Faced with the threat of ossification, Bitcoin Core is expected to adopt BIP 300 and 301, integrating Drivechain solutions for continued security.
This is an opinion piece by Samuel Greenberg, who believes Bitcoin is the best hope we have for achieving a just world and passing it on to the next generation.
At some point, less than ten years from now, the block grant fall below a bitcoin – and continues its decomposition at each subsequent halving epoch. This means that network security will increasingly rely on transaction fees alone.
We should expect, during the same period, that the powerful fiduciary institutions of the world will become fully aware of the serious threat Bitcoin poses to their hegemony. If transaction fees are insufficient to sustain widespread and distributed mining activity, these powerful institutions may have the ability to control enough hash rates to attack the network. As a community, we need to take this threat seriously and resist complacency in the idea that somehow Bitcoin’s success is predetermined, requiring no extra effort on our part.
Since the block wars ended in 2017, network improvements have been extremely difficult to implement due to a rightly obsession with mainchain security. Given its importance, skepticism toward a proposed Bitcoin Core code improvement is reasonable and desirable. That said, resisting all proposals in the name of the precautionary principle is counterproductive in the event that a proposal contributes to network security. Developers should operate as gatekeepers aimed at perfecting the network, rather than gatekeepers that keep it stagnant.
The Challenges Bitcoin Will Soon Face
Bitcoin, like other protocols, will ossify at some point – however, there are two critical issues that are essential to address before it hardens permanently. The first is the uncertainty that transaction fees will suffice to secure the network as block grants decrease over time. The second, which is indirectly related to the first, is that developers have no place to safely innovate useful and cost-inducing features for the network without permission.
In order to ensure continued network security, the miner ecosystem must be robust and widely distributed. It is incumbent on miners to seek out attractive energy sources, be prudent in capital planning, and maintain operational excellence. Unfortunately, if there is simply not enough accessible revenue for everyone, all the best practices in the world will not suffice, and miners will be forced to shut down and sell their ASICs.
The total revenue earned by all miners across all activities (transaction fees, block subsidy, and others) over a given period, or the Bitcoin “safety budget,” has been driven primarily by a decreasing block subsidy. exponentially. We – as a community – have a responsibility to help bolster the network’s security budget, finding new ways to increase revenue from transaction fees or working to maximize the value of Bitcoin in general or localizing other new uses for minors. The value and security of the network are directly linked to its usethe solution must therefore involve increasing the use of Bitcoin.
We need to balance the affordability of mainchain transactions with the imperative of a consistent and reliable fee market, ensuring the network is not susceptible to attack. The transaction fees generated by using Bitcoin as cash alone can prove to be an unstable source of income. This approach (which is currently the most prevalent) could potentially require users to pay hundreds or even thousands of dollars per discrete transaction to be included in a block, thereby undermining Bitcoin’s usefulness as money.
Our most reliable countermeasure is to maximize the usefulness of the Bitcoin network by enable the community to develop as many useful tools and applications as possible (all requiring transaction fees). Drivechain is the ability to secure the Bitcoin network with permissionless innovation. As noted, innovation is currently inhibited as developers are understandably cautious and conservative when considering network enhancement on the mainchain. Moreover, there is no procedure for integrating a new idea — a proponent must often work for years to create a social dynamic by convincing individuals one by one, a miserable and counterproductive use of their energy.
Basically, it forces real paying users to wait patiently for developer priests to bless a desired feature or seek it elsewhere. This is a gross misalignment; no group of people should decide what is worthy of use. If we believe in free markets, not just in money, but also in ideas and vision, then we must trust the market to decide freely what is useful.
Presentation of the chain of transmission
In 2015, Paul Sztorc propose BEEP 300 and 301 (or “Drivechain”), describing a protocol upgrade that would allow developers to innovate without permission on top of the Bitcoin protocol stack. Drivechain’s vision is to allow users to deposit and withdraw their bitcoin in sidechains with a fixed, one-to-one conversion rate (enforced by BIP 300’s “Hashrate Escrows”). Miners would be able to collect all transaction fees from each of these sidechains as Bitcoin transaction fees, without the need to run additional node software (described by BIP 301’s “Blind Merged Mining”) .
The transmission chain requires a soft fork and establishes a clear mechanism for incorporating innovations into the network, safely, on a side chain (a “second layer”), while the current functionality of the main chain remains unchanged. Bitcoin users can choose to completely ignore all sidechains. But unlimited development of features for users can be deployed there, all of which can contribute to the security of Bitcoin’s network.
This additional utility in the Drivechain-enabled bitcoin network captures value in two ways: first, because sidechains can only be accessed by depositing bitcoins at par and are always redeemable at par, their existence is a new source of demand, generating price appreciation against the dollar. ; and second, by diverting dollars from rival blockchains to bitcoin, we generate price appreciation relative to other cryptocurrencies, all with bitcoin being the money to access and use an unlimited multitude of sidechains. Thus, Drivechain expands the realm of need for bitcoin as a currency.
Responding to criticism from the chain of transmission
The Bitcoin community should not tolerate rival projects. We should incorporate all the good ideas from all the other projects into the bitcoin network. We should have privacy coins, smart contracting coins, and every other coin anyone can dream of.
Since sidechains are not get-rich-quick vehicles (via pre-mine, then pump-and-dump models), they usher in true open-source coordination; users can give good ideas to someone else to build, without worrying about missing the benefit. All valid solutions would compete for users’ attention solely on the basis of their usefulness and usability. Any use of any project built on a sidechain would benefit everyone who held bitcoins (in proportion to the scale of use on the sidechain).
The community is asking Drivechain advocates to respond to several common criticisms, the most common being the claim that “miners can steal sidechains.” But let us consider that these sidechains would be sources of income for miners, so there is little incentive for miners to destroy them. Additionally, any use of sidechains is voluntary, so users choose to deposit their bitcoin knowing there is a theoretical risk.
An important context is that due to the code behind the BIP 300, a sidechain attack would take six months if at least 51% of the miners were in collusion. The attack must happen in broad daylight, and at any time the network can react to defend itself, needing only 2% of the miners to default (by pointing their hash rates to other pools). There is a precedent for this, for example, in September 2022, when the Poolin mining pool suspended withdrawals, its hash rate dropped from more than 10% to less than 2% in a few days – the network is able to defend itself against the faults of the mining pool.
Other common criticisms amount to layoffs like “We have nothing to worry about regarding fees” or that “The network is fine as is”. Both of these attitudes are epistemologically overconfident – we have no way of knowing what the future holds and bitcoin’s survival is too important to hope for. If it is true that the main chain transaction fees are indeed sufficient, then the secondary chain transaction fees are accretive and only work to further secure the network.
Bitcoin represents a normative good for humanity – now and in the future. Like the Internet decades ago, it is impossible to imagine the good that will come from this technology, and we should at all times seek to nurture and defend it. The transmission chain is a relatively small and light touch and serves as a reversible change that unlocks huge latent potential. Humanity has always solved its problems through innovation. We should want Bitcoin to become a more useful tool that can be applied to a broader set of issues, while securing its primary use as a currency.
It will take a lot of courage and effort to build consensus for Drivechain to be merged with Bitcoin Core. But we can be part of the consensus effort. We can educate ourselves and advocate within our circles. We can signal our support and make our voices heard.
This is a guest post by Samuel Greenberg. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.