last year about why nobody understands Bitcoin. In short, Bitcoin touches on many different aspects of society and combines different fields, which are often individually hard to understand for a lot of people.

Putting it all together requires you to find all this information and then understand complex abstract models, which is not everyone’s strength.
As a result, most people end up having a partial understanding of Bitcoin.

What’s interesting to me is that the average person shouldn’t have to understand how Bitcoin works, we simply want to.

Many of us frequently use the banking system, yet almost nobody can explain how it works behind the scenes. Most people just know it is our “official money” and that is that.

We use the Internet every day and trust it with all our information, yet almost nobody can explain how that works either or who decides the rules. We just assume a lot of smart people did the right thing and that other smart people ensured that really was the case. As long as our Instagram posts, cat videos, Netflix series and WhatsApp messages work the way they are supposed to, we’re good.

That is arguably the point Bitcoin will need to get to one day, where people use it without needing to understand it. They simply trust it because it has worked beautifully since they first started using it.

We’re not there yet however, so everyone wants to figure out how it all works, before they trust this new abstract thing with their money.

We don’t owe it to them to explain everything, but if we want Bitcoin to continue to succeed, we’ll need many more bright minds on board.

2. Good information is hard to come by.

If someone asks you how to learn more about Bitcoin, where do you send them?

• The whitepaper? While it is definitely a must-read, people have countless questions after reading it and many won’t have a clue about some of the abstract concepts in it.
• YouTube? There is a lot of great content on there, but a lot of crappy videos too. They won’t know which is which.
• A book? That’s alright, but the space evolves rapidly and they will likely need much more than that.
• Podcasts? These are nice to combine with other activities, but can be rather time consuming and many people need to see to believe.
• Wikipedia? Not bad, though not always written in a very accessible way.

My point is, we have a huge fragmentation in information. I firmly believe that most of the ‘debates’ in Bitcoin on how to scale and improve it originate from people being poorly introduced.

I was introduced to Bitcoin as a fast and cheap payments method. It took me months to realise how that isn’t what we’re building here.

The fragmentation of information also explains why some altcoins get pumped so high. Their marketing is organised and the groups behind them control the narrative. Writing a whitepaper full of grand promises is not too hard, debunking all the bullshit claims in them when you don’t care about the project takes a lot more work.

In Bitcoin, many more people care and take the time to correct mistakes, but a lot fewer take the initiative to create accessible content.

3. Those who understand Bitcoin can’t necessarily explain it well

I spend much of my time explaining complex things in simple ways and words. Going from understanding something yourself to explaining it to others is a constant challenge.

There is so much “data loss” when you interpret something, reformulate it for someone else, who then might interpret it differently than you intended.

When you are reformulating what you learned, it is also easy to assume that people already know what you know and shorten your explanations.

If you’ve ever created a piece of content, you will know exactly what I mean. How do you find the balance between keeping content simple and explaining everything in-depth?

I think the best way is by creating content for a specific audience.

When I educate newcomers, I never use the term “hash” for example, because it is too technical for 99% of the population and not relevant to understand yet when you’re just being introduced. Yet most of the people I see introducing others to Bitcoin speak about hashes and hashing.

If I do have to explain, I tend to call it a unique digital fingerprint of some information.

I think this happens because after being into Bitcoin for years, many people begin to assume these technical concepts are understandable for anyone.

That leads me to the title of the post.

The False Consensus Effect

The false consensus effect means that people overestimate the extent to which their opinions, beliefs, preferences, values, knowledge and habits are the same as most of the population. It happens to all of us way more than we realise.

We tend to surround ourselves with people who think the way we do, so we encounter less resistance over time and end up believing that everybody thinks the way we do.

This has long-term implications in onboarding newcomers to Bitcoin, because if the people who know what SegWit is mostly talk to other people who also know what it is, we may stop explaining or being good at explaining what it is. We then assume that if people Google it, they will always find simple and correct answers to explain it to them.

Let’s try that:

If you Google “what is segwit”, because you’ve been told that it is the solution to your high bitcoin fees, and go to Wikipedia, you find this as your first paragraph:

Not exactly welcoming, is it?

The average person only needs to know:
“SegWit is a stepping stone for Bitcoin which makes more improvements possible in the future. It also allows more and cheaper transactions on the network. Check the list of bitcoin wallets that already support it below.”

How do we fix the technical gap?

I think Bitcoin education needs to happen at 2 levels.

1. We continue to educate newcomers in accessible ways and many languages. We explain every term and assume the reader/viewer knows nothing.

2. We help current bitcoiners to get a better understanding of the things they briefly learned about in their introduction phase. To do this we need educators to be a bridge between the technically skilled people and the rest.

To explain you why this is so important, I’ll use an example:

“SegWit and Bech32 will help Bitcoin scale.”

It’s amazing that we will soon have native SegWit addresses (Bech32) and that we can protect users against typos in bitcoin addresses. I have much respect for all the engineering work on this, but that is from the point of view of someone who understands Bitcoin relatively well.

Meanwhile the newcomer is overpaying in transaction fees, because their wallet has poor fee estimation and still doesn’t support SegWit. The newcomer googles “why is it expensive to send bitcoins” and may end up in a BlockstreamCoreAXA conspiracy snakepit of sockpuppets that preach Bitcoin’s days are numbered. We may have just lost another newcomer who will spend months reading that and get their own false consensus effect.

Perhaps one day they will take the time to understand how hard the engineering challenges are, but chances are they won’t.

The more likely route is that they will go complain on Reddit or another forum to “fix this shit” and regurgitate that Bitcoin is dying because it isn’t innovating.

They may be met by well-intentioned long-term bitcoiners, who explain to them we’re getting bech32 addresses to support more SegWit adoption, as well as Schnorr signatures so we can do signature aggregation and save more capacity.

Compare this to the “10x the blocksize now!” and you can imagine why these on-chain scalability campaigns have had any success so far. They simply speak to the imagination of a non-technical person.

From being “technically correct” to keeping it simple

If we want to onboard newcomers and save future arguing time, I think we need a shift from being “technically correct” all the time to speaking in simpler terms.

The longer we stay in our technical bubble, the more we will drift away from the people. We will have built the best cryptocurrency/blockchain technologically, but the people won’t (want to) understand it because altcoin X has simpler, more organised marketing and because their attention span is limited, with every company on the planet fighting over it.

You can say that the technology will ultimately prove itself, but I disagree, because change is hard and if you build it, people won’t necessarily come.

We will need to convince them against the negative narratives of the mainstream media, the haters and the sockpuppets.

It takes a lot of patience to educate newcomers, but always remember that one day you didn’t know anything either and spent hours going down the rabbit hole looking for answers.

Let’s make it a pleasant experience to learn about Bitcoin, not a painstaking months-long process. I for one am excited to work on that.

Thanks for reading!