Balaji Srinivasan, founder of 21 – one of the most well-funded bitcoin company – stated that bitcoin needs “the right leadership” as, following the blocksize debate “we’re still coasting on the momentum of the past but we have lost the innovation of the future, or we’re in danger of losing it.”
The remarks were made in an extensive interview introducing 21’s new feature of pay to e-mail, with much of the discussion focusing on the blocksize debate. A debate Balaji summarizes as on one hand those who see bitcoin as just gold and on the other those who want “lots of traffic.” Balaji says:
“Now, if you are somebody who cares mostly about the digital gold or store of value application, then you don’t really care about the block size issue very much, because you buy $50,000 worth of Bitcoin once a year and you sell it three years later. Your transaction volume is extremely low. You don’t really care if the fee is one cent, or 50 cents, your vision for the system — All you care about is that you can get it out at some point and that the private keys work and so on and so forth.”
On the other hand, “if you want the Bitcoin economy to grow very large with actual transactions happening within Bitcoin,” there’s the Lightning Network (LN) or an increase of the blocksize.
On LN, Balaj says it is a “whole second layer that is as different from Bitcoin in many ways as — I don’t know. The OS from the raw hardware.” Moreover, backing one of the main criticism against LN, Balaji says it is “potentially centralizing. These hubs are potentially centralizing.”
On a maxblocksize increase, he says that it is probably backed by most bitcoin businesses:
“I would say probably where most corporations, venture-funded corporations in Bitcoin are. Probably where most venture capitalists are. They think the block size should be increased, because basically the Bitcoin network should handle lots of traffic.”
Dwelling a bit deeper, Balaji says “the premise that the small block size is causing decentralization is just simply not accurate, I don’t think, because you have mining centralization already.”
He says that if node count decreased from 10,000 to 1,000 while miners increased from 10 to 100, then decentralization would increase from the perspective of “the number of people you have to get into the room to compromise the system.”
A Balance or Toxic Gridlock?
The blocksize debate has been “fairly rancorous,” says Balaji, but the counterargument is that bitcoin’s price has still increased, reaching a new all-time high, perhaps because the debate has attracted more attention to bitcoin, he says. Moreover, there’s the argument that bitcoin is so difficult to change “it’s just really hard to politically attack,” he adds. On the other hand:
“The innovation has gone somewhere else and there’s Zcash and there’s Ethereum and there’s… all these infighting within Bitcoin. Yes, we’re still coasting on the momentum of the past but we have lost the innovation of the future, or we’re in danger of losing it.”
He then says we need “the right leadership,” to turn it all around the way “Satya had totally turned around Microsoft,” the interviewer interjects to state: “Or the way that Vitalik has led Ethereum the entire time.” Balaji says:
“You have to give Vitalik his props. He took Ethereum from nothing to where it is today. He took it through the DOA. He took it through very, very, very tough times. He had to layoff lots of people before the Ethereum crowd fund. He managed to navigate all the legal issues and so on. He’s not yet gotten any issues on that score.”
The interviewer asks whether Vitalik Buterin is “Steve Jobs of cryptocurrency?” to which Balaji answers with a brief “he’s good,” before moving on to talk about how ethereum and bitcoin would position themselves, whether they would be complementary like different social networks such as Facebook and Twitter.
The reason is because, he says, “for all the digital gold people, Ethereum is a non-starter, because it is something where if it gets political hot enough — The DAO…” which he then follows up by stating “you know what? That is a feature. Undo is a feature. The question is though; how far do you go with that?”
The parties then go on to talk about Numerai, an ethereum based crowdsourcing hedge-fund. Giving us a snap-shot of the current blockchain space.
As the interview shows, there is little to talk about bitcoin except for the blocksize. The discussion therefore moves to eth, firstly the platform/currency itself, then to one of the many eth based projects.
Thus, in a way, proving Balaji’s statement that bitcoin has lost its lead in innovation, with businesses pivoting while new projects choose other public blockchains.
“Last question. What are the pieces of Bitcoin infrastructure, whether you’re talking about software or a hardware that people are not working on that you wish people are working on.?
Balaji: I’d like to see a resolution for this block size issue.”