Roundtables vs. Honey Badger (0–2)

Big blockers vs Small blockers … very different ideologies and scaling models

As the ongoing debate in Bitcoin between the Core and the Classic camp rages on, early signs of tentative order emerging spontaneously from the un-orchestrated chaos can be seen. For one, most of the intelligent proponents on either side finally seem to have recognized the fundamental irreconcilable differences of opinion on either side of the divide, having spent the last 3 months weeding through the army of trolls and sycophants which always seem to amass around idealogical movements.

The industry has started to look upon itself in a satirical way, from high profile jokers like Samson Mow, to the absurd display at the Miami Satoshi RoundTable, organized by Bitcoin Foundation Bruce Fenton, which sported such medieval artifacts as an actual suit of armour and a Bitcoin Magna Carta which would make 45 year old AD&D live roleplaying nerds giddy. The industry has certainly reached its apogee of insanity, absurdity and self flagellation, and it can’t possibly get any worse, and thus, we should expect to see things starting to come back to reality very soon.

Several promising things have been happening recently that give me cause to be hopeful that we may yet see the end of this “Rite of Passage” in the life of Bitcoin:

1. Core has started to consider a hard fork proposal themselves.
2. Interest in Bitcoin has been re-kindled in the form of 2000+ (as of writing) new nodes added to the network.
3. Mining pools have started to implement miner voting systems within their constituents.
4. New consensus tools have emerged which help bring visibility to and encourage people get involved in, the decentralized crypto-governance process.
5. A total of 4 past attempts at securing industry participants into binding agreements have all failed to produce consensus.

Let’s examine each in turn.

Good Golly Batman, a Hard Core Fork!

The core proposal of a hard fork after their segwit deployment, would involve a 95% activation trigger with a 252 day grace period. You read that right. 1 year. Why in the world anyone need a year to upgrade? Well, their reasoning is that they don’t want to lose any nodes in the network whatsoever, while also avoiding any chance of anyone losing any money. This argument doesn’t hold water on many levels. First, of the non-conforming 5% in a 95% consensus, if most of exchanges and wallets have upgraded, then there would be no chance of them losing money at all. Only miners would risk losing money through a potential loss of mining rewards (in the event of a re-org). The irony is that the reason they use to argue for a 1-year grace period (people losing money) is exactly the reason why others believe a long grace period is not needed, because people will not want to lose money. Core seems to believe that people can’t take care of their own money, so they need to do it for them.

Second, the cost of corruption is too high with a 5% veto. All a bad-faith conspiring party need to do is to pay off 5% of the miners to block any change. In fact, this need not be a bribe, it could just as well be a death threat or similar threat of harm to body or business. Making the margin for veto too low, puts increased risk to individual miners personal safety or that of their families.

Finally, with 1 year of grace time, much can change in the distribution of hash power from the time of the trigger to the time of actual activation. It is possible even the proposed change to 2mb would be insufficient in a years time. Miners can play hashpower withholding games or new ASIC tech may be developed in the span of a year. It is extremely dangerous to get a majority to agree to enforce rules so far in the future that some of the participants may not even be in business by the time the rules come into effect. I think this proposal from core devs displays a certain naive perspective of a hard fork being a purely technical endeavour, or deliberately made such that it would never be acceptable by the public. Hard forks, unlike soft forks, are very much an economic animal, and economic incentives play the most important role in their deployment. We also well know the economy is notoriously hard to model, for if it were easy, economists would have solved it by now. Sometimes you just have to pick reasonable parameters and allow the economy to adjust to them. Still, the fact that they are willing to even put forth a proposal is a step in the right direction.

2000 New Nodes!

With the rush of support for alternative implementations, the Bitcoin network has seen a growth of more than 2000 new full-nodes in the last 3 months, a rate of growth unseen since the early days of Bitcoin. This in and of itself is a great thing. It shows a renewed interest in Bitcoin, with people willing to put up resources to help the network grow. Nodes running Classic now number close to 30% of the entire network. Core supporters however, are quick to point out that the number of nodes don’t really matter. This is particularly amusing, as not too long ago, the falling number of full-nodes in the network was all they could talk about.

In fact, to this day that is still quoted as one of the big reasons the decentralist brigade will say is the danger of 2mb blocks, because it will increase the cost of running a full-node and thus reduce the number of nodes on the network! But I guess when they say “full-node”, they really mean full-node running core software. The other full-nodes don’t count I suppose. A great site detailing the data on the distribution of nodes can be found here. It’s just a matter of time before this data is integrated into a world map akin to the War Room in Stanley Kubrick’s Dr. Strangelove.

Voting by Hashpower!

This is one of the most exciting things happening in the last 2 weeks. Under pressure by Slush pool introducing a voting system where individual miners for the first time have the ability to express their opinion on which client to support, 2 of the largest pools in China, F2Pool and Antpool have started to implement their own forms of miner voting. While the systems still have some kinks to work out (like what to do with non-voting hashpower) the fact that they are starting to explore this aspect of Bitcoin is very encouraging. I believe that if pools allowed all their miners to express votes through them, then we will approach a system much more similar to what Nakamoto originally intended with 1 CPU 1 vote. This may also help miner decentralization, because the differentiation between pools is no longer limited to the size of the pool and the fees that the pool charge. Soon, the voting system that your pool can offer you may be a deciding factor in pool choice, adding a new dynamic to pool competition. Competition is good. Voting systems also take the politics out of the equation for pool operators. They can simply delegate the decision of which client to support to their constituents. This removes any scrutiny and pressure from the business of a pool operator.

Tools! Tools! Tools!

Great apps like Coin Dance and NodeCounter have emerged which track the consensus process. Early on, one of the fears often talked about was the lack of ways in which the economy could monitor the signalling process of a fork activation. With many new sites that now show live updates of blocks mined for each implementation, and the current network breakdown of nodes and hashpower, we are actually witnessing for the first time in human history a completely uncoordinated election happening in real time. -Think about that for a second- This is monumental if it turns out to be the model for all future elections made in cryptocurrencies in the future. Every other cryptocurrency in existence is currently running on the “benevolent dictator” model. If Bitcoin can evolve beyond this, we are certainly making history. I believe we are witnessing democracy and freedom of choice emerge spontaneously in Bitcoin. Some day, I think a book will be written about the events of early 2016.

Honey Badger just doesn’t give a F*&k !

4 separate times in the past 1 year, the well meaning members of meatspace have tried to organize “RoundTable” meetings with devs and miners and other industry participants in order to come to a gentlemen’s agreement and settle the dispute with off-chain signatures. I, like them, used to think that these were necessary, but I have since been enlightened. Agreements in real life should not be required to keep the Bitcoin network running smoothly. If they were, then Bitcoin has already failed as a system for coming to consensus. I am not saying that face-to-face meetings are not useful, (having spent 14 years working on a trading floor has certainly impressed upon me the effectiveness of throwing things at other people) But the need to come to ‘binding’ agreements off-chain should be avoided. At the end of the day, in order for Bitcoin to be a strong resilient network, we need to make sure that everyone in it feels adequately empowered to have an opinion. This means as a user, you should run your own full-nodes, or lobby your wallet providers to run a certain node. Exchanges should run their own nodes and perhaps even start small mining operations themselves, and mining pools should provide voting systems for their individual hashers. Nakamoto PoW was created so that we do not need to rely on external political systems to come to consensus. Let us resist the urge to satiate misplaced preconceptions and add a superfluous secondary layer on top of Nakamoto PoW. We can talk and lobby all we want in real life in or around any shape of table, any number of times, but when it come down to it, every individual’s own vote is one’s own right and duty to make. No decisions should be made off-chain. Any attempt at doing so can be seen as precisely the 51% collusion attack that Satoshi designed the system to resist.

I look forward to watching the evolution of Bitcoin unfold in the next coming months.

Originally published at https://www.wallstreettechnologist.com on March 12, 2016.