In his article from Wednesday, Shinobi argued that increasing institutional Bitcoin adoption will lead to premature ossification of the Bitcoin protocol. Although I share his concern to some extent, I am less convinced that this is necessarily true.
Bitcoin is inherently a permissionless system. For protocol changes specifically, it “only” requires users to upgrade their software. When it comes to deploying soft forks, it only takes the majority of miners to upgrade. (Admittedly, this is a simplification for the sake of brevity, but I’d say it’s still “true enough” to put it that way.)
Miners will mostly follow economic incentives. If a protocol upgrade makes Bitcoin (for example) more scalable or more private, then there is actually good reason to believe that this would make Bitcoin more valuable, which in turn means there is good reason to believe that miners will activate the upgrade. .
Even in the extreme scenario in which the soft fork occurs through a user-activated soft fork (UASF) that splits the blockchain, and even if institutions in this scenario prefer the legacy version of the chain (this is the scenario that Shinobi ultimately envisions), it is not clear for To me the series that is not upgraded will “win”.
Simply owning a lot of Bitcoin does not give you the ‘judge’ as to which aspect of the chain split is more valuable. Initially, everyone receives coins on both sides. only If you are willing to buy or sell these coins (eg: “dump” coins on one side of the division to get more coins on the other side) does your economic weight matter. But that means you have to take a risk: skin in the game.
Will major organizations be willing to bet everything they have on a version of the protocol without upgrading? This is a big assumption.
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.
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