Confessions of a (former) BTC Maximalist

Introduction

Like most people, my introduction to Cryptocurrency was through Bitcoin (BTC). In 2012, I thought it was an interesting oddity. I used Bitcoin for a few low-fee, pseudo-anonymous payments and left it at that. Sometime around 2015, I decided to take a closer look. I listened to Trace Mayer’s podcast, and was fascinated by the technology as well as the idea of a currency that wasn’t issued by any government and couldn’t be seized. Was Bitcoin digital gold? An offshore bank alternative?

I started to absorb everything I could about Bitcoin. I read the “Internet of Money” by Andreas Antonopoulos and was inspired. A whole new internet, where value is tied to data at the base layer is being built *right now*, and I get to take part in it. So cool. Bitcoin was an established, decentralized protocol that would allow for permission-less innovation “at the edge”. I dreamed of cars that could not only drive themselves, but also pick up passengers, accept payments, and even pay their own car loan, all thanks to Bitcoin!

I was so inspired that I decided to teach about Bitcoin while I continued to learn. I started bitconsult.co. My articles focused primarily on technical aspects like mining, anonymity, and the importance of holding your own keys.  However, I also wanted to create a “getting started” guide for newcomers. This is always difficult with Bitcoin. Where do you start? Cryptography? The history of money? Game theory?

Not only was I overwhelmed with information, but I realized that a lot of the things that I remembered from 2012 and wanted to write were no longer true.

Bitcoin is peer-to-peer cash that can be transferred instantly, with no fees! It was 2017 and this was no longer true. Fees were now around $2-$5 on average. Presently, average fees are around $0.80. While 80 cent fees are *incredible* for international remittances, they’re too high for everyday purchases.

Even worse, fees spiked during the consumer investment craze of December 2017. Remember Uncle Rand who was so smitten with your Thanksgiving Bitcoin speech that he went out and bought some Bitcoin? Well, now he’s trying to move it off Coinbase and onto his own hardware wallet (like a goodboi), and is being told the fee is $15. Some will say “Coinbase wasn’t batching” and “they should have adopted segwit”. But blaming users is what bad engineers do. And what’s segwit save? 30 percent? COME ON GUYS. It’s no surprise that many companies dropped Bitcoin as a payment option recently.

Bitcoin is the internet of money. Strike two! At some point, the narrative around Bitcoin started to shift. Trace Mayer’s podcast no longer hosted debates about scaling Bitcoin. Gone were the days of striking a balance between utility and decentralization. Many “big blockers’ will say that Blockstream highjacked Bitcoin and never intended to scale, but I don’t think that’s true. Just a couple of years ago Adam Back and Gavin Andresen were able to sit in the same room and civilly discuss 2 – 8 MB blocks.

So what happened? I think Bitcoiners got scared of innovation and shifted their focus to protecting their bags. I know I felt this way. My small nest egg looked a lot better when Bitcoin was at $8K than when it started the year at $800. Hard forks were scary. I trusted the “experts” at Blockstream and may have even slapped a #no2x on my twitter handle. *cringe*

Bitcoin Exodus

What’s the result of failing to scale Bitcoin? Well, the developers who were trying to build the “internet of money” left, in droves (see: BitDB, BitSocket, money button, TonicPow, yours.org, slock.it). Some started their own projects, making 2017 the year of the Initial Coin Offering (ICO). Sure, many devs started their own coins for selfish reasons – either to make a quick buck or to have total control of their protocol – but what was their choice? If their project required low-fee on-chain transactions, they were screwed.

The smarter developers realized that the true value of cryptocurrency comes from decentralization and Proof of Work (PoW). After all, if a project is centrally controlled, how is it any different than legacy software? The good devs also realized the benefits of economy of scale, and the network effects of having a community of developers and users utilizing the same protocol. So, most of the legitimate projects, and a generation of young developers, shifted over to Ethereum.

The problem with Ethereum? Well, it also wasn’t ready for the remotest amount of mainstream adoption. The network came to a halt when major token sales were taking place. Projects like cryptokitties were absolutely unusable at launch.  I’m not an Ethereum expert, and maybe it can scale, but there is little consensus on the path forward, and many options are being floated – Serenity, Casper, Payment Channels, State Channels, Plasma, Sidechains….the list goes on. The problem? Like supporters of BTC, many ETH fans are switching up their narrative and are trying to get users to think of Ethereum as a “settlement layer”, not the world computer that was promised.

Layer 2

BTC has completely abandoned on-chain scaling. No one’s talking about increasing block sizes, but believe it or not, there’s some discussion to decrease the blocksize to 300 kb. The current plan is to push transactions onto “layer 2”, with systems like The Lightning Network (LN). I gotta admit, I drank the Kool-Aid at first. The mega-brains leading the Bitcoin movement told me that they could build a system for instant, nearly-free payments that was rooted in the security of the Bitcoin main chain utilizing a system of time-locked smart contracts and game theory.

I’ll do just about anything to support cryptocurrency, so I spun up a couple of lightning nodes on my PC and smartphone (I was feeling #reckless). Opening a channel was a chore. Routing payments was a nightmare. But, this was early on (April 2018), so I cut LN some stack, and I was happy to write a guide and help people buy their stickers.

The problem with Lightning? It’s not Bitcoin. It is a complicated system with many more attack vectors. 2019 saw plenty of Lightning Network users lose money. While some Lightning proponents are quick to blame the users (a common theme), other lightning proponents are quick to remind everyone that Lightning is still in Beta and that if you use the network, you should be prepared to lose funds. I bought this narrative early on, but it has been 4 years since the release of the Lightning Network whitepaper. Critics of the Lightning Network mock it by stating that “everything will be fixed in 18 months^TM”. Funny enough, it’s been exactly 18 months since I wrote my article about the Lightning Network, and I’m ready to move on.

The Internet of Money

To be honest, I lost some of my cryptocurrency passion in 2019. While I still believed in financial sovereignty, I got kind of bored. I could only HODL, read Mises, and wait for global economic collapse for so long. I looked around, and “the internet of money” was not there. ICO’s were exit scamming at a record pace, and even “legitimate” projects like Status were laying off employees.

I had initially written off Bitcoin Cash (BCH) in August 2017 as it looked like a Bitmain Pump and Dump scam. After 2X was cancelled, however, I gave it a second look. Bitcoin is one of the most ambitious projects in the world, and there should be multiple approaches to scaling. Because of this, I decided that I was going to hold all forks, but I never really dove into the BCH community. BCH seemed to be mostly focused on consumer payments. While this is certainly a lucrative industry, I just don’t see the incentive for consumers to pay for products with cryptocurrency. Spend + replace is a pain in the ass, and you don’t earn airline miles for spending Bitcoin. While consumer payments were certainly key in establishing Bitcoin’s value as a currency, it’s just not something that interests me now. I want applications with on-chain transactions. While BCH did pull some Big Blockers from BTC and other projects, I just wasn’t seeing anything worth using. In addition, many developers left BCH for BSV during the hash war/checkpoint/difficulty adjustment debacle (more on this later).

Bitcoin SV

Just when I was ready to give up, I found the other fork of Bitcoin – Bitcoin SV (BSV). My first exposure to BSV was through twetch.app. Twetch is a social media site (like twitter), that gives you access to your own data (unlike twitter). Twetch seamlessly integrates with your web browser and money button to provide a true “Internet of Money” experience. Want to post to twetch? That’ll cost you 2 cents. Want to “like” a post? 5 cents, with the money going straight to the user who drafted the post.

Sure, this means you can make some money if your posts go viral, but it’s much more than that. Twetch has less trolls because trolling now costs money (replies are 2 cents). Social media sites have also been plagued by bots, with fake accounts being spun up in “click farms” to artificially inflate the reach of certain users. Not a problem on twetch.

What really sold me on twetch, however, is that it’s really just a pretty interface to Bitcoin SV. When you post to twetch, you’re really posting to the BSV chain. Why should you care? Instead of your posts being stored in Twitter’s servers, they’re stored on the BSV blockchain. So, if twetch goes bankrupt, or if you lose access to your twetch account, you can access your posts, images, etc by searching the BSV blockchain via any blockchain explorer. This really hits home for me, as my twitter account (@bitconsultLLC) was “suspended” over a year ago by twitter. I still can’t access that account. Why was my account shut down? I still never received an official answer. I lost all of my followers, and also a whole lot of content, as I was building a kind of file system on my account. On twetch, I can build with confidence, as all of this information (including followers) can be recovered from the data that’s stored on chain. Read the full story here.

In addition to twetch, there are tons of other interesting applications being built on BSV. Want to know if your website is up? UptimeSV provides real-time monitoring from real users, who get paid in BSV for providing availability data. Bitok is a simple web application that lets you record audio data on the BSV chain. Global climate data is being stored on chain with WeatherSV. Sick of news sites with slideshows, ad pop-ups and mandatory subscriptions? Content creators can now paywall content behind a money button slider, allowing users to make micropayments for content. It doesn’t stop there. To see more BSV apps, check out agora.icu, the gateway to the “metanet”.

Before BSV, interacting with the blockchain was always this abstract thing to me. Sure, data could be stored in OP_RETURN, but it wasn’t encouraged on BTC, and no one was really making apps that utilized this power. Why? 1 MB blocks have very little space for transactions.

Speaking of transactions, so much is happening on BSV that it will soon overtake BTC on a key metric – transactions per day.

This transaction metric was blasted early on by BTC maximalists, as most BSV transactions were from a single app – Weather SV. However, transactions are now more evenly spread across dozens of applications.

Over time, BSV transactions will continue to increase as more applications are built on top of the protocol. Fees will remain low as BSV does not have a blocksize limit. Companies can build on BSV with confidence, as there’s plenty of room for their transactions in BSV’s blocks. Meanwhile, BTC blocks remain capped at 1 MB, and transactions per day will remain about the same for the foreseeable future.

BSV’s progress is certainly impressive, but is there a catch?

The Spectrum of Decentralization

Like a lot of people, I found out about Bitcoin and thought it was cool. Then one day I found out about ripple (XRP) and thought that was cool. Holy cow, XRP can do 1,500 transactions per second?! Bitcoin does 7 transactions per second. Is XRP the future?!?!

Some people stop here, they’re known as the #xrparmy. I didn’t stop there, I started reading about how XRP really works, and I was not impressed. At the end of the day, XRP may not even be a “cryptocurrency” by most people’s standards. XRP does not use Proof of Work (PoW), or Nakamoto consensus, which are the hallmarks of Bitcoin. Instead, they use “validators“. The end result? Ripple maintains a level of centralized control and their gateways can freeze user funds. And how about the economics? Well, a massive amount of XRP owned by Ripple and it’s founders.

But this begs the question – If XRP isn’t “decentralized”, do its transactions per second matter? If accounts can be frozen, and if Ripple can flood the market with coins, do we have anything new here, or just an inefficient re-build of the current financial system?

So, what is decentralization? How much decentralization does a protocol “need”? Does that question even make sense? This is central to the issue of “Blockchain vs. Bitcoin”. When do we have a “real blockchain”, and when do we have an uninteresting corporate database? Where does BSV fall on the “spectrum of decentralization”?

Is BSV Just “nChain Coin”?

Let’s face it, opinions about BSV are incredibly polarized right now. BTC maximalists are quick to write off BSV as a centralized altcoin, while BSV proponents are perhaps turning a blind eye to some of the features that are key to a successful cryptocurrency.

Centralized Leadership

Who are the key players in BSV? From bitcoinsv.io: “The Bitcoin SV project was created at the request of and sponsored by Antiguan-based CoinGeek Mining, with development work initiated by nChain. The project is owned by the Bitcoin Association on behalf of the global BSV community, and the Bitcoin SV code is made available under the Open BSV License..”

Now, dig a little deeper and you’ll find the cast of characters most often associated with BSV. Craig Steven Wright is the Chief Scientist at nChain, and Calvin Ayre is the founder of CoinGeek.

Let’s go right after the Giant Kangaroo in the room – Craig Steven Wright. Is he Satoshi? I don’t know. Does it matter? No. Does he have unmatched influence on the future of BSV? Yes. Does that matter? It depends.

Many cryptocurrency users believe that one of the strengths of Bitcoin is that no single person is viewed as the “leader”. Satoshi anonymously released Bitcoin, hung around for a while, then left. Meanwhile, on Ethereum, many users still look to the creator, Vitalik Buterin for his opinions on the future of Ethereum.

But let’s step back a minute. Can Vitalik single-handedly “change” a critical feature of Ethereum? No. The chain has it’s own momentum. Software updates would not only have to be incorporated into the protocol, but users/miners would also need to be convinced to “upgrade” to the new client. Any change that is destructive to the functionality of Ethereum (or the economics) would meet major resistance. So, at the end of the day, Vitalik can motivate some users to fork off of the network, but he can’t force changes. Now, this isn’t trivial, of course, as Vitalik led a movement to fork the ETH blockchain after the DAO hack, resulting in splitting the chain into two different protocols – Ethereum (ETH) and Ethereum Classic (ETC).

Is the situation any different on BTC? Yes and No. While no single person has the influence on BTC that Vitalik has on ETH; users, miners, and exchanges still look to “experts” and “thought leaders” for direction on what ideas to support. Blockstream convinced me that a hard fork could ruin BTC, so I was #no2x. A twitter campaign and full-node signalling, led by Blockstream and small-block podcasters effectively canceled BTC scaling.

So, while Craig certainly has a Vitalik-like influence over BSV, it is not all-powerful. In addition, he becomes less and less powerful as the chain adds developers, miners, applications, users, and………blocks.

Control of the Protocol

Where Craig and nChain do have incredible influence is in the current development of the protocol. While BSV is open source, and can be forked any time, the only real protocol development work is happening within nChain. The BSV community has apparently decided that centralized protocol development is needed to get BSV off the ground. Does this matter? Well Satoshi didn’t exactly put the whitepaper to a vote before releasing it.

The current plan is for nChain to release the “Genesis Upgrade” in early 2020. Their plan is to “lock down” the protocol at this point besides fixing critical security issues as they come up. Will nChain control all commit access to the reference client GitHub after the Genesis release? Does THAT matter? At any given time, there were only 1-4 people with commit access to Bitcoin Core’s git repository. But again, commit access isn’t the only control here. To change to protocol, you have to convince the community to change.

Now, nChain does need to stick to their long-term vision and keep the protocol stable or else they’ll suffer the same fate as BCH, and risk another network fork. During the hash wars with BSV, BCH lost perhaps Bitcoin’s most prolific developer – @_unwriter due to protocol instability and crony capitalism. BCH also forked so often during the early hash wars  that many clients were knocked offline. We don’t have the time to get into it all here, but unwriter sums up the issue of protocol centralization nicely in this piece.

BTC has a more decentralized approach to protocol changes, which is a very beauracratic process that has its pros and cons. On the up-side, it’s hard to change the protocol. On the downside – well, it’s hard to change the protocol. Any substantial suggested changes will go through a long, heated process of debate. In addition, no one is funding BTC Core development (whereas nChain is throwing massive resources behind their developers). This is why BTC will never scale on chain. BTC Goldbugs have no problem with that. But personally, I’m willing to give up some level of “decentralization” to use a chain that actually works.

What Really Matters

Can “BSV”/nChain/CSW “freeze my account”? No, I only need to incentivize a miner to include my transactions.

Can my BSV funds be stolen/seized? No, they’re protected by cryptography.

Can a BSV app like twetch steal my data like twitter? No, it’s all stored on the BSV chain.

So, BSV is clearly not ripple. BSV is trying to build utility back into Bitcoin. Does this require some degree of “centralization”? Yes, but does it “matter”? Will BSV win over more disillusioned BTC’ers? Only time will tell.

Conclusion

While I’m no longer a maximalist, I still see value in BTC. I believe in money that is unseizable and has a controlled supply. BTC has a proven track record and controls a vast majority of hashpower. For these reasons, my personal investments are still approximately 3:1 BTC : BSV.

Where is my current passion? BSV. Where will I onboard new users? Well, all we can do is give options and be transparent. I think BSV will attract more and more users who are interested in building/participating in the “internet of money”. BTC will continue to attract speculators and hodlers.

As always, we’ll keep our fingers on the pulse of the industry. Where will Lightning Network go from here? Will BTC consider larger blocks? Will BSV gain more legacy finance support? What hijinks will Craig get into next?!?!

Thanks for reading. Please connect with me on twitter or leave a comment below. If you’re interested in one-on-one personalized consulting, contact bitconsult for more information.