This series started as a way to consider the economic impact of the halvening and the balance between mining for the bitcoin subsidy versus processing transactions and data for profit as part of the act of being an honest node. But it has changed a little bit as we gain more perspective over time. Now, I like to think of this series as a challenge to reflect on where we have been and the progress of the bitcoin economy as a whole. Bitcoins, though issued by Satoshi Nakamoto in 2009, are emitted on a predictable schedule that cuts in half every 210,000 blocks, or roughly four years. While the countdown to zero emission is generations long, the point at which the network needs to become self-sustaining by generating large blocks full of fees will occur during the 2020’s. As network security makes its punctuated transition from the subsidy to standing on its own, we will discuss the history of the major eras of the protocol in a multi-part series with a focus on how block size and progress have always been intrinsically linked. Read Bitcoin History Part 1 and Part 2.
Let’s be clear.
In Part 2 of the Bitcoin History series, we learned that many Bitcoin developers were big blockers before the venture capital money started to spill in. Then, conveniently, Blockstream’s “defensive patent strategy” took hold of BTC Core, and it quickly became a social heresy to suggest that the bitcoin protocol was capable of safely propagating more than 6 megabytes of data per hour. After Mike Hearn walked away and BTC Core changed the locks on Gavin Andresen, Blockstream became the kings of the BTC Core repository. Nearly all discussion of scaling moved to the theoretical, future creation of parasitic networks such as Lightning that would only connect circumstantially to Bitcoin for occasional settlement. And, in stark contrast to the warnings of the white paper, the price of each transaction was reengineered to be high so that the price to participate as a governance “node” (a term that was completely redefined in this era) could remain low.
In 2017, in the last days of a unified bitcoin economy, Craig Wright would make his singular public appearance in blue jeans, BitConnect and the Ethereum ICO boom would usher in a sh*tcoin renaissance and Jeff Garzik would code the Segwit2X implementation. Of course, the VC-funded sock puppets guiding the court of public opinion would beat the drum of the “#No2X” movement, and the entire mining community would get “Back-Stabbed™” by the CEO of Blockstream and the rest of the small blockers.
From there, the split of BTC Core and Cash (BCH) happened rapidly. Due to social pressures, BCH declared that the new consensus would use relay protection so that it would be incapable of orphaning BTC, and the small blockers of this era would win the BTC ticker tussle. The “Bitcoin” name was retained by the more limited chain, even though it was the one making the more stark changes to the protocol and governance of Bitcoin, and the big blockers agreed haphazardly to fight for dominance on the worst metric possible: price. This battle for market cap dominance was (and perhaps still is) futile because Tether also became the dominant trading pair during this era, muddying the waters of organic price discovery to this day.
The debates would continue to rage as many big blockers still waved the Bitcoin flag declaring “Bitcoin Cash is Bitcoin,” and the small blockers would continue with their battle cry:
But how did bitcoiners lose such a crucial battle? How did everything get so bungled in the scaling debate? How did such vile characters win so many PR battles?
First, we need to talk about Barry and DCG
Blockstream, like every other corporation, acts in the interest of its investors in order to make a profit for its board and shareholders. If one follows the money,…