Bitcoin-the Incorruptible Money
In situations like this, where the Bitcoin market enters a stage of considerable price drops, causing a cascade of defaults and collateral liquidations for loan contracts, especially in derivatives and protocols that work leveraged in alternative currencies, many of the involved “crypto” companies consider that the consensus rules of Bitcoin should change in order to be rescued, as occurs in the face of bank runs or liquidity crises in the traditional financial world. But that can never happen in Bitcoin. The rules of the Bitcoin protocol have been written in stone since day one, and changing them is practically impossible.
After the first Bitcoin version was released, any intended changes to the basic consensus rules would be virtually impossible, so it was imperative to have everything perfectly designed from the start. That was why Satoshi paved the way so that different types of transactions could be carried out in the future, escrow transactions, multi-signature addresses, smart contracts, and others that were not used in the early days of Bitcoin adoption.
Any subsequent attempt to change the rules would divide the network into what is known as a “fork”, these rules would still be respected in the previous chain, which, if it manages to muster the most computing power, would be the one that would finally prevail. This was empirically demonstrated in 2017 when the first Bitcoin fork occurred, leading to the creation of BCH (bitcoin cash), which is still struggling to survive today. Various other forks were made afterward, many of which ceased to exist.
Bitcoin is a social construction, and the network participants decide which rules to respect by enforcing them through their interconnected nodes. Those who wish to join the network must ensure that their nodes adhere to the protocol’s consensus rules, or they will immediately be expelled.
Consequently, each minor modification that wants to be introduced in Bitcoin at the protocol level requires a broad consensus among all the ecosystem participants, and as they have grown so much in recent years, it makes decision-making more complex and requires time. For this reason, it is said that the system has been “ossifying” over the years. The greater the number of participants, the greater the diversity of criteria, opinions, and the difficulty in reaching consensual agreements.
“The basics of Bitcoin protocol are ossified”
In Bitcoin, no group has power over another because each node counts as only one, and none has priority or power over any other. This flat, non-hierarchical, open, and distributed network configuration ensures that no decision made by any specific group can be imposed on the rest of the participants.
This was a lesson learned the hard way by a group of important miners, exchanges, and payment processors in 2017 when they tried, with all their lobbying and computing power, to change some basic parameters of the Bitcoin consensus rules to benefit themselves economically, in what it was called “The Blocksize War” (you can read more about it in Jonathan Bier’s book).
All the rest of the network (ordinary users running their nodes) made it clear that if they attempted that change, they would not follow and would kick them out of the network. Those large groups of power understood that without the support of the rest of the users, they would end up isolated and finally capitulated, but not before trying a fork in the chain anyway, verifying empirically that the market was not on their side and consequently losing a lot of money in the process.
Bitcoin is an intellectual entity (software) with physical implementations (hardware) powered by electricity (energy).
These three dimensions are related and articulated in such an elegant and virtuous balance that results in a complete and autonomous organic global monetary system, decentralized and unassailable, which at the same time is open to the participation of all. A true technological marvel with important economic and social implications.
We can all participate, but no one has the power to change it for its benefit or that of any particular group.
In Bitcoin, there is no central government that can decide to alter monetary policy to rescue those groups that make bad financial decisions or to balance deficit budgets.
Every satoshi counts!
Safeguarding each coin is imperative since there will be no more than 21 million BTC, and many have already been lost. It is not worth risking our holdings by betting them on promises of uncertain returns.
- Hodl Hodl trading platform: hodlhodl.com
- Lend at Hodl Hodl: lend.hodlhodl.com
- E-mail: email@example.com
- Blog: hodlhodl.medium.com
- Twitter: twitter.com/hodlhodl
- Telegram: t.me/HodlHodl
- Reddit: hodlhodl.reddit.com
- Facebook: facebook.com/HHodl
- Youtube: youtube.com/c/HodlHodl