August is in full swing and yesterday was packed with action. Bitcoin Cash skyrocketed and has become 2% more profitable to mine than Bitcoin Core at the time of writing. The latter remains divided as we detailed in the most action filled headline we have written so far:
“BitPay Makes an Entrance, Blockstream Investor Turns, Jeff Garzik Booted, Theymos Reprisal Censors”
You need to read that to make sense of what follows as the below commentary is mainly based on the above events that happened yesterday and may be on-going.
So what is happening here? Well, bitcoin is being tested, fundamentally. Its very premise that it is decentralized within its own blockchain is now being significantly challenged.
On the technical coding and protocol level, there is nothing anyone can do. That, it has proven is decentralized. But on a social level, it remains open to question as far as within its own chain is concerned.
Because although the protocol is decentralized, certain things aren’t. Most notably, the name. There can be only one way to spell bitcoin and that brand is very valuable in itself.
Less notably, but still very significant, is the r/bitcoin name. Again, there can be only one. The same applies in some way to the bitcoin repository, but more important there is the legacy nodes.
What is now called Bitcoin Core used to be known as just bitcoin because it was the only one of relevance with some 99% of nodes running it.
Inertia and laziness means people just upgrade to whatever client they release or they don’t upgrade at all. The latter is possible because of soft-forks, which lower security for non-upgraded nodes, but they can still continue operating.
That might be a way of locking nodes into the Bitcoin Core client, which by itself gives some centralized influence. The alternative is multiple clients, but that’s of course being strongly resisted.
If all these aspects are consolidated under the control of one group, then to say that blockchain is decentralized would not be quite true because a widespread effort would be needed to make a desirable or even common sense change if that group was against it.
The way of doing so is to fork. If all businesses and miners or their vast majority – say 80% – agree to call a chain run by a different client as bitcoin under the ticker of btc, then the emperor is revealed to have no clothes.
Which is why apparent reprisal action was swift with the rhetoric over the top. It is easy to single out one company or individual and portray an entire vision as embodied by the company or individual.
You can easily remove BitPay, but if you remove Coinbase, Blockchain.info, Gemini and all the rest, then you are removing yourself, not them.
However, by making an example, you hope the rest fall in line. After more than two years, businesses have still not realized what the representation of bitcoin tells them in every coin, Vires in Numeris – Strength in Numbers.
But there are different ways this moto presents itself in practice because it is not prescriptive, but descriptive. Another way is to fork off regardless of whether businesses agree or not. That’s what Bitcoin Cash did, opening the decision to the free market.
Yet, those that remain in Bitcoin Core remain unhappy. So businesses there may fork off, or Bitcoin Core might become the minority chain.
Ethereum too plays its own role as an alternative. In combination, the moto presents itself. Leaving Bitcoin Core somewhat isolated as it may be lacking any real numbers.
They may still continue on their own minority chain, with r/bitcoin and bitcoin.org perhaps calling it actual bitcoin. But no one would be fooled if the price difference reflects the hashrate and business infrastructure, which you’d think it would since r/bitcoin and bitcoin.org don’t provide any actual bitcoin service.
But Bitcoin Core generally and Blockstream more specifically will probably try and divide the businesses and miners so that some move and some don’t, some call one chain bitcoin and some another.
In which case, it remains to be seen what the test results are as the people’s money forges ahead.