Bitcoiners are a positive bunch of people. In response to the economic and monetary turmoil referenced in the genesis block, Satoshi Nakamoto wrote and released the first code that started the Bitcoin experiment. To put it simply, Satoshi was a cypherpunk.
A single person could have a huge impact on the world and future societal outcomes by using the software. Sadly, this optimism has recently become distorted and detached from actual progressive technological development.
I want to draw attention to this inevitability, which contrasts with Bitcoin’s original practical optimism. PlanB’s stock-to-flow (S2F) model and Michael Saylor’s Bitcoin strategy and rhetoric come to mind.
Bitcoin’s Inevitability Allure
PlanB’s infamous price projection model S2F predicts bitcoin’s dominance. Sure, the author never claims perfection. After all, no one can avoid volatility when starting a new monetary system from scratch. But the popularity of S2F and similar models is clear.
Why isn’t it a mystery? Nothing to do but sit around and stack sets with any available cash flow, waiting for the proud moment when you can tell everyone, I told you so. The seduction of inevitability is simple.
While Michael Saylor has criticized the S2F model, he seems to share the same underlying attitude. Saylor and MicroStrategy are the world’s most famous and aggressive public bitcoin buyers. MicroStrategy has over 124,391 bitcoins, while Saylor says he has 17,732. Despite this massive investment, neither Saylor nor MicroStrategy have made any visible efforts to improve the development efforts of Bitcoin (BTC) or the surrounding software ecosystem.
Saylor’s interview messaging is consistent, and he does a great job of simplifying complex ideas using metaphors. He uses the concept of digital gold to describe bitcoin’s supply cap value to a new audience. However, all models are wrong. Some are good.
Beyond a superficial analysis, the digital gold metaphor’s usefulness quickly fades, making its overuse counterproductive. Because bitcoin isn’t a rock or a static element on the periodic table. It’s ever-changing software that needs maintenance and improvement.
In terms of Saylor’s narrative and active investment strategy, it assures Bitcoin’s growth and development.
Two Paths Forward
The issue is simple. The battle is far from won. Aside from creating false expectations, implying otherwise actively hinders our efforts to improve Bitcoin as a technology today.
Some will argue that Bitcoin’s success is inevitable given the current state of technology. But Bitcoin’s success isn’t an all-or-nothing proposition that we can predict.
The fixed supply and network effect of Bitcoin guarantee its success as an asset. Nevertheless, it does not guarantee its success as a foundation for a full-stack, peer-to-peer financial ecosystem.
Bitcoin’s base protocol layer has always limited transaction throughput. This design choice ensures the base layer’s most important property, decentralization. New software tools and layers can be built on top of this foundation to increase the scalability of transaction throughput and other functions.
These solutions range from simple and centralized like Cash App and exchanges to self-custodial and decentralized like the Lightning Network. These solutions simply cannot surpass easier, centralized alternatives due to their inevitability and the resulting complacency that comes with it.
If this is not addressed, the wider Bitcoin ecosystem will suffer from chokepoints and resilience issues that adversarial actors can exploit to attack the network and its users.
This area’s future outcomes are nuanced and uncertain, and can only be shaped by action. We can choose to ignore this and continue to bask in our limited success. To extend self-custodial and P2P solutions to as many people as possible is another option.
Resistance to Protocol Occlusion
The core protocol itself limits the ability to support more innovative self-custody and P2P solutions atop Bitcoin.
Bitcoin’s fundamental protocol, unlike more stateful competitors like Ethereum, is designed to be minimal and focused. But its current capabilities are insufficient for a full-stack P2P ecosystem. TA plethora of open Bitcoin Improvement Proposals (BIPs) are now being evaluated, discussed, or motivated to merge, with many of them having considerable conceptual ACKs (indicating agreement with the overall purpose of the proposal). With four years between SegWit and Taproot, there’s clearly room for improvement.
But ossification goes hand in hand with inevitable success. Protocol ossification occurs when a protocol becomes so widely used that the number and diversity of stakeholders involved make further development difficult. This is, of course, a success indicator, indicating the protocol’s widespread dominance.
A defense against malicious changes to the Bitcoin core protocol, such as SegWit2x, may be desirable sooner rather than later. Delaying and preventing beneficial protocol changes that can enable more robust peer-to-peer and self-custodial solutions on subsequent layers is another exploitable attack vector. An adversary would conclude that stalling is a far more viable strategy after the spectacular failure of SegWit2x.
Since preventing further development is far more likely than enacting a malicious change, we should be more urgent than ever to keep extending Bitcoin’s functionality. With so many clear improvements and extensions made, there is no reason to accelerate ossification now or in the near future. Protocol ossification, like Bitcoin maximalism, is descriptive rather than prescriptive.
Bitcoin’s Moment of Truth
Bitcoin has come a long way in 13 years, and its growth has shifted its reach and community makeup. With change comes a change in discourse and ideas, and the ideas that win out will be the simplest and most universal. So, it’s no surprise that digital gold has gained traction.
The issue isn’t that such ideas exist or are becoming popular. All models, flawed or not, have value. Providing simple analogies allows newcomers to enter a vast ocean with ease. Without laying the basis and encouragement to go deeper, their own evangelists and the community as a whole will be unable to achieve this aim.
We fail as a community when we lose sight of the original spirit of Bitcoin’s creation and bootstrapping. As a result of our own creative marketing and our own arrogance, we lost sight of the fundamental premise upon which everything else was based, and this small experiment was a failure. We can remember it and win.
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