The fundamental principles of bitcoin as “permissionless”, “uncensorable” MONEY

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The fundamental principles of bitcoin as “permissionless”, “uncensorable” MONEY


The entire debate transcends block sizes and gets to the fundamental principles of Bitcoin as “permissionless,” “uncensorable” money.

There exists one group of people who hold that Bitcoin has value specifically because, by design, it cannot be captured or censored by any actor or state. Honest miners, acting individually to maximize their profits, share one common goal: to maximize coin value. Each miner is free to modify their source code (and many do) which includes modifying the consensus rules that govern the network. For example, miners are free to modify the consensus rules to pay themselves 100 coins per block, breaking Bitcoin’s inflation schedule. It is a trivial code change to make. They do not do this because other nodes and miners would reject their blocks, making them worthless.

It is for this reason that Satoshi explains in the white paper that miners “vote with their CPUs” and that “any needed rules and incentives can be enforced with this consensus mechanism.”

It is this mechanism of “voting with their CPUs” that keeps Bitcoin permissionless and uncensorable. Were it possible to compel miners to run a specific application with a specific set of rules then it would be trivial for the owner of the codebase to, for example, invalidate transactions, modify the inflation schedule, block certain bitcoin addresses or ip ranges, etc.

In other words, Bitcoin only maintains its intrinsically valuable properties of permissionlessness, uncensorability, trustlessness, guaranteed inflation schedule, etc. precisely because it is NOT controlled by any governance entity.

To those of us who see Bitcoin in this way, it is highly desirable that governance of Bitcoin code not be centralized in any one body of people, but rather that there exist a free market of viable alternative codebases which miners can choose from.

Some people believe otherwise: that all Bitcoin code must emanate from Bitcoin Core. For them the idea of providing alternatives and allowing the free market to decide is threatening. Hence the smear campaign to brand XT as an “altcoin” and forbid discussion of it in various public fora — nevermind the screaming irony of trying to censor discussion of a censorship-resistant piece of software. Hence the outright DDoS attacks against miners who mine on XT and the pools that permit them.

We are told by these people that Bitcoin is too fragile to permit alternative clients — in other words, miners may “vote with their CPUs,” but they must have the option of voting only for one Party. We know what an election with only one choice is called: Totalitarianism.

If Bitcoin is so fragile that it demands actual adherence to Totalitarianism in order to prop it up, then we who have supported it for these many years should pack up, go home, and concede defeat. The experiment in permissionless, Stateless money has failed: we tried, but ended up recreating the State, only this one run by a tiny handful of technocrats.

Some people argue that the block size will be raised, but only after it reaches a certain pain threshold. Here I personally side with Mike: you don’t smear alternatives, break apart online communities, and outright DDoS your competitors because you agree on everything except for timing. Those are the actions of people who perceive a threat.

But there is another reason to question the logic of “waiting until the pain is bad enough” and that is because it stifles innovation. Let’s suppose I have the next “killer app” for Bitcoin. It’s going to be bigger than email and is going to go viral in months. Problem is, I need venture cap. You don’t have to be a very technical venture capitalist to know to ask the question “will the network support the expected volume?” And you don’t commit the venture cap when the answer is “maybe, if we can get the most obstinate people on board, but even then only after our app grinds to a screeching halt.” In short, you have to “build it” before “they will come.”

Bitcoin operated with a block size limit far in excess of its operational requirement for a long time. There is no need to cap the block size “just above” the expected throughput as many argue. Moreover, if such a need exists, then it should be “voted on” by miners who select what they believe is the optimal codebase for them from a market of competing codebases. They should not be “voting” for the one choice provided to them by a tiny group of technocrats.

The only way to destroy freedom, is to convince people they are safer without it. This is exactly what is happening to Bitcoin.


2017-04-16T10:18:27+02:00 3 May 2016|