The Battle for Bitcoin’s Soul
One of the many things that has fascinated me most about cryptocurrency since it started capturing all of my spare brain space is how emotionally charged it all is.
Many nocoiners and even some crypto-trading cynics use both price upswings and corrections to scornfully call it a bubble, a fraud, a scam, a stupid investment…you get the idea. From the crypto gospel end of the spectrum come shouts, snark, chest-beating, told-you-so-ing, and more during those exact same jumps and drops of coin prices.
It makes sense — belief in crypto is not simply a willingness to roll the dice on interesting technology. In my own experience, taking the plunge to work at a startup comes with a certain ability to buy in, suppress doubt, and block out the critics. This is a daily exercise and it is not for the faint of heart. Working on a crypto project, from an outsider’s point of view, is a completely different beast in terms of fealty. How so, you ask? If anyone is sitting on screenshots of Twitter fights between taxi drivers and Uber employees, I sure would love to see them, because the mere suggestion is laughable. This kind of thing is par for the course in crypto.
When you give yourself to crypto, you do it completely. Developers working on crypto projects seem to speak and act out of ideology, not mere interest. This is why words that CryptoTwitter throws around with regularity— rebel, revolutionary, pioneer, libertarian, maximalist — to describe the most passionate cryptoids invoke a special kind of imagery. The great crypto debate has heroes and villains, not simply disagreeing parties on either side of an argument.
Perhaps even more captivating are the seemingly endless skirmishes that erupt within the crypto community. Infighting among nominal allies struggling to advance a movement is nothing new, but it is amazing nonetheless to watch crypto tribes sprout and take up arms against one another.
Some of the disputes can be characterized as momentary confrontations dismissively wiped away by members of a community with no time to waste on small issues. Altcoins are routinely accused of scamming investors without much public spectacle; the crypto world keeps turning.
Others have staying power, especially those that involve rapidly ascending or popularly traded coins. Ethereum ($ETH) founder Vitalik Buterin faces daily criticism for flouting the (unofficial) First Rule of Crypto — there is no head on this snake. As the de facto leader of Ethereum, Buterin’s critics see him as the centralized antithesis of Satoshi’s original vision.
(If it wasn’t obvious, tweets from self-proclaimed Bitcoin historian Kevin Pham that reference Ethereum are best viewed as biting sarcasm.)
Kevin’s anti-Ethereum rampage has only intensified in recent days and is hardly unique among Bitcoin maximalists.
The recent rise of the Ripple ($XRP) token brought tons of hate out of the woodwork — it’s not decentralized, banks don’t really use it, the token has no value, on and on. Litecoin ($LTC) founder Charlie Lee continues to take heat for cashing out his $LTC holdings, from his view, to protect against conflicts of interest while he works on project development. These are just a few of the flare-ups that persist. New ones seem to ignite daily.
And then, topping them all, is the blood feud between Bitcoin ($BTC) and Bitcoin Cash ($BCH).
The dispute between $BTC and $BCH is, fundamentally, one of technology and philosophy. Funny enough, these are two topics that seem to have little in common on the surface, yet are closely woven together in crypto.
To understand the key differences between $BTC and $BCH, one must consider how philosophy drives unique technology decisions. When $BCH forked from $BTC, the developers behind the former essentially participated in a popular uprising based on coding differences. Last week, Vinny Lingham, CEO of secure identity platform, Civic, beautifully broke down what sets each apart from the other. It’s essential reading.
At the risk of oversimplifying a complex issue, I’ll do my best to summarize without covering every detail. Bitcoin’s technology development decisions treat decentralization as a non-negotiable axiom. Individual miners having the ability to run nodes is essential to Bitcoin’s philosophy, and the blockchain cannot be overwhelmed by high volumes of small transactions, or else these small miners would be unable to participate. Bitcoin’s security approach focuses on walling off actors who would seek to use it for their own ends by requiring a majority of nodes to agree to changes in code. This is distinctly anti-government and anti-hacker. The problem is, the decentralization orthodoxy has made Bitcoin hard for the average person to use in their daily lives at this point. This could change with “second layer” solutions like Lightning Network, but that is only in the test phase.
Bitcoin Cash, on the other hand, doesn’t see mining access for all as a practical scenario. Instead, $BCH prioritizes peer-to-peer utility over the purest form of decentralization. It’s here that Bitcoin Cash shows it is aptly named. $BCH is capable of processing 8MB blocks as opposed to BTC’s 1MB block limit (one of the key reasons for the fork in the first place), leading to faster transaction times and lower fees than $BTC. Ultimately, processing larger blocks makes $BCH a more “spendable” currency than its predecessor. As of this writing, if you owe a friend some small sum of money, you’re better off using $BCH to pay them back — the funds will arrive sooner and will cost you less. The catch? Ignore decentralization at your own risk. Reducing the supply of eligible miners puts power in the hands of a select number. This isn’t anything like what traditional, centralized financial institutions do and it’s a far cry from Ripple’s trusted nodes system, but it can’t be ignored, either.
An interesting, although probably immaterial note, at this point — $BCH advocates and even prominent $BTC voices have pointed out that Bitcoin Cash aligns more closely to the original vision detailed in Satoshi Nakamoto’s Bitcoin whitepaper.
So, each has its apparent strengths and weaknesses. When I first started getting familiar with the technical differences between the two, my thought was that each had a meaningful value proposition and they should be able to coexist. Bitcoin can be digital gold, serving as a reserve of sorts and protecting against major economic swings once price volatility settles down. Bitcoin Cash can be more liquid, used to buy your daily cup of coffee, metaphorically speaking. The problem, as I can see it, is that each combatant wants the territory it has already claimed and to ransack the other.
Take a trip down the CryptoTwitter rabbit hole and it won’t be long before you come across @Bitcoin. If you’re just getting started following top crypto accounts, this would seemingly be a logical place to begin your search for meaningful content. If you do follow this account, you may have noticed a distinct agenda.
Normally, it would be easy to dismiss or at least devalue an account with such a clear-cut bias towards one coin, but this is no ordinary account. The name and handle alone make that impossible, especially given the endlessly malleable, hyperactive minds of crypto investors. More to the point, @Bitcoin has 674,000 Twitter followers. John McAfee and his out-in-the-open get rich quick schemes have 670,000. People are paying attention to @Bitcoin — whether they care or are aware of its questionable representation is another story. And of course $BTC, not $BCH, is still colloquially known at “Bitcoin.” (The $BCH community would prefer you call $BTC by the name “Bitcoin Core.”)
That’s why it’s the Jan. 9th tweet that I can’t get out of my head. “Who is really stealing the Bitcoin brand?”
Wait, is this a thing?
Run a quick search for “bcash” — I used to think this was just a convenient Bitcoin Cash abbreviation. Nope! It’s a derogatory term, used by the $BTC community, to disassociate $BCH from the Bitcoin brand. Looks like it’s a thing!
I have to admit, I laughed when I first realized that “branding” had anything to do with this. I couldn’t believe it. The supposed leaders of the unbanking revolution, the cypherpunks, the Wall Street and bad-central-actor disruptors actually give a shit about something as corporate as BRANDING? For how holy, how sanctimonious, how self-congratulatory so much of the crypto community can be with mountains still to climb, a tiff over who gets to be called “Bitcoin” felt like an astonishingly petty facet of the debate.
And yet…the more Bitcoin vs. Bitcoin Cash ferments in my mind, the more I can’t shake the thought that the name is everything.
Creating or working on an altcoin in 2018 is one thing. Ambitious? Sure. Entrepreneurial? Absolutely. Impactful on society? Could be, but the odds are against you.
Roll back the calendar to 2009. Imagine that you’ve decided to work on a project that is truly the first of its kind. An anonymous, shadowy figure claims it will free people to control their own financial destinies. Your work will supposedly erase the need for the officiating hand of third party overlords like banks and governments. The project contends to brings finance without fraud. Oh, and for your efforts, you’ll be one of just a few people in position to be paid in a currency that you’ll be helping to literally invent.
Even on the heels of the financial crisis, how freaking insane would (did) this sound to the average person? I know it sounded insane to me until 2017! Think about how much crap those people had to listen to from doubters, from people who never took the time to really educate themselves on the technology or the mission, from people who gravitated towards phenomenally unfair headlines hyper-focused on Bitcoin “funding” crime. Think of Paul Krugman, Jamie Dimon, Chuck Schumer, or Warren Buffett. Those are just a few of the high-profile names who publicly declare your idea to be stupid, doomed, maybe even fraudulent. Imagine you trudged through as many as eight years of naysaying.
If there’s any difficulty in imagining how strongly you’d feel and how devoutly you’d believe after sticking to your guns despite endless condescension and criticism, it should be considerably easier to imagine how you’d feel if you’d seen the crypto explosion that we’re experiencing right now coming all the way. An explosion that, undeniably, is spearheaded by the name “Bitcoin.” Though technically a subset of the broader cryptocurrency/digital asset/blockchain category, Bitcoin comes with significantly stronger brand recognition.
If it wasn’t clear by now, the name “Bitcoin” just means more than all other coin and blockchain project names. Bitcoin, to those who have been there since the early days, is a set of ideals brought to life by technology. Other coins may claim the same thing; some of them rightly so. But in the end, they were always following in Bitcoin’s footsteps.
When the crypto version of a civil war breaks out and both sides lay claim to the truth, expect them to fight bitterly for it. Our combatants aren’t fighting over a logo, they’re trying to be the sole bearers of the revolutionary flag.
My sincerest apologies if you’ve read this far in the hopes of getting a prediction, or of finding ammunition to call me a shill for one or the other. I really can’t say which coin will come out on top. I don’t know how much time we’ll need before safely declaring victory for one or the other. We don’t even know what defeat would look like — does a coin have to die entirely in order to have lost, or does second-place survival count as loser territory?
In any scenario, the number of transactions for the winner’s coin would have to experience a massive, sustained spike at the expense of the loser. The winner would need mainstream acceptance from merchants and individuals, with all the necessary speed, cost, security, and trust-free prerequisites. Both seemingly can argue that they either have or will have the prereqs covered.
Where I expect we’ll find some answers is in the debate over just how decentralized a mass-adopted coin needs to be. How much do people care? Will they choose pure, decentralized freedom over digital currency convenience, if it comes to that?
Maybe it’s fitting that the battle for Bitcoin’s soul won’t come down to a power struggle between insiders locked away in a conference room. In the end, it will be decided by the countless choices of individuals in position to use one coin or the other.
