Bitcoin Analogies

People use analogies to try and describe how new tools and complex systems work. Email was sold to many as “electronic letters” and Skype as “internet telephone”, even though both of those software systems have nothing to do with paper letters and how they were written, posted, paid for, sorted and delivered (in the email case) and how telephone calls were made in the case of Skype.

Now we have a new tool, Bitcoin, which men are having a hard time categorising so that it can be understood by consumers who know nothing about software and the true nature of money. This has led to many perception problems, as each person brings their own ideas to Bitcoin. Entrepreneurs have the biggest problem of all, because they are trying to sell a service with the software, so their need to find a good analogy that fits has many consequences for adoption of their product.

As you may know, Bitcoin has characteristics that currently make it suitable for a class of transactions. Note how I do not say that Bitcoin has limitations; the people who say that are trying to use Bitcoin inside a mental model that creates analogies like, “Bitcoin is digital cash”. Which it can be…but I've written about that before.

The analogy in question goes like this:

“Bitcoin with one meg blocks is like a highway with one lane”

That analogy is completely wrong, because it assumes that Bitcoin is like a car on a motorway (what Americans call a “highway”) when it is more like a train on rails.

British Rail High Speed Train near Chesterfield

Trains travel on fixed rails, have set ticket prices, carriages with a fixed number of seats, and fixed schedules. Lets think about this.

Train departure display at Paddington Station, London. Trains to Twyford, Bristol Temple Meads, and Penzance. Platforms 14, 2 and 4.

You know when the train (The Blocks with a fixed size) is leaving, you know when (The Schedule) it will arrive with your goods (your transaction) or with you the passenger.

A “Single Day Return” British Rail ticket, Bognor Regis to Norbiton (not London), Printed 09:19, 2nd November 2005 Price £19.50, valid on one day only, Ticket Number 13303.

You know how much it costs to ride, either in first class or standard fare (The Fee).

Time table 23, circa 1962. Edinburg (Waverley), Peebles, Galashiels, Haywick, Langholm and Carlisle, showing all times, carriages and stops.

You know the best time to catch a train in advance (The Congestion), because the schedule is published (The Blockchain), and you can rely on the people who run the service that it will perform exactly as specified (The Miners). And the internet is The Rails.

Trains are a much better analogy for Bitcoin. Bitcoin takes a set amount of time (more or less, depending if you are in rush hour) to process a transaction. There is a fixed set of rails it runs on, and a set of more or less fixed prices to ride.

British Rail Inter City 125 interior, circa 1980.

The number of carriages with a set number of seats is also fixed, and that is the block size.

No one expects extra capacity to be laid on in a train system (sufferers of British Rail on the Paddington to Cornwall route know what that is like) they understand that the British Rail networks is a system with a fixed capacity, and that if they want a seat, they need to book one in advance or pay to travel First Class. Lets take, by analogy, the idea of increasing the British Rail network’s capacity on this notorious Paddington to Cornwall line. No one who is serious talks flippantly or casually about “increasing the train length”.

Anyone familiar with how train systems work knows that increasing the train length to increase passenger capacity has serious repercussions and side effects and is not a simple and easy fix. First of all the platforms on the British Rail network are all of a set length, and passengers getting on and off of a train cannot be accommodated without increasing the platform length along the entire system. The Euro Star system, being designed all at once for a target capacity, has platforms that are suitable for its coaches. The British Rail system on the other hand is very old, and is a rickety patchwork of ancient short stations and old rails. Many times when you are on an InterCity 125 train, the manager will say, “If you are leaving us at Castle Cary, please note that you will only be able to leave the train from coaches three, four and five as the platform is short”. This is exactly like saying, “If you want your Bitcoin transaction to clear quickly, you need to use a slightly higher fee”.

Increasing the block size alone will not produce a Bitcoin that can handle more transactions per second without side effects, and once again, the need for this increase is not universal; it is only people who see Bitcoin as a rival to PayPal who characterise this capacity feature as a problem.

Unlike the real world consumer railways, Bitcoin is software you can set up yourself. You can have your own Bitcoin network, like a model railway set

Insert insult here.

and design it to do whatever you like. You can build a massive, accurate miniature rail network, that has no empty rails on it and nothing but trains, or a network with only an engine on it, with miles of track. Its your personal world, where you can do whatever you like.

In the real world however, Bitcoin does not conform to any single person’s idea of what its true purpose is. It has some specific characteristics that make it unique, mainly that it is decentralized and safe from the control of the State. This single feature is, to many, its greatest attribute. It is trivial to set up a MySQL database money simulation that can out perform PayPal. It is not so easy to design and run Bitcoin, which is a hard problem that took the finest software minds decades to solve.

Whatever anyone thinks of Bitcoin, they are free to use it or to decline to use it. What they cannot do is superimpose their ideas by force on everyone else who uses the network in its correct function. There is no argument that anyone will accept to cause them to abandon Bitcoin’s central proposition, and as I said before, if you want a PayPal 2.0, you have MySQL to power it and you don’t need Bitcoin.

Lentil soup, fresh bread, fresh unsalted butter.↴