About Me

I’m a ex-Wall Street Techie, 11 years at Goldman Sachs, 3 years at JPMorgan.  I’ve worked with some of the smartest people that I have ever known.  Then I discovered Bitcoin, and that’s when I really started to learn about money, and how the economy really works, (and why it doesn’t)*

*a nod to Irwin Schiff


Bitcoin: Getting to the Moon 101

Easter weekend.  Family reunions, liturgical services, fasting for some, feasting for others, a time for renewal, time to dispel some crypto myths!

Everyone talks about “going to the moon” in crypto but few if any really knows what that means.  Cypherpunks care about privacy and censorship resistance, libertarians care about political ideology and businesses care about making money. But how many of them actually think through how to get there?

I don’t mean in a metaphoric sense, I mean pragmatically. What is the adoption roadmap? What do we mean by ‘moon’? Price?  Resistance to government usurpation? Censorship resistance? Self sustaining system without any oversight?

True, most people who say “To the moon!” are just pumpers or speculators trying to incite a windfall profit from the penny stock altcoin that they purchased for the express purpose of dumping it for a profit on unsuspecting suckers.  But let’s consider a moment the goal of Bitcoin –becoming a widely accepted alternate money to fiat currencies– how does Bitcoin get to there from where it is today?  What challenges and obstacles must it overcome?  What different stages of development and growth must it evolve through?

I’ll start with the presupposition: Getting ‘to the moon’ means establishing Bitcoin as a permanent irreversible alternative to fiat currencies, available to anyone on planet earth with an internet connection, who wishes to use it, regardless of their political environment.

To the Moon, via the Bitcoin Rocket

Let’s examine the path to the moon by way of an analogy.  Yes, I know that analogies are dumb.  Well, most of them are.  They are dumb because most people use them incorrectly to ‘prove’ a point.  For one, analogies don’t prove anything.  Just because you come up with some way of rationalizing something to yourself in your mind, doesn’t mean that you have uncovered some sort of objective proof that shows that you are correct.  More often than not, analogies are just generalization fallacies wrapped up in a catchy phrase.  But anyway, here we go.

You have all heard of the saying that upgrading Bitcoin is like replacing the engine of a car while it is speeding down the highway.    Well, I like to think of Bitcoin as being a rocket ship. 3542608_orig A Saturn V rocket, if you will, built and designed to reach the Moon.  Getting to the Moon, like real life rocketry, must be done in stages.

Stages to the moon, listed with its primary driver:

  1. First, the rocket is build by the crypto-geeks, cypherpunks and the engineers
  2. Libertarians and anarchists ideologists act as the ignition and the fuel to take the rocket off the launchpad and into the troposphere
  3. Speculators and pumpers push it up into the stratosphere
  4. Businesses and capital investments act as second stage boosters which take the rocket into the mesosphere
  5. +1m user adoption brings the rocket into unstable low earth orbit (current state of Bitcoin)
  6. Greater adoption (a developing countries worth of GDP) brings it into medium earth orbit
  7. Mass adoption (a G20 countries GDP) breaks it out of high earth orbit and safety coasting towards to Moon

The big misconception is about what level the network needs to be in order to reach stable earth orbit (i.e. self sustainable).  Some people who say that we can afford to wait for more businesses to develop before increasing network capacity.  They say that a fee market is necessary because users need to pay more for the decentralization that they have up until now been getting for free.  That essentially means consciously limiting the network users to those who are currently underserved, and NEED to use Bitcoin because it would be illegal to do what they are doing with fiat currencies.  Yes, a fee market means that Bitcoins biggest users will be drug dealers, pirates, ransomware hackers, pedophiles and terrorists.  (of those, only ransomware hackers and drug dealers have come to use Bitcoin so far).  But keeping Bitcoin exclusive to those can afford to pay for decentralization is reducing its potential user base.  And that is as folly as shutting off the rocket engines halfway through its ascent — the rocket comes crashing back to earth.

Notice that I listed the final three stages to the moon all depend on user adoption.  New users become the primary source of fuel for this rocket soon after the stratosphere is reached.  It is users that will put Bitcoin into stable orbit (beyond reproach of the earth’s gravity).  It is not scalable technology, it is not business use cases, it is not speculators.  This is because the only thing that can ensure that the network is beyond the far reach of governments is mass adoption.  As long as the government controls the guns, then the only thing they are afraid of is mass revolution, and negative public sentiment which affects votes (in democracies anyway).

Decentralization isn’t a goal, it is a means to an end

Most people think of decentralization as a static goal.  As if it was a certain quality of the network that can be increased and decreased in by incentivizing the participants in a certain way.  Central planning is the biggest hubris that some long time cypherpunk philosophy is guilty of.  This is naturally due to the fact that they are paranoid of outside forces which they cannot control, so they strive to control everything.

Decentralization is not achieved via running more nodes in geographically distinct locations.  It is already achieved by way of the protocol being public and open, and the network effect which incentivizes people to preserve the network functionality.

The analogy often used is TCP/IP.  Is it decentralized? It is just a protocol. It doesn’t make sense to say it is decentralized.  Is the internet decentralized? It certainly is. Why? Because although there are certainly datacenters that run most of the servers on the internet, this does not stop anyone from running darknets across it, or pirate media via BitTorrent.

The internet started out pretty centralized

Did that require heavy handed controls such as artificial fee-markets and resource caps by developers to achieve?  Not at all.  The internet just developed naturally that way.  And so will Bitcoin, if the central planners would just get the heck out of its way.  The fear of mining being centralized into datacenters is as silly a notion as demanding that everyone on the internet host their own website on their home computer in order to preserve decentralization, for fear of censorship.

Certainly people are free to do so, but the current level of government oppression does not warrant that level of decentralization yet.  (If it did, people may just start doing just that) But to limit the bandwidth of the internet just so that it would preserve the ability of individual home PCs to be able to compete as peers to every other machine on the network would have seen the internet never catching on, and perhaps alternatives like CompuServe, AOL and Nifty would have remained the dominant place for e-commerce, and the public internet regulated to personal webpages where one would post embarrassing party pics of their college frat.  Where would the internet be without Amazon, or eBay, or Craig’s List, or Mixi(ミクシィ), or Facebook?  If Bitcoin is looking to ensure its own survival, then I say we need to support a set of developers who don’t try to fight the formation of these large ‘centralized’ businesses on the network, and instead welcome them.  They fail to see the forest for the trees.  For without the public commercialized internet, with its concentrated power hubs like Google and Baidu and Facebook, do you think we would even have a darknet?

Developers, cypherpunks, libertarians and crypto-anarchists, time to get your heads out of your collective arses and see the forest for the trees.  Before you regulate Bitcoin to being just a footnote in the history of money.


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Roundtables vs. Honey Badger (0-2)

As the ongoing debate in Bitcoin between the Core and the Classic camp rages on, early signs of tentative order emerging spontaneously from the un-orchestrated chaos can be seen.  For one, most of the intelligent proponents on either side finally seem to have recognized the fundamental irreconcilable differences of opinion on either side of the divide, having spent the last 3 months weeding through the army of trolls and sycophants which always seem to amass around idealogical movements.


The industry has started to look upon itself in a satirical way, from high profile jokers like Samson Mow, to the absurd display at the Miami Satoshi RoundTable, organized by Bitcoin Foundation Bruce Fenton, which sported such medieval artifacts as an actual suit of armour and a Bitcoin Magna Carta which would make 45 year old AD&D live roleplaying nerds giddy.  The industry has certainly reached its apogee of insanity, absurdity and self flagellation, and it can’t possibly get any worse, and thus, we should expect to see things starting to come back to reality very soon.

Several promising things have been happening recently that give me cause to be hopeful that we may yet see the end of this “Rite of Passage” in the life of Bitcoin:

  1. Core has started to consider a hard fork proposal themselves.
  2. Interest in Bitcoin has been re-kindled in the form of 2000+ (as of writing) new nodes added to the network.
  3. Mining pools have started to implement miner voting systems within their constituents.
  4. New consensus tools have emerged which help bring visibility to and encourage people get involved in, the decentralized crypto-governance process.
  5. A total of 4 past attempts at securing industry participants into binding agreements have all failed to produce consensus.

Let’s examine each in turn.

Good Golly Batman, a Hard Core Fork!

The core proposal of a hard fork after their segwit deployment, would involve a 95% activation trigger with a 252 day grace period.  You read that right.  1 year.  Why in the world anyone need a year to upgrade?  Well, their reasoning is that they don’t want to lose any nodes in the network whatsoever, while also avoiding any chance of anyone losing any money.  This argument doesn’t hold water on many levels.  First, of the non-conforming 5% in a 95% consensus, if most of exchanges and wallets have upgraded, then there would be no chance of them losing money at all.  Only miners would risk losing money through a potential loss of mining rewards (in the event of a re-org).  The irony is that the reason they use to argue for a 1-year grace period (people losing money) is exactly the reason why others believe a long grace period is not needed, because people will not want to lose money. Core seems to believe that people can’t take care of their own money, so they need to do it for them.

Second, the cost of corruption is too high with a 5% veto.  All a bad-faith conspiring party need to do is to pay off 5% of the miners to block any change.  In fact, this need not be a bribe, it could just as well be a death threat or similar threat of harm to body or business. Making the margin for veto too low, puts increased risk to individual miners personal safety or that of their families.

Finally, with 1 year of grace time, much can change in the distribution of hash power from the time of the trigger to the time of actual activation.  It is possible even the proposed change to 2mb would be insufficient in a years time.  Miners can play hashpower withholding games or new ASIC tech may be developed in the span of a year.  It is extremely dangerous to get a majority to agree to enforce rules so far in the future that some of the participants may not even be in business by the time the rules come into effect.  I think this proposal from core devs displays a certain naive perspective of a hard fork being a purely technical endeavour, or deliberately made such that it would never be acceptable by the public.  Hard forks, unlike soft forks, are very much an economic animal, and economic incentives play the most important role in their deployment. We also well know the economy is notoriously hard to model, for if it were easy, economists would have solved it by now.  Sometimes you just have to pick reasonable parameters and allow the economy to adjust to them.  Still, the fact that they are willing to even put forth a proposal is a step in the right direction.

2000 New Nodes!

With the rush of support for alternative implementations, the Bitcoin network has seen a growth of more than 2000 new full-nodes in the last 3 months, a rate of growth unseen since the early days of Bitcoin.  This in and of itself is a great thing.  It shows a renewed interest in Bitcoin, with people willing to put up resources to help the network grow. Nodes running Classic now number close to 30% of the entire network.  Core supporters however, are quick to point out that the number of nodes don’t really matter.  This is particularly amusing, as not too long ago, the falling number of full-nodes in the network was all they could talk about.

All we need is a map showing the Bitcoin allegiances of nations!

In fact, to this day that is still quoted as one of the big reasons the decentralist brigade will say is the danger of 2mb blocks, because it will increase the cost of running a full-node and thus reduce the number of nodes on the network!  But I guess when they say “full-node”, they really mean full-node running core software.  The other full-nodes don’t count I suppose.  A great site detailing the data on the distribution of nodes can be found here.  It’s just a matter of time before this data is integrated into a world map akin to the War Room in Stanley Kubrick’s Dr. Strangelove.

Voting by Hashpower!

This is one of the most exciting things happening in the last 2 weeks.  Under pressure by Slush pool introducing a voting system where individual miners for the first time have the ability to express their opinion on which client to support, 2 of the largest pools in China, F2Pool and Antpool have started to implement their own forms of miner voting. While the systems still have some kinks to work out (like what to do with non-voting hashpower) the fact that they are starting to explore this aspect of Bitcoin is very encouraging.  I believe that if pools allowed all their miners to express votes through them, then we will approach a system much more similar to what Nakamoto originally intended with 1 CPU 1 vote.  This may also help miner decentralization, because the differentiation between pools is no longer limited to the size of the pool and the fees that the pool charge.  Soon, the voting system that your pool can offer you may be a deciding factor in pool choice, adding a new dynamic to pool competition.  Competition is good. Voting systems also take the politics out of the equation for pool operators.  They can simply delegate the decision of which client to support to their constituents.  This removes any scrutiny and pressure from the business of a pool operator.

Tools! Tools! Tools!

Great apps like Coin Dance and NodeCounter have emerged which track the consensus process. Early on, one of the fears often talked about was the lack of ways in which the economy could monitor the signalling process of a fork activation.  With many new sites that now show live updates of blocks mined for each implementation, and the current network breakdown of nodes and hashpower, we are actually witnessing for the first time in human history a completely uncoordinated election happening in real time.  –Think about that for a second–  This is monumental if it turns out to be the model for all future elections made in cryptocurrencies in the future.  Every other cryptocurrency in existence is currently running on the “benevolent dictator” model.  If Bitcoin can evolve beyond this, we are certainly making history. I believe we are witnessing democracy and freedom of choice emerge spontaneously in Bitcoin.  Some day, I think a book will be written about the events of early 2016.

Honey Badger just doesn’t give a F*&k !

4 separate times in the past 1 year, the well meaning members of meatspace have tried to organize “RoundTable” meetings with devs and miners and other industry participants in order to come to a gentlemen’s agreement and settle the dispute with off-chain signatures.  I, like them, used to think that these were necessary, but I have since been enlightened.  Agreements in real life should not be required to keep the Bitcoin network running smoothly.  If they were, then Bitcoin has already failed as a system for coming to consensus.  I am not saying that face-to-face meetings are not useful, (having spent 14 years working on a trading floor has certainly impressed upon me the effectiveness of throwing things at other people)  But the need to come to ‘binding’ agreements off-chain should be avoided.  At the end of the day, in order for Bitcoin to be a strong resilient network, we need to make sure that everyone in it feels adequately empowered to have an opinion.  This means as a user, you should run your own full-nodes, or lobby your wallet providers to run a certain node.  Exchanges should run their own nodes and perhaps even start small mining operations themselves, and mining pools should provide voting systems for their individual hashers.  Nakamoto PoW was created so that we do not need to rely on external political systems to come to consensus.  Let us resist the urge to satiate misplaced preconceptions and add a superfluous secondary layer on top of Nakamoto PoW.  We can talk and lobby all we want in real life in or around any shape of table, any number of times, but when it come down to it, every individual’s own vote is one’s own right and duty to make.  No decisions should be made off-chain.  Any attempt at doing so can be seen as precisely the 51% collusion attack that Satoshi designed the system to resist.

I look forward to watching the evolution of Bitcoin unfold in the next coming months.


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The Decentralization Myth

I have often observed that disagreements between smart people inevitably devolve into a difference of opinions based on assumptions which are either ignored by one or both sides or insufficiently proven, which leads to the construction of a belief system built on top of nothing more than reasonable guesses.  Because of this, it takes a long time before one can peel away the layers of conditional truths before you reach the core assumptions over which the principle disagreement is erected upon. (one needs to look no further than the renewed flat earth movement to see how you can rewrite your entire belief system to support your theory). Over the last month as I have debated with the decentralists on the foundations of their “decentralization is the most important thing about Bitcoin”* argument, I believe I have finally discovered the crux of the dispute, the mistaken assumption, upon which all other conclusions are derived upon, the genesis block of the debate, if you will.

Network_topologiesThe problem comes from the fact that the term decentralization has been overloaded to mean so many different things.  From topological point of view the old graphic from Paul Baran (1964) (inset  right) may seem to provide a good enough definition but only from the perspective of a network topology which is certainly not the common usage of the term today.  More recently some folks have improved upon the definition to more clearly indicate that it is the notion of control (the little puppet master hands in the diagram) of the network nodes that make them more or less decentralized.

Looks better. But where are the little hands on each one of the individual nodes in the Decentralized and Peer-to-peer models?

This explanation, which I credit for adding richer meaning to the term decentralization in its own right, unfortunately misses the mark and fails to address the real issue at hand, the core basic assumption which I alluded to above…  which is that it is not really decentralization that we want.

What we really want, is network security.  Security from corruption, and collusion. Security against that evil puppet master hand taking control of things.  Let’s measure this thing and call the quantity the net Cost of Corruption (CCR) of the network.  What we want is to maximize this. The higher the CCR is, the more difficult and thus more unlikely it will be for a malicious puppet master to take over the network.  Decentralization certainly helps in increasing the CCR, or does it?  Not enough academic study has been done on the topic to say for sure, but I can empathize with the decentralists that in absence of solid theoretical or empirical evidence, it sure feels like increasing decentralization should increase network security.  Right?

Well I’m not a PhD in economics so I will leave the heavy lifting to others on this, but I can certainly outline the framework by which I would start to examine this quantity of network security, or its Cost of Corruption.

Let the cost of a failed collusion attempt for a mining node be

Screen Shot 2016-02-05 at 17.08.11

Which broken down into all the assets which would be lost if the collusion is discovered, sunk capital costs, legal costs, expected future profit stream, and potential reputational damage

Screen Shot 2016-02-05 at 17.08.41

What a node gains for a collusion, i.e. the bribe amount, in % of current profits we shall call the gains

Screen Shot 2016-02-05 at 17.09.21

Now there is a cost to contacting every node in a network to coordinate a collusion, it increases the more independent nodes the network supports.  This is quite a dynamic variable, as costs could drop if methods for coordinating an attack could be more efficiently employed, such as anonymous posted bounties, or use of social media, or use of viral spreading techniques.  But as those methods can only reduce the cost of coordination, I will assume for now the worst case scenario where it is constant, and only linearly increasing with just the number of nodes.

Screen Shot 2016-02-05 at 17.09.54.png

Let the cost the cost of corruption be defined by

Screen Shot 2016-02-05 at 17.11.19

Where each node’s CCR is defined by

Screen Shot 2016-02-05 at 17.12.19

Where the expected costs of a failed collusion are

Screen Shot 2016-02-05 at 17.12.46

And the expected gains of a successful collusion are

Screen Shot 2016-02-05 at 17.13.13

The theory is that as the network becomes more decentralized, (more independently controlled nodes controlling an increasingly smaller portion of hash power), the cost of coordinating a collusion increases, but the cost of a failed collusion drops

Screen Shot 2016-02-05 at 17.13.40

Because smaller miners make less profits, and in the extreme case of teenagers in their basement, they also have little reputation or capital assets at risk.

Recall that:

Screen Shot 2016-02-05 at 17.14.10

Worse, if all nodes were anonymous, then colluding and being caught doing so would not even affect their future profits, so the biggest factor in the cost(fail) is practically zero. Contrast this to a large mining business, where their future revenue stream is likely the largest component of their cost(fail).

Let d be a configuration of network decentralization which results in a specific cost of coordination for the whole network, and a cost of failure for each node

Screen Shot 2016-02-05 at 17.14.52

It is also the case that the configuration of the network changes with the number of N nodes which will comprise more than 51% of the network hashing power.

Screen Shot 2016-02-08 at 13.33.40

But since we cannot enforce the number of mining nodes in the network N, (and if we did it would alter the cost(fail(d)), then it follows that we should optimize decentralization such that the net Cost of Corruption is maximum for any given N, which is the most secure network state.

Screen Shot 2016-02-05 at 17.15.25

It should be obvious from above that maximizing decentralization (maximizing N) alone, does not produce the maximum security, in fact it may start to hurt network security beyond a certain point due to decreasing the cost(fail) for each node.  As we get more nodes, the cost(coord) may go up, but the CCR(n) for each node will drop.  We should in fact be trying to find the optimal d.  In addition, if we modelled the cost(coord) more accurately, accounting for more efficient ways to coordinate independent nodes to collude, then the result would even be stronger against decentralization being the most important factor in network security.

This is the decentralization myth.

* -“and this is why we need smaller blocks! Because big blocks hurt decentralization!”(would be the common “False Effect” argument built on top of this assumption)


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How do YOU measure Decentralization?

The disagreements between the ‘big blockers’ and the ‘small blockers’ in Bitcoin are heating up.  Bitcoin Classic is poised to release its first client to compete with Bitcoin Core, and Bitcoin Unlimited has had its first vote on its new feature set.  It is a time of peril in the galaxy…

Now as the credits fade into the star field background picture a big wedge shaped Star Destroyer with the banner reading “Decentralization” filling the screen.  This word is really the Battle Cry of most crypto-currencies, and as I have written in the past, it is so poorly understood.

Everyone wants it, but few know what it is

It is a repurposed term, that simply describes a quality of network topology, transformed into a rallying call of rebellion.  The problem is that almost everyone that I read or encounter in the industry uses this term as a panacea for all the problems that they see in the world today, without actually knowing what it truly means. They believe it because of faith from authority, and through basic reasoning, that it is good and thus must be fought for without actually knowing why.  This is dangerous, as this is how cults start.  The Cult of Decentralization.

Decentralizing for the sake of Decentralization

Ask any ‘decentralist’ what it means to be ‘decentralized’ or how they measure it, and they will fumble.  They will offer excuses as “it is hard to measure clearly” or “you can’t measure it directly, but you can measure certain aspects of it”.  Which, to any trained skeptic is just poppycock self-rationalizations of an assumed belief system which they do not actually understand, but believe via faith alone.

They will say that more nodes makes a network more decentralized (not really, if all the nodes are in one area, or controlled by one person).  Or they will say then that more independent nodes controlled by different people are better than a few controlled by one, for that is obvious.  Well, if you think it is obvious, then you have fallen into the mind trap.  The mistake is to stop here because this rationale is based purely on the technical definition of the word “decentralized”.  Indeed topographically, in graph theory and mathematics, the notion of more connections between nodes makes a system less centralized and more decentralized, ending in the maximally decentralized topology “distributed”.  But if you end the discussion here, then you have fallen prey to the magicians trick.  The classic distraction of the audience to mask the true illusion, which is of course, that the REAL thing we care about is censorship resistance, and network security.  Somehow, after all the brouhaha and cries for decentralization, most people will have forgotten to ask the most important question of all… is decentralization the same as Security?  If not, and it is only a proxy for security, then it stands to reason that we must try to show by what measure or relation does increasing decentralization actually increase security.  Is it a linear relationship? Is it monotonically increasing? Is it just positively correlated? In which domains?  Should we be also evaluating other solutions which may not increase decentralization, but actually increase security?  In fact, the whole “Maximum Decentralization is the goal of Bitcoin” narrative of the Cult of Decentralization breaks down, along with the core foundation of the ‘small blocker’ camp’s arguments.

So how DO you measure decentralization?  Well, that is a foolish question, if you are measuring the wrong thing.  The correct answer is how do you measure security, and how much does decentralization affect it.  I have mentioned this many times on other occasions but network security cannot be measured by theoretical technical analysis alone.  In adversarial game theory, you must always consider the socio-economic costs of an attack.  Thus, the only way to measure security, (and by extension how much decentralization matters or affects it) is in terms of dollars, or what I call the “Cost of Corruption”.  Think of it as the cheapest possible method by which an attacker could compromise the network to do something which is against the rules (or social contract) of the network.  You can see this as an event where a government wishes to block a users payments, confiscate property unlawfully, or even if a bunch of golden-hearted bandits decide to steal from the rich and give to the poor.  In Bitcoin, one way you can empirically discover one cost of corruption is by how much it would take to bribe 51% of the hash power of miners to block payments from an individual or party.

Now the reason why it is very important to think of Bitcoin network security in terms of Cost of Corruption is because then you start to appreciate where the TRUE dangers to network security may be, and spoiler alert, the number of individual nodes in the network isn’t the biggest worry.  For instance in order to actually get 51% of the hash power to collude to defraud or act against the network, you have to work out what they are losing in return.  They risk losing all future revenue streams from their business, as well as socio-economic losses in personal reputation.  This means that a small mining operation is cheaper to bribe than a larger one, because they have less expected future revenue. Furthermore, they have less of a potential loss due to less capital invested into their business.   This means that the constant point repeated by decentralists that we need more diversity in mining nodes is a red herring, unless you further qualify that those node collectively must be more costly to bribe than 1 large mining node.  (a hundred 16-year olds running mining nodes on their laptops can be pretty cheap to buy off via anonymous bounty than 1 large business with future revenue streams to protect).  This is also pertinent, with respect to the much debated safe activation threshold for a hard fork (with 60%, 75%, 90%, or 99% of the majority). Traditionally, a supermajority in politics involves a 67% majority.  This is no accident.  There are good reasons for this, but unfortunately many of the computer scientists who have little background in socio-economic systems discount it, calling it a relic of governments and Bitcoin is a new system that need not play by old rules.  This is just ignorance.

The reason why 67% is statistically significant is because it is the ratio which makes the Cost of Corruption the most expensive, and thus, the least likely to be corrupted. Why? Consider if the majority rule were to be triggered at 90%.  This means that a group controlling 11% of the vote would be able to block any measure or proposal from passing. This may be seen as a good thing from the perspective that the ‘minority should not suffer by the majority’, but this situation, called Minoritarianism, is actually quite susceptible to corruption due to the fact that an attacker need only to bribe, threaten the business, or kidnap the loved ones of 11% of the vote in order to control the system. Having compromised 11%, the attacker can then demand and influence which proposals the majority proposes (and vow to veto all others). Considering the bottom 11% of hash power in the Bitcoin network are likely small mining operations with equivalently small capital investments, they make easy blackmail and extortion targets, and are more likely to give in to attacker demands.  The level of 67% is significant because, it sets the Cost of Corruption at 33%, which is the highest it can be while still having the majority support be greater than 2x that of the minority; any more and the majority would no longer be a supermajority.

So knowing this, you can start thinking critically about what is the lowest cost to corrupt the network today? Where do the biggest risks lie?  I leave you with this challenge:  Which do you think is cheaper, to bribe one or more developers to mislead 51% of miners into installing malicious code, or to have 51% of the miners collude amongst themselves to create and install malicious code*?

Next time anyone says that this or that is good for decentralization, you know what to ask them, to see if they really know what they are trying to sell you, or if they are just repeating the common in-vogue party line.

*Hint: one solution involves considering the mining businesses future expected revenue streams, the other does not.
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Begun, this Bitcoin Clone War has!

I ask you, dear reader, please forgive me.  I am going to break from my normal “impartial observer” commentary on the Bitcoin space and speak personally about a project that I am involved in, because I believe it matters.  election-ahead-sign-375x250

There is an election going on in Bitcoin space.  At least this is what the media is going to call it very shortly (perhaps in a months time, after it is all settled, as mainstream media is apt to do… always late to the party).  This election, like any, is political.  It is a battle of wills, of differing philosophies, of ways of thinking.  But like all elections, I believe that the will of the people, the majority, will determine the results.

Bitcoin Classic, is an implementation headed by Gavin Andreson, Jeff Garzik, Jonathan Toomim and others, which aims to deliver an alternative implementation of Bitcoin, aimed at addressing the demands of the users and businesses in Bitcoin.

We seek to work cooperatively with all implementations of Bitcoin, including BitcoinCore! This has been the philosophy of Bitcoin Classic from the beginning.  To promote freedom of choice, in users being able to help guide the priorities of the project, and to work together with developers cooperatively to make Bitcoin better.  Indeed this is the guiding principle of open source code.  As a investor in Bitcoin, I feel it is my right to have a say in the direction I want Bitcoin to evolve and develop, but the existing maintainers have been consistently telling everyone that we cannot have the freedom of choice.  The majority must succumb to the oppression of the minority, because the small minority of experts knows what’s best for us.  This view would normally be well and good if this minority were publicly elected officials, but they are not.  They are just people who inherited the Bitcoin codebase and taken custodianship of the network, of the capital and businesses it represents, of _my_ money.

Pro-Rules vs Pro-Choice

At Bitcoin Classic, the policy has been one of free choice, of allowing people to choose which features they want, instead of the ones that the developers think are best for us.  For example, a highly contentious feature, Replace by Fee, which was not well explained to the public and on the surface looks to open up attacks on instant transactions over Bitcoin, was forced into the codebase without much more than a cursory explanation of what it was, and why it was necessary.  It has since become a contentious topic.  (it actually makes things like Lightning network work better).  Core devs should not be blamed for their behaviour though.  Many of them are really hard working selfless volunteers.  But they are open source developers, who are unaccustomed to asking for permission or interacting with the users of the system.  In a company, the project managers would fill the role of negotiating with stakeholders about which features they wanted, and made sure that the developers created a product that fit the users demands.  This is unfortunately not the current development process being employed.  Bitcoin, is the world’s first open source project with over 6 billion dollars riding on it.  The developers have all the right to be overly cautious.  Unfortunately, that level of caution has come at the expense of them being completely disconnected with what the real stakeholders in the system want.  

Instead of listening to the users, Blockstream (the company which employs many of the Core devs) advocated strict enforcement of the “no contentious changes shall pass” in order to force consensus.  Screen Shot 2016-01-19 at 18.41.52Block size is one such change.  They insist that consensus rules (written by them) are inviolate, and that everyone needs to respect them, even if a majority of the stakeholders may not agree with them.  This is just another way of saying the defacto law is that the minority rules, and the majority must suffer the oppression of the minority, because math!

Well, who writes the math(computer code)? It doesn’t matter what language rules are written in, whether it be C++, or the legal language of legislators, rules are created by people, who in real life are voted in by the people.  The fact that Bitcoin’s consensus laws are written in computer code and secured by cryptography just means that they are easier to enforce, without the need for an army of big brutes with guns to do it.  Think about that for a second.  If you can essentially make laws, and you don’t need a police force to enforce them, then that means you can’t really stop people from disobeying them, unless you can convince them it is for their own good, that they don’t have a choice.  And that is exactly what the Core supporters are trying to do presently, in every way they can.

In real life politics we at least have a semblance of a choice in the matter.  We vote. We allow for competing parties with competing ideological platforms.  Not so in Bitcoin!  If the Blockstream line is to be believed.  Nobody voted in the Core developers, they devoted their own time, many without pay, and volunteered for the job.  This model has gotten us up to this point, but the time has come when the prodigal son needs no leave the homestead, to set off into world at large to live on his own.  It is time to let the Bitcoin project go, into the world, to try and stand on its’ own two feet.

I have advocated for the need to have diversity and freedom of choice in Bitcoin, in order for it to grow out of its infancy, and the developer teams who write the code are no exception to this requirement.  How can it become the money which stands for freedom, when the incumbent team is strictly enforcing compliance to its own agenda?

Stage One: First they ignore you…

When Classic was first announced, it was dismissed by Core as “Bitcoin XT2.0” by Adam Back (CEO of Blockstream)  This was in reference to the previous attempt by Mike Hearn to create an alternative implementation of the Bitcoin code base.  That effort failed for its own reasons, but it has no relation at all to the current Classic project.

Stage Two: Then they laugh at you…

It started with hooligan attacks such as the vandalizing of the Classic teams shared google documents, and attempts at trying to get us to violate our own democratic policies.  LukeJr, notable Core supporter, put in a code pull request into the BitcoinClassic system, which proposed changing the Proof-of-Work algorithm of Bitcoin, so that all the existing mining companies would be obsoleted. (by making their mining hardware useless).  This suggestion, something that he has been advocating for years, while technically ‘legitimate’, was a poison pill, whose motivation may have been to cast doubt on the ability of the Bitcoin Classic democratic model to work effectively.  It was quickly voted down, democratically.  Next the Blockstream supporters* switched strategies and tried to filibuster the Classic forums with ‘strawmen’, people whose task it is to fill the chatrooms with endless rhetoric and debate so that legitimate users voices are drowned out, and all the channels turn into never ending shouting matches so as to deter any real exchange of information.  They were asked to desist, but they remained.  In the final attempt to ‘win the debate’ in a /r/btc reddit exchange, Adam Back (adam3us) came forward with the reasons why he was so adverse to hard forks, one of which was a claim to moral hazard, to which Jonathan Toomim (jtoomim) decisively rebuffed here.  This was when it started to become apparent that the Core supporters did not have much technical merit to their argument, nor any claim to moral superiority.

Stage Three: Then they fight you…

The tone changed drastically when BitcoinCore supporters started to see the support of the majority was leaning towards BitcoinClassic.  Screen Shot 2016-01-19 at 18.42.59This culminated with Adam himself coming onto the Classic chatrooms and leaving not-so-subtle hints that several Core developers would quit their work on Bitcoin, if a hard fork was ever done, regardless of how successfully it was deployed, and what percentage of the population agreed with it, so long as it was controversial (can you spot the catch-22? As long as anyone thinks it is controversial, it is.)  Basically he is saying that unless the changes are made by us, we aren’t going to go along with them and will instead rage quit like somebody else recently did.

The first offensive shots were fired when, despite days of civilized debate in the BitcoinClassic forums, The tactics of the Core supporters changed from trying to convince everyone of the over-exaggerated dangers of a hard fork to outright sabotaging of the BitcoinClassic code.

We would have liked to think that people would behave civilly and in good faith, but the truth is undeniable it seems, and Blockchains are War and Andrew Poelstra was right when he said that we have to expect adversaries everywhere in crypto.  We just didn’t expect the adversaries to come from within the Bitcoin ranks though.  The attack was directed at impeding the progress of the project in releasing its awaited first version of the code.

How?  Through the informal democratic process, which specific system features to include in the first release were voted upon.  For instance, whether or not to remove the controversial Opt-in RBF, and whether to make the block size scaling choice a simple 2mb static bump vs a 2-4mb linear algo etc.  After discussion, the conclusion was arrived at to just do a simple 2mb bump first, as it seemed that the world just needs to be convinced that a simple hard fork can be done safely, if well planned and with a majority consensus of the entire network.  But soon the decision for a simple 1-feature-only change became an unexpected necessity…

Within a day of this decision, many malicious buggy changes were put into Classic’s code repository many by anonymous users, in a sort of ‘Denial-Of-Service’ attack on the project’s developers.  This had the effect of slowing down the real work that needed doing as efforts were diverted in order to weed out the bug injection attempts from the honest code updates.  Such bugs if not caught could have been used to publicly declare the supposed lack of competence of the Bitcoin Classic developers.

Stage Four…

I’m hoping that stage four will be “and then they join us” instead of “we win”, and I sincerely hope that any logical developer on the Core dev team would agree with me.  The real enemies to the Bitcoin movement are elsewhere, and it doesn’t help the Bitcoin community at large for us to remain divided for long.  Like all elections after all is said and done, we need to reconcile our differences and push forward together.  Even if they don’t join Classic intends to work with Core, in helping to make sure that their code is compatible with the network post hard fork.

If you want to show your support for choice then choose a alternative Bitcoin implementation that supports people’s voices! (BitcoinClassic, BitcoinUnlimited). If the message is heard loud and clear by the Core team, then I would like to hope that they change their minds and realize that Bitcoin has evolved to a stage where it cannot be controlled by any one centralized team any longer.  The honey badger naturally rejects centralization, even in its own development teams!

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* To be absolutely fair, I do not believe that Blockstream is officially condoning the malicious behaviours in any way.  I think they are just as frustrated about this drama as everyone else.  All the developers working there have contributed countless years of unpaid work in maintaining the Bitcoin codebase.  They should not be vilified for the actions of a few bad apples.  Do not, repeat, do not give them any undeserved hassles or show them any ill will.  This is not about disagreeing with the people, it is about disagreeing with the message.




Part 2 – Mining and The Valuation of Bitcoin

DISCLAIMER: this is an OpEd piece. Opinions expressed are my own. Do not take it as or use it as advice on investments. 

In part 1 of this article, I discussed how decentralization is really a measure of security in the network and having a more secure network means having one that costs more to corrupt it than to work within its rules.  This in turn results in a system that is trust-minimized, which means you need to trust 3rd parties less to ensure everyone plays by the rules.  This is the basis of why Bitcoin can actually work as a currency, but you have been reading my blog, so you already knew that, right?

In this segment, I would like to breakdown and explain the components that comprise the Bitcoin price, in terms of economic drivers.  I will apply some high level fundamental analysis on Bitcoin, to see if we can tease out what factors affect it’s price, and whether or not that price is stable.

The current market Bitcoin price is composed of 4 components:

  1. Hoarders Value
  2. Mining economics Value
  3. Speculative Value
  4. Medium of Exchange Value

The first people valued it for ideological reasons, from libertarian anarchists to those from the Austrian school of economic thought.  These are the hoarders and will be the last to sell.

The second element is the value supported by the current industry in mining.  Each miner is a net seller of bitcoins as they profit by creating the currency and their profit and expenses are denominated in fiat currencies.  They have massive real investments in their businesses, from server farms to personnel to land permits.

The largest portion of the value right now is made up by Speculators.  This includes businesses, venture capitalists, and also traders and individual buyers who expect that the value will hit 1,000USD in the short term.  They expect the currency to appreciate, or their businesses to turn a profit, therefore bringing them a return on investment.

The final component makes up for only a tiny portion of the value, that of Bitcoin as its utility as a method of payment for goods and services.  This fraction is small, and is mostly made up of businesses that are not exactly legal in their jurisdictions and thus it is hard to quantify how big.  Sure, there are the occasional legal merchants that accept Bitcoins, but they universally aren’t seeing much flow and payment processors like Bitpay tapping out completely.  For those who doubt the only meaningful real commercial use of Bitcoin at present is to buy illicit substances, take a listen here to a real interview with a dealer.  The reason for this is that honest law abiding people have a hard time justifying the need to use Bitcoin for everyday use.  There are some exceptions to this, of course, e-commerce is perhaps one, remittance maybe another, though the prospects of saving costs over the existing system seems dubious.

If we were to draw out the price components as a percentage of the current price, it would look something like this. The actual components are on the left total about $450/BTC which was around the price when I wrote this. (values are estimates are represented in USD value invested, not by current market price of BTC holdings)

Screen Shot 2016-01-17 at 18.47.09

Now the important thing to note is that the smallest portion, the value as a medium of exchange, is the most important in determining a money’s long term durability and store of value!  Why? Because as much as the hoarders would like it not to be, the fact is that if a money is only good for hoarding value, then it will be no better than collecting Franklin Mint Commemorative Coins.  Sure, they are worth more than the legal tender face value, but I certainly wouldn’t use them to transport and store my wealth. This has nothing to do with the fact that they are physical, but because I would have a hard time finding somebody to exchange them with!  Sadly, as much as the hoarders would like to deny it, this is the current state of Bitcoin.  To be fair, Bitcoin has faired better and gotten further than any other man-made money in the post fiat age, but this is not something that we can just declare victory on and rest on our laurels.  Why? Because in order for Bitcoin to survive, Bitcoin must grow.

Bitcoin will either be worth a million dollars, or it will be zero.*

“Why must it grow? Why can’t it just stay at this relatively stable price of 250-450 USD perpetually?  It seems to be doing a great job doing that over the last year.”  That is the opinion of those who likely also believe that a stocks performance is defined by its historical performance, without understanding the fundamentals of the company.

The full breakdown scenario boils down to this:  Unless Bitcoin can build out a large enough percentage of its value being supported by its use as a medium of exchange, then it will die.  To understand how this may play out, consider that most of its value today is based on speculators.  These speculators are only in Bitcoin because they expect a certain ROI.  When this fails to manifest, (and the supply of new speculators into the economy is limited and will be exhausted) then the bag holders will sell.  When they all sell off, we will drop until we reach the next level of support below the speculators, the miners.

The miners each have a break even price under which they will be mining at a loss.  (most of them are around 150-180USD).  If the price drops below this, then miners will soon have to switch off mining rigs.  As miners start to lose enough money, new mining projects are put on hold, and investments dry up. As investment money starts looking elsewhere to park itself, other competing projects (like private blockchains etc) start making progress, and further reduce the speculative value of Bitcoin due to reducing the expected payout of a Bitcoin business or play.  If this happens enough, then you start to get the third and final constituency affected, the holders.

The holders/hoarders bought in at a low price, back when being in Bitcoin was all about being rebellious and a crypto-phreak.  Their entry into the market was around the 10-100 dollar mark.  If these levels are breached and they start selling off their holdings, that would be the end of Bitcoin.  The network effect will have successfully unravelled.

This is why no other crypto today can successfully break above the 10 USD level, it is because all the people needed to fuel that rise are currently still heavily invested in Bitcoin.  But if miners started to switch off, and investments start to wane, then even they will start to look to buy into some other crypto project.  Incidentally this is why we can never “reset” the mining economy in bitcoin (and why we would never want to!) the mining economy represents a large portion of the ‘actual businesses’ dependant on a healthy Bitcoin network.  To get rid of them (say by changing the PoW algorithm to something more GPU-friendly) is suicide.

So you see, we are not out of the woods yet.  In order for Bitcoin to reach a stable orbit, we need that last stage of the rocket booster to fire, we need its component value as a medium of exchange, or a unit of commerce to grow, at least to match that of the other factors.  No money in the history of man made it to global acceptance without first being universally recognized as a acceptable means of exchange.  One only has to look at how gold or silver is universally accepted but platinum is not. (platinum was never universally accepted in any society as a common means of exchange).

Until we reach that point, Bitcoin is still susceptible to failure.  Not from government or network attacks, but it’s own failure to establish itself as a medium of trade between people.

*I don’t remember who said this exactly, but I have a feeling it was Andreas Antonopoulos
Where do these numbers come from??? Good question. They are guesstimates. The hoarders generally ranged around the price of BTC before 2012, the miners trigger price is from mining insiders profitability numbers in China, the rest up to current daily close price is assumed to be the speculator valuation (I believe in efficient markets) the dark markets one is a guess only. But as I don’t believe we can rely on dark markets being the only use of Bitcoin upholding the economy I am happy to wait for better data. Estimated sales using Bitcoin is less than 10 million a year given Overstock only made 3million in sales.  I will update the numbers as the year goes on.  

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The Mining Centralization Myth – Part 1

hqdefaultIn this 2-part article, I have decided to address some of the very commonly spread myths in Bitcoin space, namely that of mining centralization, and its effects on the BTC price valuation.  At the end of reading this I hope that you will have a better understanding of the complicated topic of decentralization in terms of economic factors, and also how everything is perfectly reflected in the BTC price.  Also, I hope that you would have a new found appreciation that BTC price is going to continue to fluctuate wildly and even may go to zero, under certain certain scenarios.

But first, to the often repeated, and universally unsubstantiated claim:  That Bitcoin is suffering from miner centralization.  First off, I want to stave off all the thoughts that the proponents of this opinion are thinking now: “You must not have heard of this thing called the Great Firewall of China!”, “You must not understand what the propagation delays are and its affect on orphan rate!”, “You must not know about the mining relay network!”, or my favourite, “Maybe you haven’t heard, but they have this corrupt oppressive government over in China!”.   Rest assured, I know, I have heard all the arguments, and I have well connected business associates in China.

The fact of the matter is, with each and every one of the people I talk to who have this view, when we get to the crux of the issue, it becomes a matter of “Protecting what little decentralization we have left”.   But when I ask them how they define decentralization, and how do they quantify it exactly, I generally get blank stares.  (virtual stares at least, I couldn’t confirm that jaws were dropping in disbelief on the other side of the monitors, but I could sense it.)  Firstly, we must assume we are talking about decentralization in terms of the ability of the network to resist corruption, and not just the physical definition of having a lot of computers in many different places.  Thus what we really mean when we speak of decentralization is a cumulative general notion of network resiliency or security.  So with this, a common quoted situation that should seem obvious to anyone: the more nodes spread out over a bigger topology (a fancy computer science term analogous to geography), spanning many political boundaries, is “better” that a few nodes in one place.  Obviously.  Right. But are you sure?  Yes? Okay good, then why is it better in terms of security of the network?  This is where I lose most people.  They know that more nodes are more secure, but they cannot say why, other than that it is “harder” to compromise the network, or to co-opt it to do dishonest things.  “Better”, “harder”…. great terms to use at dinner table discussions, but sadly not concrete enough to convince the professional skeptics and the critically minded.

When you think on this question long enough, or if you have an economic or financial background, you may already know the answer.  The reason why the first situation is more secure is because it costs much more to compromise the network, where it costs relatively little in the latter situation.  What the important point to note is, it is not the number of nodes that matter, it is the cumulative cost of compromising more than 51% of them that matter.

That cost can come in the form of bribery, incentive, or threat of violence, it doesn’t matter, so long as someone is willing to pay it.  The other important point to note is that the more liquid money that these nodes have themselves, the more they are resistant to external coercion.  To illustrate, simply think about how much it takes to bribe your local highway patrolman (someone with little money) vs bribing a congressman, or the President of the United States.  So security depends on the cost or the amount of money you need to PAY to usurp the network.  This money needs to be an external cost to the system, i.e. bribes in the network currency don’t really work, because you are paying actors to sabotage the system itself, therefore devaluing their bribe*.

If you have followed this line of reasoning, then it will be very clear to you that the current mining situation in Bitcoin isn’t all that bad.  In fact, it is as decentralized as it currently needs to be.  Could it be better? Perhaps, but in order for it to be more decentralized, money needs to be fed into the economy to pay for it.  This is why small block proponents want a fee market to develop so that people can pay more for transactions, in order to incentivize more decentralization or at the least to prevent it from getting worse.  Trouble is, this is a red herring.  Any money artificially thrown into the market will be absorbed as profits for the current miners and not significant enough to stimulate new miners to join the industry. This is because most of the value in mining comes from the block reward and only about <1% from user fees.  Students of monetary theory may realize a stark similarity of this strategy to that of Keynesian economics, where spending money to stimulate an economy artificially have been known to have long term negative effects.

So the next time somebody says that Bitcoin mining is ‘broken’ and how having 100,000 individual nodes is much more decentralized than all mining power being concentrated into 10 companies in China, then you know how to respond.  The correct answer is a question: is the 100,000 nodes run by 16-year olds in their basement?  And how large are these 10 mining companies in terms of capital invested, what are their profit margins, and projected future revenues?  (and which is cheaper to buy off?) The answer to which, will determine whether or not their idea of decentralization is based on theory or actual economic reality.

In part 2, I will discuss the price components of Bitcoin and how mining security contributes a major part to it.

*incidentally, this is why Proof of Stake will never work.

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Bitcoin’s need for Anarchy


Nobody votes to adopt anarchy, it just happens.  It is emergent, it is organic, and that is exactly the way it should be.

If you asked anyone what was the most innovative thing about Bitcoin, you would likely get an answer such as “censorship resistance” or “financial disintermediation” or “deflationary money”.  But the truth is that the biggest innovation of Bitcoin is the fact that it is headless.  In fact most of what makes Bitcoin capable of delivering on the aforementioned promises is the fact that there is no company owning Bitcoin, no CEO to sue, or entity to hold accountable.  Bitcoin is simply a protocol.  Unlike previous protocols like TCP/IP however, this is a protocol that can represent money directly, and as such is likely to have a lot of politics embroiled with its implementation.  In the project’s nascency it was just Satoshi who maintained the software, and after his disappearance that torch was placed on Gavin Andresen, and subsequently Wladimir van der Laan.  As the project grew in popularity and media coverage, more developers came forth taking on more active roles in its development and maintenance.  This is a good thing.  The progression went from solo designer, to committee stewardship during the first 5 years of it’s life.  Like any committee tasked with such a heavy burden of safeguarding over 6 billion dollars in value, bureaucracy does what bureaucracies are arguably designed to do, slow down innovation in the name of conservatism.  For example, the current standing feature change policy enacted by Wladimir, is intended to only allow non-contentious features to be brought into the code base.  While this protects the status quo, it also effectively means that the system will cater to the lowest common denominator and prioritize preservation over dynamism and progress.

“Bitcoin will either grow to a million dollars per BTC, or go to zero…”

This is a fine opinion that any person or group is entitled to have, but certainly to impose that ideology onto the network would be in itself an act of oppression, yet we find ourselves presently with a dearth of viable alternatives should we choose to disagree with the conservatism of the Bitcoin Core team (a few of which work for Blockstream).

Thankfully, that situation is about to change.

In the last 2 weeks there has been several new projects that are forking off the reference client*.  I think that is extremely good to finally see biodiversity starting to emerge in the ecosystem.

Two recent projects have launched each with its own take on how to handle Bitcoin governance.  Each has a different opinion on how to manage code changes and steering direction of the project.  Both focus on being responsive to the community and centre around allowing everyone to take part in the decision making process.

Bitcoin Unlimited  subreddit: /r/bitcoin_unlimited

I mentioned this initiative last week, which focuses around making the block size settings a command line configuration.  This presumably allows for node operators to signal to the network the maximum block size that they are willing to support.  Additionally there is a setting which will allow a node to come into consensus with the network if the block which they have previously rejected has been unanimously accepted by the network (signalled by having a default depth of 100 blocks).  This is the node of choice for operators who want full control of what they want to accept, with ultimate freedom in expression.  Critics claim that allowing every node to set their own maximum block size will cause a flood of network forks which could destabilize the network.  Whether it will, or whether it can be mitigated with judicial use of block size acceptance signalling and/or block depth acceptance triggers has yet to be seen.  BU’s governance model is based loosely on that of a corporation, with members voting on issues through a formal system of proposals and hierarchy.  It also plans on operating a non-profit pool for users wishing to contribute hash power to the project’s initiatives in support of its feature set and development.  They have published an Articles of Federation which read somewhat like a mission statement or a statement of beliefs.

Bitcoin Classic subreddit: /r/bitcoin_classic

Classic, which tends to evoke images of the wildly successful “Coke Classic” after the disastrous introduction of “New Coke” in the 80s, aims to set itself apart from other Bitcoin implementations by setting in stone several tenants inspired by Satoshi’s original vision which the project members pledge to abide by.  BC looks to classify members of the community into 4 “Pillars of Governance”; developers, miners, businesses/users and a forth meant to represent Satoshi’s original vision.  It will be first Bitcoin implementation to codify a constitution, and will use it as a guiding influence in all decision making (by means of the 4th “pillar”), which will be decentralized and trust minimized by principle.  The use of emergent consensus tools such as public voting mechanisms will be used to facilitate the decision making process of the developers in terms of features to prioritize.

Diversity makes the system stronger

I believe 2016 is going to be a pivotal year in Bitcoin space, with many developers coming forward with interesting new ideas in the community which can only help augment the good work being done by the legacy Bitcoin Core team.  Moreover, I think that we are starting to take our first promising steps into a new world of decentralized governance within a shared network environment.  It is not often that we have the chance to define how an industry evolves and comes into its own within a new paradigm.  It is equally rare that a single network protocol’s development has been overseen by more than one major implementation team*.  The fact that it can actually be done successfully is a foreign concept to most people, but indeed it is exactly that which is the core innovation of Satoshi’s Bitcoin, and the Proof of Work system of consensus building.


*Arguably the real reference client is not even Core’s! It is this: Bitcoin Reference Client , just as Satoshi left it, and still being maintained by the Stewards of Purity, The Bitcoin Foundation.
*Kind of harkens me back to the days of all the flavours of Unix.

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