Whenever concerns surrounding Bitcoin’s long-term prospects turn in a negative direction, a common refrain is “well, tell us what to do about it then.” This is used to dismiss all concerns about regulation leading to regulatory capture, deeper involvement of certain entities leading to higher risks to the consensus process, and any type of failure involving Bitcoin’s resistance to censorship and the ability to truly enable the erosion of freedom.
“So what’s your plan?”
Use Bitcoin. Bitcoin consensus revolves around two important variables, economic actors and miners. Economic actors decide whether a set of consensus rules has value by deciding whether to honor their side of the bargain based on whether it is valid according to their consensus rules. Miners decide which set of consensus rules to mine, and choose the rule that offers the most value to them.
Users who actually use Bitcoin, i.e. to transact and operate businesses, services, and other protocols to leverage block space, gain influence through both mechanisms. A set of consensus rules needs two things, users who will value it, and miners who will mine it. Users who purchase block space attract miners with greater revenue beyond what the block support creates. To the extent that fees constitute miners’ revenues, the users who generate these fees have a significant amount of proportionate “power” over miners. They decide in the event of a disagreement over consensus rules which side will give that revenue, which means miners will have to follow those rules to earn it.
The threat of institutional adoption and regulatory encroachment poses a huge risk to Bitcoin in the long term if people simply stop doing anything with Bitcoin and keep it. In this type of environment, regulations can fall on miners and intermediaries and greatly influence events related to agreed changes. They can try to veto useful and valuable changes, and try to force useless or harmful changes.
So what do we do to combat this? We actually use Bitcoin for more than just holding and investing. Which This is why scalability is important. Because it allows more people to directly interact with the system in this way, to exert their influence directly. The more we actually use Bitcoin, the more influence users will have to collectively exert in the future on consensus.
If Bitcoin holders turn Bitcoin into just an asset to hold, something they leave idle, we will eventually lose it. We will lose our say and influence in the markets that Bitcoin facilitates, we will lose our influence over the consensus rules that miners choose to mine, and we will lose everything.
Bitcoin users must be active, not passive. We need to make transactions, we need to build more businesses, and consume more block space. With payment networks like Lightning or Ark, uncensored derivatives are marketed using downloadable content, and even stupid stuff like Ordinals and Inscriptions. Demand for block space must come from distributed and diverse sources, not just from large institutions and corporations that are easily subject to regulatory and governmental influence.
Bitcoin is very much a “use it or lose it” thing. I’d rather not see it lost to people who truly care about freedom through indifference.
This article is a takes. The opinions expressed are entirely those of the author and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
Comments are closed, but trackbacks and pingbacks are open.