This is an opinion editorial written by Michael Matulf, an electrician and independent student of Austrian economics and member of the Mises Institute.
Bitcoin needs to change! In the world of bitcoin fad, before you prepare to hang me from the gallows for this statement, allow me to express my final thoughts. Let me make a brief introduction – I am not a hack and slash programmer. I have to admit my relative ignorance in the fields of computer science and cryptography. I am not in the bitcoin industry. Instead, I’m a layman, hard at work building to make ends meet, striving to maintain humility and gain a thorough understanding of the true nature of Bitcoin. So, why do I say Bitcoin has to change?
Let’s start by thinking about the adage, “Not your keys, not your coins,” which sounds like one of the highest mantras in the bitcoin community, and rightly so. When your private keys are held by a centralized exchange or custodian on your behalf, you are effectively giving up control of your funds. This situation creates counterparty risk, as you become dependent on the security and safety practices of the third party who is authorized with your keys.
The philosophy behind “Not Your Keys, Not Your Coins” aligns with broader principles of resistance to decentralization and censorship. These principles seek to empower individuals with financial sovereignty and eliminate the need for intermediaries. It underscores the importance of personal responsibility, security, and self-reliance in this digital age as governments increasingly use technology as a tool to control individuals.
Now, you may ask, what is the issue at hand? Well, the fact of the matter is that under the current implementation of the Bitcoin protocol, the scope for self-custody does not scale. Many Bitcoin enthusiasts choose not to critically analyze this fact. However, we cannot ignore the consequences of ignoring reality.
Recently, the BRC-20 minting case has thrust this challenge into the spotlight within the community. The event triggered an explosion in the base-tier fee market, resulting in huge transaction confirmation costs. Whatever you think of BRC-20, the incident gave us a glimpse into the future if the network continues to expand. Try to imagine, in all honesty, how bad this situation is with 8 billion users. As pointed out by activist Anita Bush in this tweetGuard solutions will become the only way to prepare new participants in the network. While there are standardized protocols aimed at eliminating the risk of intermediate custodial by spreading it among several custodians, this solution remains fundamentally different from self-custodial.
Recently, human rights activist Alex Gladstein Bring up a thought experiment focused on this issue:
To my chagrin, more than 54% of respondents to his script consider it a success. This sentiment is risky, as such a scenario undermines Bitcoin’s spirit of self-sovereignty and censorship resistance. However, this may not come as a surprise; This survey may indicate that more people prioritize “number increase (NGU)” over individual freedom.
When the scaling problem arises, a common response is to invoke the idea that Bitcoin is layered, that the base layer can maximize while additional layers make it easier to accommodate the world’s population. but, As shinobi reminds us“The second layer is not a magic spell. To improve and improve the second layer, new functions over the base layer are required. The second layer is literally just things built upon the functions of the first layer. The limitations of the second layer are a direct result of the limitations of the first layer.”
Accepting this reality can be daunting, especially for individuals like myself who aren’t computer science majors or cryptographers. We adore Bitcoin, and the prospect of change can be frightening because we don’t realize what we don’t know. There is a non-zero probability that any change could cause Bitcoin to fail. Thus, many of us are stubbornly digging our heels in the sand and defending the ossification of the underlying layer to ensure, in our minds, that Bitcoin remains intact.
If, like me, you believe that “not your keys, not your coins” should be an option for all participants in the network, now and in the future, we must embrace the flexibility of Bitcoin before it is too late. In the Lyrics by Jameson Loeb:
“Bitcoin is good money. But it’s not just digital gold. Bitcoin is programmable money. Unlike gold, it’s a technology that can be upgraded. We don’t need to throw this property out the window. There’s still a lot about Bitcoin that can be improved without violating its integrity.. The nature of how network protocols ossify means that changes must necessarily happen earlier rather than later; and it becomes impossible to coordinate changes once a protocol has been adopted at a mainstream level.”
and l Quote from Lopp again:
“Ossification is a side effect of growth, rather than an explicit decision in itself. There is no way of knowing when we have gone too far until newly proposed changes stop gaining any traction. Now, the real problems with ossification are clear: Once we cross an invisible line into the future, Bitcoin will be “set” as is, with practically no further updates possible.
Before that happens, developers and users need to think about what the final Bitcoin codebase should look like. We can see from previous discussions about things like the SegWit fork that bitcoiners are divided and excited about many issues, and there is almost certainly no answer to that. This is a question that everyone will agree on. This is, of course, part of the problem with driving ossification in the first place.”
Only time will tell if we have indeed crossed this invisible line of base layer ossification. However, until that day comes, it is critical for all users who cherish Bitcoin for its properties of self-sovereignty and resistance to censorship, as well as its ability to truly separate money from the state, to embrace changes with an open mind. Engage in various discussions within the developer community. to implement The principle of charity in your feedback and discussions. Personally, as present at ChiBitDevsI can attest that those in the developer community are very welcoming and enjoy helping non-technical users understand the complex engineering issues that lie at the forefront of development.
Let me leave you with A final shinobi quote To think: “What if the ghosts (the government) want you so badly against any further changes to Bitcoin that the only long-term expansion options we have are banks that they can try to regulate and take over?”
Tuk-tuk, next block.
This is a guest post by Michael Matuloff. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.