The first decentralized currency is soon to implement a contentious upgrade which fundamentally changes its direction from bitcoin cash to a bitcoin settlement network. A decision that may have ramifications for decades to come or it may amount to a storm in a tea cup, but does the way such decision was made suggest bitcoin has become centralized in the hands of a few people?
Under the threat of a flag-day soft-fork by some Bitcoin Core developers, including Luke-Jr, Peter Todd and Eric Lombrozo, who supported the so-called User Activated Soft Fork (UASF), which is more correctly called a developer’s flag day soft-fork, bitcoin businesses and miners reached a signed agreement after a closed door meeting where no independent journalists were invited.
As such, we don’t quite know what was said in the most important bitcoin meeting so far. A meeting which shouldn’t really be possible if we are to truly call bitcoin decentralized.
Because in the same way they reached this agreement, they could reach many different agreements, including a raising of bitcoin’s 21 million limit.
That may seem unthinkable right now, but let us thought experiment and in the process show how the segwit decision was reached.
Through IRC chat discussions, gradually developers start to accept as given that bitcoin needs inflation in order for it to operate based on hypotheticals, extrapolations, and mere opinions.
Some of the developers disagree. But those in favor are seemingly convinced, so they subtly, and at times less subtly, start smearing the developers against inflation through innuendo, association, exaggeration, taking words out of context, and repetition.
A public debate is opened, with the vast majority, some 80%, being against. Naturally, they dominate the discussion, but some developers in favor of inflation, the vast majority of the most vocal ones being employed by just one for-profit company, say everyone shouldn’t be hasty.
There are technical issues that need discussing, tests to be made, and so one, which we will present at a Monetary Policy workshop, they say. At the workshop, they announce the inflationary code will be merged soon.
The developers against split and launch their own client that keeps the 21 million limit, but the person who controls almost all social media communication channels is in favor of inflation, therefore he proceeds to do what many thought was unthinkable.
He starts banning and censoring all bitcoiners against inflation, especially any links to the non-inflationary client. If you don’t like it, leave, he tells everyone.
Which they do in droves, so miners are not sure what to do. They hold a meeting with the developers in favor of inflation where they are told they will merge the inflationary code and then they will merge the non-inflationary code some months after provided they run only their inflationary client.
At the time when the non-inflationary client was getting vast support and momentum, miners agree to support the inflationary client based on the non-binding promise developers will then implement the non-inflationary code.
As the agreement was in a closed-door meeting, no one can quite say what their reason was, but the client now controlled by developers in favor of inflation was used as the only client up to that point. So they probably preferred no bitcoin chain-split, something which the developers in favor of inflation had said would occur if they run the non-inflationary client.
A client which continues to have support, but is starting to fall in momentum due to the agreement. However, just to be sure, the client’s nodes were DDoS-ed, probably by those in favor of inflation, probably to show miners and others that the developers in favor of inflation have greater skill.
Then, what was the main and almost sole bitcoin client prior to the debate, merges the inflationary soft-fork code, but miners do not run it, waiting on their promise for the addition of the non-inflationary code.
How you could have both probably neither quite understood, but as it seemed the inflationary code was now the only choice after the non-inflationary client was a thing of the past, the developers in favor of inflation made it explicit that there won’t be any promised non-inflationary code.
Some miners run their client nonetheless, but a grassroots client of sorts by new bitcoin developers called Bitcoin Forever, had been gaining momentum among those against inflation. It then started getting the support of some 40% of miners after developers failed to deliver their non-inflationary code.
Bitcoin Forever increases in node numbers, but has some harmless bugs exploited, which briefly crashes nodes, that soon recover, without any monetary losses.
The exploit was probably by those in favor of inflation, since no monetary gain, likely to show their higher skill and intimate knowledge of how they can wreck havoc if they please due to intimately knowing bitcoin’s bugs. But that doesn’t change the opinion of Bitcoin Forever supporters or miners’ opinion. So a stalemate is reached.
In the meantime, the bitcoin spaces keep talking about the matter and hardly much else. Unrelated to it, due to monetary mismanagement by authorities in China, India, and elsewhere, bitcoin’s price skyrockets.
The community, therefore, grows considerably, with most newcomers landing in the communication channels controlled by those in favor of inflation because they had managed to gain unique brand-name bitcoin spaces.
Due to a policy of heavy censorship and banning, the newcomers, traders, occasional bitcoiners, and others, are hardly aware of the complexities and only hear propaganda by those in favor of inflation.
At the same time, as their inflationary code nears expiration time, developers start losing patience. Some of them suggest a flag-day soft-fork, with a new client launched to activate the inflationary code through a flag-day soft-fork (UASF).
It is supported by a number of developers, while some others suggest it’s too risky as it would chain-split bitcoin and create two coins. Miners say it may create three or four.
But a campaign in the censored forums has begun in favor of UASF, advertised through hats like during the recent election, and its node count starts rising. Miners are probably worried as non-upgraded nodes would be compatible with the inflationary code, potentially creating a mess.
Exchanges say if there is a split they will call the inflationary coin as bitcoin regardless of whether it has the majority of hashrate or otherwise. One of the biggest exchange says the opposite, they will call the coin with the majority hashrate bitcoin. An absolute mess.
Talks of a compromise increase for an upgrade that has both inflation and non-inflation. Businesses and miners agree to implement the unmodified inflationary code with the non-inflationary code to be implemented in three months. They start voting for the inflationary code and lock it in. Bitcoin Core developers say the non-inflationary code will be merged “when hell freezes over.”
A new client launches that chain-splits bitcoin, retaining the non-inflationary code regardless of hashrate support. But while some 80% were in favor of it two years ago, now it has to start off as a minority coin, lacking the infrastructure, needing to be added like any other coin. Moreover, what was their biggest supporter among exchanges says they won’t even give their customers their non-inflationary coins.
How the story develops from there remains to be seen, but so far it seems clear that through a flag-day soft-fork a handful of developers can force a change to the protocol in bitcoin.
Something which suggests the currency has become centralized in many ways. Far more than some other coins, like ethereum, where soft-fork upgrades are not possible due to attack vectors, leaving hard-forks as the only option.