This is an op-ed by Michael Matulef, electrician, freelance economics student from Austria, and fellow at the Mises Institute.
Bitcoin must change! In the realm of bitcoin heresy, before you prepare to hang me on the gallows for this statement, allow me to express my final thoughts. Allow me to do a brief introduction – I’m not some galactic-brained dark super coder. I must confess my relative ignorance in the fields of computing and cryptography. I do not work in the bitcoin industry. Instead, I’m ordinary plebs, struggling to build to make ends meet, striving to maintain humility and gain a comprehensive understanding of Bitcoin’s true nature. So why am I saying Bitcoin needs to change?
Let’s start by thinking about the adage “Not your keys, not your coins,” which resonates as one of the Bitcoin community’s strongest mantras, and rightly so. When your private keys are held by a centralized exchange or custodian on your behalf, you effectively relinquish control of your funds. This situation introduces counterparty risk, as you become dependent on the security practices and integrity of the third party responsible for your keys.
The underlying “not your keys, not your coins” philosophy aligns with the broader principles of decentralization and censorship resistance. These principles aim to give individuals financial sovereignty and eliminate the need for intermediaries. It emphasizes the importance of personal responsibility, security and autonomy in this digital age where governments are increasingly using technology as a tool to control individuals.
Now you may ask, what is the problem at hand? Well, the truth is that under the current implementation of the Bitcoin protocol, personal custody is not evolving. Many bitcoin enthusiasts choose not to critically analyze this reality. However, we cannot ignore the consequences of ignoring reality.
Recently, the BRC-20 keystroke issue has put this challenge in the spotlight within the community. The event sparked an explosion in the base layer fee market, leading to exorbitant costs to confirm transactions. Regardless of your opinion of BRC-20, the incident gave us a glimpse of the future if the network continues to grow. Try to imagine, in all honesty, the worsening of this situation with 8 billion users. As activist Anita Posch has pointed out in this tweet, custodial solutions would become the only way to integrate new participants into the network. While there are federated protocols aimed at disintermediating custody risk by distributing it among several custodians, this solution remains fundamentally different from self-custody.
Recently, human rights activist Alex Gladstein posed a thought experiment focused on this question:
To my dismay, more than 54% of respondents to his script considered it a success. This sentiment is perilous, as such a scenario undermines Bitcoin’s philosophy of self-sovereignty and resistance to censorship. This may not come as a surprise, however; this poll may indicate that more people are prioritizing “increasing numbers (NGU)” over individual freedom.
Whenever the scaling problem arises, a common response is to invoke the notion that Bitcoin evolves in layers and that the base layer can ossify while additional layers help integrate the world’s population. . However, as Shinobi reminds us“Layer two is not a magical incantation. For layer two to be optimized and improved, new functionality on the base layer is needed. Layer two is literally just stuff built on top of layer one functionality. Layer two boundaries are a direct result of layer one boundaries.”
Coming to terms with this reality can be daunting, especially for people like me who aren’t computer science majors or cryptographers. We love Bitcoin, and the prospect of change can be daunting because we don’t know what we don’t know. There is a non-zero possibility that any changes could cause Bitcoin to fail. Therefore, many of us stubbornly bury ourselves in the sand and argue for base layer ossification to ensure, in our minds, that Bitcoin remains intact.
If you, like me, believe that “not your keys, not your coins” should be an option for all network participants, present and future, we need to embrace the malleability of Bitcoin before it’s too late. In the lyrics by Jameson Lopp:
“Bitcoin is solid money. But it’s not just digital gold. Bitcoin is programmable money. Unlike gold, it’s technology that can be upgraded. We don’t need to throw this property out the window. There are still many things about Bitcoin that can be improved without violating its soundness… The nature of how network protocols ossify means that changes must necessarily occur sooner rather than later; it becomes impossible to coordinate changes once a protocol is adopted at the general level.”
And to quote Lopp one more time:
“Ossification is a side effect of growth, not an explicit decision in itself. There’s no way of really knowing when we’ve gone too far until the newly proposed changes just stop gaining traction. Now the real ossification issues become clear: once we cross an invisible line in the future, Bitcoin will be “settled” as is, with no more updates practically possible.
“Before that happens, developers and users need to think about what the ultimate Bitcoin codebase should look like. We can see from the past debates surrounding things like the SegWit fork that bitcoiners are both divided and passionate about many issues, and there’s almost certainly no answer to this question that everyone will be arguing about. ‘OK. This is, of course, part of the ossification problem in the first place.
Only time will tell if we have ever crossed that invisible line of base layer ossification. However, until that day arrives, it is crucial for all users who cherish Bitcoin for its self-sovereign and censorship-resistant properties, as well as its potential to truly separate money from the state. , to accept changes with an open mind. Participate in the various discussions within the developer community. Implement the principle of charity in your observations and discussions. Personally, as a participant of ChiBitDevsI can attest that the members of the developer community are extremely welcoming and enjoy helping non-technical users grasp the complex engineering questions that reside at the cutting edge of development.
Let me leave you with one last shinobi quote to contemplate: “What if the ghosts (government) want you vehemently against any further changes to Bitcoin so that our only viable long-term scaling options are the banks they can try to regulate and capture? ”
Tick tock, next block.
This is a guest post by Michael Matulef. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.