Bitcoin Battle
War-gaming BTC v. BCH v. BSV strategies.
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The Bitcoin Civil War between BTC, BCH, and BSV (aside from other Bitcoins) is hotter than ever, with existential stakes for different communities of stakeholders.
What follows is objective analysis written by neutral researchers with no professional, contractual, or financial affiliations with underlying assets and teams. Caveat emptor, “not legal/financial advice,” and other customary disclaimers apply.
Now let’s get started.
Of these multiple fronts, tactics, and strategies, two contests are especially noteworthy: (1) war for legal primacy; (2) war for narrative primacy.
1. War for Legal Primacy
The legal battles between competing Bitcoins grow more complex each day. Bitcoin-related lawsuits now cover a lot of ground, including adjudication of whether Craig Wright is Satoshi Nakamoto — the pseudonym under which the Bitcoin Whitepaper was published.
1.1 Copyright/Trademark Claims
Most recently, Craig Wright (BSV) laid copyright claims to the Bitcoin Whitepaper and Bitcoin 0.1 source code. As a result, even litigation opponents like Peter McCormack have started to appreciate the audacity and aggressiveness of BSV’s legal posture.
The copyright claims (and, yes, even potential “Bitcoin” trademark claims) are just the tip of a much bigger crypto IP iceberg.
1.2 Crypto Patent Litigation
Aside from Bitcoin/blockchain copyrights/trademarks, patents present the ultimate wildcard battle scenario.
Patent wars…
Blockstream raised USD60 million on the promise of 2 patents. The patents are:
medium.com
According to its CEO Jimmy Nguyen, nChain has the largest and highest-quality blockchain patent portfolio in the world. nChain’s website explains the BSV patent posture quite clearly:
Although much of our work is protected through the patent process, nChain intends to licence select innovations and products on an open-source or royalty-free basis, specifically for applications operating on the BSV network.
So, if a project adopts BSV, it will not face the threat of patent infringement litigation. But if an enterprise actor chooses to build on competing projects like BTC or BCH, they should be prepared for licensing demand letters.
nChain is also building a “professional services” unit that will doubtlessly create custom licensing streams for enterprises. It is reasonable to infer that early licensees will have better deals than late-comers, which directly incentivizes rally-around-the-leader licensing practices. Nobody wants to be late to the blockchain patent party, and BSV is where the party’s at.
Like it or not, nChain is basically the Oracle of the blockchain space.
Armed with its patent portfolio, nChain can “exit” via merger with an existing BigTech player, or continue staking out and building out its own ecosystem. Both are equally likely at present; both disadvantage BTC/BCH because enterprise adopters will reasonably gravitate towards the blockchain with the smallest number of legal clouds.
1.3 Legalizing Bitcoin
BSV’s patent portfolio helps explain the strong and clearly concerted move by the BSV team to claim the mantle of blockchain legality — to do everything possible to “legalize” and formalize BSV as Bitcoin. Please note that in this respect, the Bitcoin Battle is a zero-sum contest: legalization, formalization, and legitimation of BSV as Bitcoin necessarily implies the delegitimation (and potential illegalization) of competitors.
In the minds of future Bitcoiners, there will only be one Bitcoin. For Bitcoin’s core value proposition is its singularity. Bitcoins (plural) only makes sense in relation to how many of the 21,000,000 digital unicorns one has; because of network effects, no rational person will invest resources in a Bitcoin clone under a cloud of legal fog.
The BSV team is stating this overtly in every interview, publication, and presentation: BSV is the legal and lawful blockchain. In effort to strengthen their case, BSV Bitcoiners are doing everything possible to signal affirmation and indispensability of existing legal authority. Ayre, Wright, Nguyen’s repudiation of illegality is striking. Their stated rationale of enterprise adoption is also highly logical, even though conformist.
Craig Wright’s recent sharp legal turn (covering everything from jurisdiction doctrine, to evidentiary standards, to questions of legal institutionalism) is especially instructive here. Wright is clearly writing for an audience of current and future finders of fact, and his chief message is simple: “Bitcoin BSV is Bitcoin.” [CraigWright’s Medium account name!] — and if you disagree, you better have “deep pockets” because Craig Wright will sue you.
BSV is clearly on home turf in a court of law.
The key question for everyone else is whether they consent to legacy courts being the primary fact-finding organs for blockchain disputes. Judging from trends in crypto law, many leading blockchain actors (including the disputants here) have essentially acquiesced to the inevitability of legal oversight, or are quickly coming around to that realization.
All eyes should be on the actor(s) that will still seek to carve out operating space for their Bitcoin that is truly supra-national and supra-jurisdictional — as many early cypherpunks had hoped. Here, BCH’s status as an insurgent Bitcoin may prove especially advantageous for BCH.
1.4 Battle Maps
Now that we are in the legal thicket, the various seemingly-discrete lawsuits and offensive-defensive-hybrid postures suddenly start to make a little bit more sense.
Once we map out the major camps and actors, and draw out the lines of attack, we start to see that, at minimum, nChain/BSV have a formidable war chest to wage so many legal campaigns (& defenses) — simultaneously.
A crew with a deep war chest and a proclivity to fight can never be discounted. Especially if it includes Australians and LA lawyers.
1.5 Battle Plans
Now that we have a panoramic view, the best way to make sense of the flood of lawsuits between, say, Calvin Ayre (BSV) & Roger Ver (BCH) is to step back and ask what the lawsuits are tying to achieve.
The cynical answer to the question regarding intent is that the lawsuits above are merely publicity plays, serving as clever forms of earned media under the guise of crypto impact litigation. Another view is that these lawsuits are motivated by personal animosity as much as strategic vision.
The realist/rational view is that the current lawsuits may be opening moves in a much more complex and drawn-out chess match. Bitcoin SV’s Jimmy Nguyen says so explicitly, frequently referencing a book that informs his thinking: Winning the Long Game (by J. H. Schoemaker and Steve Krupp).
This begs the questions: (a) Is this chess game winnable? (b) At what cost?
1.6 $8 Billion Reasons to be Wright
Before proceeding, we need to add one other legal attack vector to our battle map. This is the major lawsuit in the US District Court for the Southern District of Florida involving the estate of Dave Kleiman (and his company, W&K Info Defense Research, LLC) versus Craig Wright.
Among other things, the lawsuit (Case 9:18-cv-80176) alleges the tort of conversion — which is a civil version of the crime of theft. Essentially, Ira Kleiman is pleading that Wright “converted” some or all of Dave Kleiman’s estimated 1,100,000 bitcoins.
At today’s market rates, what’s at stake in Kleiman v. Wright is a cool $8 billion USD (+/- a few bills).
Though the Kleiman v. Wright case is formally a tort case, the plaintiffs’ lawyer — Devin Freedman of Boies Schiller Flexner — has explained that the Satoshi Nakamoto story is “relevant” to the underlying proceedings. [Never mind that asking courts to answer “who is Satoshi?” is like asking vegans about the taste of beef.]
1.7 Winning the Long Game
One way that nChain can win the long game is through a strong offensive-defensive legal posture. Seen in this light, the current rounds of, say, libel, IP, and Satoshi/Faketoshi litigation can (and likely will) be used in future disputes as a form of estoppel. As seen with Wright’s copyright registration, one does not need a formal “final” judicial decree to declare whether Wright is or is not Satoshi. Markets act in mysterious ways.
Even an interim judicial order that assumes, arguendo, that Wright might have been part of a Satoshi collective would undoubtedly have direct market effect and shift the narrative around Bitcoin primacy towards BSV. As markets are unpredictable, there is a non-negligible likelihood that BSV succeeds in orchestrating a comeback along these lines. In fact, even without a judicial finding on Satoshi’s true identity, Kleiman’s pleadings already essentially admit that Wright was integral to the creation of Bitcoin, directly bolstering BSV’s narrative and evidentiary thread.
The fact that BSV’s opponents have largely agreed to meet BSV on judicial fields of battle serves as strong precedent. In functional equivalence, and perhaps even in more formal terms, the various communities’ willingness to resort to traditional bases of jurisdiction may be seen as similar to de facto consent to jurisdiction — in a broad sense of the word. This is one of the most important and consequential battlegrounds in the bigger crypto legal war.
What does this mean? Stated plainly, once Bitcoiners agreed to subject their formal disputes to court, they signaled acquiescence to the power of aforementioned courts to resolve Bitcoin issues. For instance, the fact that the Binance CEO offered to underwrite legal expenses for Peter McCormack makes it reasonable to expect some type of formal dispute between BSV actors and, say, Binance.
Seemingly frivolous libel suits may just be delivery vehicles for litigating many other vectors of control over Bitcoin. Counter-claims (where a defendant sues a plaintiff) and cross-claims (where a defendant sues a third party who’s really the one to blame for the underlying mess) are age-old tactics for Trojan horse attacks. The fact that many security-conscious Bitcoiners are willingly submitting themselves to these attack vectors is perplexing, to put it mildly.
Thankfully, not everyone is an eager beaver about rushing to court. Ver and Buterin’s postures will be increasingly relevant here. The best counsel they can get is the same best counsel any of us can get: to stay as far away from litigation as possible.
2. War for Narrative Primacy
Whereas the legal battles are likely to draw out for decades and most likely produce unsatisfactory stalemates, the narrative blitzkrieg will be fast and vicious.
2.1 Scope of Bitcoin Narrative Wars
The war for narrative primacy is the battle for “hearts and minds” both within existing Bitcoin communities, as well as communities of adopters who are only now coming to Bitcoin. In the words of McCormack:
It turns out that “taking over” Bitcoin is not as difficult as diehard Bitcoin maximalists would have liked to believe. It begins with small steps, such as denying Bitcoin-ness to other competing Bitcoins.
This is why the BSV community doesn’t even dignify the BTC token with the “Bitcoin” name, referring to BTC as “Core.” Not to be outdone, BTC folks derisively call BCH, BSV (& other wannabe Bitcoin variants) “alts,” “Fakecoins,” and/or, “shitcoins.”
The battle for narrative primacy extends to domain names and Twitter handles as well. Bitcoin.com is controlled by the Bitcoin Cash crew, allowing newcomers to buy BCH or BTC. On Twitter, @Bitcoin is controlled by the BCH folks. Bitcoin.org is controlled by the core BTC crew, serving as an on-ramp for BTC purchases. There’s also a BitcoinCore.org which serves as a one-stop-shop for the BTC developer community.
[August 20, 2019 Update: the @Bitcoin Twitter handle is apparently directing traffic to BTC, with significant controversy]
If you’re confused by all this, you’re not alone. You are standing at the front line in the war for Bitcoin narrative primacy.
2.2 Bitcoin Battle Spaces
The war for narrative primacy is fought in every available forum, from #CryptoTwitter, to Change.org petitions that seek to block BSV’s attempt to claim ownership over the Bitcoin name and vision.
Here is what the battles look like on Twitter:
Here’s a typical response by a BTC Bitcoiner:
2.3 Battle Plans
It is well known that history is written by the victors. Histories are essentially retellings of the victor’s playbook. But some historians are so good at their craft that they themselves can redefine the terms of victory, long after major material wins and losses on global battlefronts.
A good historian can rewrite who wins and loses a war, long after the war is said to have ended.
In this battle for narrative primacy, BSV stands uniquely positioned.
Not only does BSV have camera-friendly protagonists and antagonists, but nChain — BSV’s main development hub — is run by a consistently successful apex IP lawyer, Jimmy Nguyen. Nguyen has more than two decades of experience handling the most complex IP and business disputes imaginable at the intersection of media law, BigTech, and finance.
If anyone is expected to tell a good story, it’s lawyers like Nguyen. With deep direct financial and reputational stakes — and “Win” in his Twitter handle — Nguyen will assure that BSV at least gets a fair audience on global blockchain markets, and screens.
2.4 Bitcoin: The Movie
Nguyen’s deep contact list virtually assures that Bitcoin: The Movie will not only be made, but that it will feature A-list talent, and end with Bitcoin SV as the real Bitcoin. This is stated literally, not metaphorically.
Everyone knows that the Bitcoin story, including the current civil war, is tailor-made for Hollywood. So we can speak bluntly: of the three Bitcoins above, the one with the highest likelihood of mass adoption is the one that will leave audiences reaching to download Coinbase and buy …
Media narratives around Bitcoin are not just dressing or ‘nice to haves’ — they are integral to the core value proposition of Bitcoin as a medium of exchange, store of value, and unit of account.
It is easy to dislike Craig Wright claiming to be Satoshi; it is much harder to do so when Wright’s character is played by Russell Crowe or Hugh Jackman and ends up saving the world and receiving an Oscar. Such is the power of global media networks. If you need proof, take a look at the White House.
2.5 Pop Narratives
Beyond speculative (though reasonably inferred) analysis on particular media plays, the battle for narrative primacy also extends to more general associations that key stakeholders already attach to each project.
Whether a fair characterization or not, BTC is associated with ghosts, underground marketplaces, and “whales” (large coin-bag holders) who lurk in stealth beneath frothy markets. BCH is associated with Roger Ver, who rose to Bitcoin prominence during its notorious “dark web” period. Ver renounced his U.S. citizenship after serving a plea-bargained ten months in federal custody in connection with his online activities.
BSV’s associational baggage is just as heavy, if not more so. Craig Wright claims to be none other than Satoshi Nakamoto, the pseudonymous author of the Bitcoin Whitepaper. Recently, Craig Wright even went so far as to register copyright to the Bitcoin Whitepaper — the Magna Carta of the crypto world. Wright’s co-venturer is Calvin Ayre, who mires himself in controversy. Completing the triptych is Jimmy Nguyen, a legal wunderkind who graduated from law school before most people graduate from college.
But personalities only go so far. Enigmas have power only if people accept them on faith; once cracks show themselves, it’s only a matter of time before the enigma is rendered obsolete. At that point, the pop narratives have to scale far beyond the figures of ghosts. Each Bitcoin project has to sell the global public on a vision of their Bitcoin future.
The successful Bitcoin vision must and will begin and end with utility.
3. Bitcoin Geopolitics
Now that we understand the stakes, strategies, and tactics of competing Bitcoin armies better, where do we go from here?
In addition to the battles for legal and narrative primacy, there is also a non-trivial chance that the Bitcoin Battle evolves along familiar geopolitical lines.
It is reasonable to expect actors to project even more “geopolitics” onto a given Bitcoin branch or team. With enough groundwork, BSV could be re-characterized as, say, a “Western,” “Corporate” and/or “Globalist/Statist” Bitcoin; BCH could be depicted as an “Asian” Bitcoin, under the control of giant hardware manufacturing firms and “China.”
In these crypto geopolitical battles, it will be relatively easy for BTC-ers to maintain narrative focus on BTC as supra-political decentralized globalized money. But given the immense profits at stake, there will be no shortage of actors launching increasingly sophisticated (dis)information campaigns in attempt to smear and/or controversialize their opponents.
Given the enormity of the stakes, everyone is advised to tread carefully. Si vis pacem, para bellum.
Lest we labor under the anxiety of not only “legalized Bitcoin” but now also “weaponized Bitcoin,” the smart money should seek out the projects that are doing the most buidl-ing. For in the end …
Utility > Legality
Less fighting and more buidl-ing is the only win-win scenario here. Otherwise, the only folks who win are lawyers.
