The Definitive Guide. continued….
In the previous article, I attempted to set the stage for the arguments (on both sides), set down a couple of disclaimers, laid the foundations for what I believe Bitcoin is, and why it’s thus far succeeded, and then gone on to dispel some of the main arguments in the space.
Here is the link. You should definitely start there:
The Definitive Guide. Case closed. Lets move on. Plzhackernoon.com
Continuing on from there, lets move straight into:
Part 3: Bitcoin Advantages
Bitcoin, in its current form and development trajectory has many, many advantages over BCH and other comparable crypto assets/currencies.
I’ll cover the main ones.
1. Segwit & Lightning
Despite all of the shit talk about both, they’re actually very elegant solutions to quite complex problems — and more importantly, they go hand in hand.
Let’s start with Segwit
Segwit solves an important problem (transaction malleability) that is a predicate for the successful implementation of Lightning.
In short, it separates the signatures from the total transaction data and therefore makes it impossible for an attacker to change the hash of an unconfirmed transaction (open channel is an example) and therefore creating problems for the network.
A side benefit is that there is also more room inside the block, so it’s actually a very elegant short term solution that increases Bitcoin’s capacity WITHOUT the need to raise the block size via a hard fork.
That’s killing 2 birds with the one stone. That’s also smart engineering, as opposed to brute force, band aid solutions.
Here’s a great video from Andreas M. Antonopoulos explaining Segwit better than I ever could:
and this one:
The only arguments I see against Lightning come from either morons, conspiracy theorists or people who genuinely don’t understand simple engineering principles (or first principles, as Musk would call them).
Some people (some whom I really respect) have put forth some valid arguments around lightning solutions becoming hub & spoke in their path to liquidity, etc — but these are only issues if one confuses why the banks are “bad”.
I’ll leave expanding on this is for another article, but I’ll just say this quickly:
Banks are NOT bad because they are liquidity providers. Banks are bad because they have a license to both print money and value “assets”. They use those two powers irresponsibly in ways which distort markets, and negatively impact people’s lives.
If the bank’s role was limited to providing custodial services, investment services, liquidity, non-fractional or partially fractional lending — that would be great and would help the economy grow.
The problem is the fact that they are incentivized to take full advantage of the powers they have and the whole thing goes to shit…
Anyway — away from Banks and back to Lightning.
Lightning is THE MOST credibe solution for scaling Bitcoin.
It allows for complexity and frequency to be abstracted off chain, whilst maintaining a secure, single source of truth, core chain that is totally neutral.
This image should help you better visualise my point:
Lightning, if done right:
- Is incredibly scalable (see graph below)
- Increases the number of vested participants in the system.
- Increases the crypto-economic guarantee of the system by creating more than one layer of verification / validation / participation, each with their own incentive model.
- Maintains the integrity and security guarantee of the core chain
**Note** Exponentially scalable doesn’t necessarily mean it will scale that way indefinitely. I read a great article on Network effects by Kyle Samani, and he’s spot on with respect to the S curve that network effects are subject to, at least mathematically speaking (and in terms of percentage growth). My point here is that we’re definitely on the LHS of the S curve, which, and with lightning, BTC has a shot at leveraging the SoV network effect and the transactional network effect, in a way that’s smarter, safer, and more technologically sound.
Here’s Kyle’s article:
This post is a spiritual successor to The Smart Contract Network Effect Fallacy.hackernoon.com
Aside from all of the above….Lightning is an extremely elegant solution to the Blockchain Trillema.
Defined by Vitalik as per the image below, the trillema basically states that a decentralized system can’t just “have” all 3 elements. There is always going to be a trade-off, and in order to “solve” this problem, you need to reinvent how you architect a decentralized network.
The Segwit + Lightning architecture being employed by Bitcoin is an example of a method proposing a solution.
So all in all, you have a more scalable solution, with a far better architecture, allowing for transactions that require throughput, to optimize for that, whilst the core settlement layer focuses on security.
Although implementation is easier said than done (hence the time it takes to build stuff like this), I see these elements as a massive advantage.
2. Multi-Layer Security
Not only is Lightning a brilliant scaling solution, but it’s also an extra layer of security.
Cryptocurrencies have “value” because they have some form of crypto-economic guarantee of security.
The mechanism design / game theory in Bitcoin is such that the validators in the network help to secure the network via the pursuit of their own self interest. The incentive / disincentive model helps to align the self interested parties to the greater ‘good’ of the network (to a highly probabilistic degree) and thus creates an environment of strong, decentralized assurances, via vested participants.
BUT…there is a problem with a single layer of validation.
Miners, for example are self-interested parties who will perform the service as long as it pays, and despite not having direct control over the network, they do have influence and may steer it in directions that are non-ideal for users.
In that vein, wouldn’t it make sense to build more layers, with their own form of guarantee, where the different participants (users, validators / verifiers, miners, nodes, etc ) operate with their own degree of vesting in the network. Done right, you can create a more robust and secure overall network.
See my excerpt below:
Here’s an excerpt from an article by Elizabeth Stark of Lightning labs, which sums it up perfectly:
Bob, and Carol [users with open lightning channels] function as “nodes” on the network. Nodes on the Lightning Network are in some ways analogous to miners on the Bitcoin network. They function as the servers that process the transactions on the network in a decentralized manner. Like miners, they do not have control over the funds they help move. Bob cannot steal Alice’s funds, as he will only receive the sender’s incoming payment if he has already sent the outgoing payment to the recipient. Thus, receiving a payment is dependent on having already forwarded it. Lightning payments are conditional upon disclosure of a cryptographic secret, and knowledge of that secret allows for redemption from prior nodes (when Dave redeems from Carol, Carol can now redeem from Bob).
3. Strong Assurances (over throughput)
This is an advantage for Bitcoin’s use case. Although I probably sound like a broken record at this stage; Throughput is just simply not as important.
Thanks Spencer Bogart for his Magna Carta article. He expands on this concept further (link below), although I’ll sum it up here.
Symbolically, the Magna Carta marked a long-standing movement toward broader applicability of rule-of-law (Kings and…medium.com
Why strong assurances matter
Strong assurances are a form of guarantee.
The US Government used to guarantee the redemption of gold for your paper dollar. These days it’s more because they have the biggest stick, along with the fact that it’s become a “reserve currency” for the world.
The problem is, that guarantee is rooted in the promise of a few — something we’ve seen throughout history as a not the best form, but the best we could do until now…
Bitcoin represents a form of guarantee rooted in math.
It’s far more secure, it’s objective, it’s clearly defined, it’s politically neutral and it’s enforced via the rules of the network, which are predicated on the consensus of the participants.
As a form of value storage and exchange, I cannot think of anything better!
This foundational assurance, that rarely (if ever) changes, is what gives Bitcoin it’s value.
The thesis (at least my interpretation) of Spencer’s article is that strong assurances like Bitcoins (or the US constitution, which which has remained largely unchanged) are what lay the foundation for economic, societal and technological growth. And if you get that right, everything else can flourish.
Excerpt from Spencer’s article:
Bitcoin network intentionally limits its scope to enforcing a minimal set of functions. This deliberately limited network scope offers participants greater predictability in the outcome and enforcement of network activity: Valid transactions are clearly defined, objectively identifiable, and unerringly enforced by the network.
Which brings me to my next point
4. Less is More.
This is very much inline with the previous section, but I do want to reinforce 2 key points:
- The less complexity in the system, the less points of weakness. The more you do, the more you increase the number of attach vectors.
2. Tech products & Money, have different growth trajectories, and Bitcoin is at the intersection of both Money & Technology.
This creates a problem.
People get the two confused and begin to rationalise that Bitcoin somehow needs to continually change, at every “whim” of the market, and every time some new competitor coin comes out with some new iteration on block size, speed, shape, colour, flavour, or whatever.
And this is understandable. As technologists, we’ve been trained to adapt to the environment, build out new features, update, update, update.
The mandate is to move fast, break things, innovate, get more throughput, etc. And all of this is fine — for a tech product.
Money on the other hand is slower. Money is a social contract. It’s a shared fiction and it requires the “trust of the masses”. This trust takes time to build and you CANNOT build that trust by changing shit all the time.
The tech improvements in Bitcoin should be slow, calculated and focused on how to make it more secure, more robust, more decentralized, more censorship resistant and as a result, over time; more trusted.
Throughput, complexity, smart contracts, features, speed and everything else come second — and they can all be abstracted off chain, without hindering or complicating the core, settlement layer.
Again, the architecture being adopted on the BTC side optimises for this and in my mind is the superior strategy.
The networks that attract and retain builders in the medium to long-term will be the ones that deliver a track record of strong assurances — a track record of consistent and objective rule enforcement.
^^Quote from Spencer Bogart again..
5. Much smaller set of competitors
Unlike Bitcoin Cash, Bitcoin is only really competing with Gold — which it’s already a hell of alot better than.
One might also say the USD, but that would be wrong, because although many use the dollar is a store of value globally — it’s definitely NOT decentralized, or censorship resistant nor is it a bearer asset, nor much else except a currency backed by a really big military.
If we view this in light of previous section, Bitcoin cash is fighting the tech fight. They push throughput, features, forks and complexity on the main chain as the path to mass adoption.
On that battlefield, they wind up competing with a plethora of teams, organisations and forces they just cannot beat.
Bitcoin should have a narrow focus, and win the boring, slow but foundational game. It’s got the best chance to do so — and on that battlefield, it’s got the greatest advantage.
By choosing the right battle, at the right time, and in the right order, Bitcoin can win the store of value & medium of exchange game.
Part 4: My issues with BCH
At best, BCH supporters are naively incorrect. Their heart may be in the right place, but I just don’t think they’ve thought it through well enough. At worst, they’re a bunch of moronic liars. That’s not to say you don’t get that anywhere else — in fact, that’s the way of the world and in some ways you need that contrast — but perhaps this series of articles will help the good people see through the shit, and blunt the sword of the assholes…
In this section, I’m going to break down the issues I have with BCH. Broadly they’re 2 issues:
- I don’t think it’s not the best place to put your money
- Their general approach / posture in the market is not the greatest
But there’s mutliple reason for each.
1. Trending toward centralisation.
The very architecture of BCH trends toward centralisation and a single layer of vaildation. Miners.
This, I believe is the number 1 flaw with the BCH model. It’s not something that’s taken large effect now, but will inevitably bite them in the ass.
Their trend toward increasing centralization inevitably leads to a situation where BCH loses its entire reason for existence as a permissionless platform with strong assurances. What left is a partially decentralized network, heavily influenced by a small group of validators, which more resembles today’s centralized networks — just built on less efficient infrastructure.
Broadly speaking, this is the trajectory of each. The value is going to accrue (at least for money) at the extremes. BCH is going to have trouble gaining market share or reaching critical mass because it’s a bit of a spork. In its bid to be the best of both worlds, it ends up with the worst of both worlds.
Now, a BCH’er might say, “this is bullshit, big blocks won’t have that effect — we can use big blocks now and into the future because of Moore’s law”.
But, their argument about technology and Moore’s law allowing for larger blocks is flawed. They want to do 1GB blocks, which, yes — the advancements in tecnology & storage will allow — but they want to ride it on the edge so that ONLY THE FEW who have the capacity or capital to run a node or mining operation can do so.
Sorry…how is this different to a private, centralised banking operation right now? Or better yet, how is that better than Ripple? If anything, Ripple might be a better solution than what BCH is proposing for the long term because they have a more credible team. (Disclaimer, I’m really not a fan of XRP).
The Bitcoin philosophy on the other hand says:
“Yes, technology and storage will most likely continue to get exponentially better, so how can we use this to trend toward further decentralization?”
Well — guess what — in 5yrs when we’ve all got 5G internet on our phones, and likely terrabytes of storage, EVERY USER of Bitcoin will be able to quickly and easily download a full node on their phone.
No longer will they need to trust an SPV client. The entire blockchain can be on their phone. This is the holy grail. Mining is trending toward commoditization, anyone, anywhere can download an app with full node functionality and anyone, anywhere can operate a lightning node, from their phone, and help support the prosperity of the system.
Now lets run a thought experiment.
Which if these systems is easier to shut down?
- The system with a few miners and a couple of nodes, that possibly a few parties control?
- The system that has a broad base of miners, millions of nodes, millions of lightning nodes, with a network of users all meshed together, whom have the choice to participate in whatever capacity they’d like to?
Good luck trying to stop the second one.
The first one, on the other hand; easy. And when shit hits the fan, people will run for the exits.
So much for having the utility to send money for fractions of a cent. At that point, sending for that fraction of a cent will cost more than what you’re actually sending .
This is a technical reason why one should avoid BCH. And should be enough. The next one’s are a little more “personal” in some ways, you’ll see what I mean.
2. Confusing the Public
Priority #1 should be to increase global adoption. And that will only come with Trust.
Instead of each working to optimise the model we believe in, proponents of BCH have gone and hijacked the name, are now trash talking Bitcoin, and confusing the shit out of the general public — which are the very people we’re trying to convince that “hey, you should use this”.
It’s the stupidest, self-sabotaging display of blind, religious adhesion to a concept I’ve see in my entire life.
They’re so caught up with beating Bitcoin that they’re going to blow themselves up in the process and probably push real Bitcoin adoption back by years — not to mention open it up to being surpassed by other digital currencies (private, public or government issued).
Instead of agreeing to disagree and moving on with their lives, they try and tear it down, “in the name of Satoshi”, like some Cristian Crusaders from the 13th Century..
3. Conflict of Interest
Without getting into conspiracies here, there is scope for a massive conflict of interest when you see who the largest supporters / promoters / proponents of BCH are:
Who are both major……Yep…. Miners.
I’m not judging them, and I don’t know enough about their individual situations, but when you look at BCH having ONE validation (security) model, ie; Mining, and they’re against full nodes, against Segwit, against Lightning…hmmm..
I’ll leave that one there..
Treating the Bitcoin Whitepaper like the Bible and Satoshi like Jesus is wrong on soooooo many levels, but each time I hear a BCH argument, I can’t help but think of Jehovah’s Witnesses…
This shit has no place in the future we’re building…Sorry.
People who focus on the word and not the essence / logic wind up creating sects, that go on to mis-inform and confuse everyone.
Roger has this table he uses during his presentations where he talks about how many points BCH and BTC get for different facets of each.
He goes and gives 5 points to length of chain / hash power, 1 point to everything else, and 5 points to the “name” in the whitepaper???
That’s like valuing Google as a company on the merits of the name.
- Who gives a shit what the title of the whitepaper said. It could’ve said a peer to peer digital asset system, but cash sounds better
- The BCH interpretation of “cash” is incorrect.
Cash means something that peopel can exchange peer to peer, that you don’t need permission for. Currently, you can do that on both BCH and BTC.
Long term, the only place you can do that is the one that survives. The essence of “cash” is what matters, and that’s what the BTC strategy is all about.
5. Impatience & Short Term Thinking
This is another thing that annoys me.
Bitcoin Transaction fees have been “expensive” (> $2) for a grand total of:
3.66% of the duration of its existence!!!
And ONLY during a period of unprecedented speculative mania that made Tulip Mania look like an intelligent investment!
WHO GIVES A SHIT!
Stable, Secure, Steady Networks take time to build. We’re going to go through times of increased fees, and pressure — and we’re going to go through times of stagnation with lower fees and partially empty blocks.
BCH proponents cracked under pressure and took the quick fix. BTC stayed strong, and kept course — because the eye is on the long term prize.
6. Really, Really Crappy Arguments
Shitty arguments are usually a cover for poor logic, a lack of strategy and things not adding up. Is it just me?? I don’t know..
Whenever I hear a BCH argument, the fallback is always either:
- Religious ;(oh, but Satoshi said), or
- Conspiratorial; (the banks took over / blockstream is corrupt)
- Victimization; (“they censored us”, etc; which in some ways could be argued, but one could also argue that posting stupidity and mis information should be moderated).
In any case, the problem with their arguments each time is the major lack of facts. There’s nothing material there.
Roger…u used to be cool man. Seriously.
You’ve done so much for the community, and now because of your lack of technical ability, or greed, or stubbornness, or naivitee, or I dunno what, you’re taking a big 💩💩💩 over all of it.
In some ways, you’re making Bitcoin more robust, but f%#& me..you’re also setting it back in the short term..
Lets take a look at this video @ Satoshi’s Vision (even the name of the conference makes me cringe..sounds like some cool-aid festival for mormons)
Roger was definitely visionary in the beginning and earned the name Bitcoin Jesus (although I think that mantle should definitely go to Andreas now), but after watching this, I can’t help but see some sensationalist nut who makes a bunch of assumptions that have no fundamental correlation nor causality.
And even if they did, he poses no technically sound arguments.
- He spends most of his time trying pull peoples heart strings, talking about babies dying and what not.
- he went through all his slides too quickly because he had no real argument
- Instead of being unified, he’s creating unnecessary confusion in the marketplace around bitcoin. He calls it an altcoin at one point, then says he’s dropping the main chain support from his wallet??
This is classic “selling to the lowest common denominator”. Selling to peoples emotions, not their logic.
That’s not the method upon which to build a protocol for trade, storage & exchange of value.
That’s how you con people into giving you donations on the side of the road.
And listen to the crowd…They cheer and applaud at every pointless point he makes. It’s like they’re at one of those Sunday sermons with those bullshit priests dressed in white, taking people’s money…wtf…
Sorry Roger — I really used to like you, but you’ve lost your way :(
If I didn’t know any better, I’d say this is one way to mount an attack on the only digital store of value in the world. But I’m not a conspiratorial kinda guy (I used to be…but not anymore), so I’m just going to put it down to the delusional monkey theory:
7. Fake Satoshi
If all of the above reasons weren’t enough, I’m just going to leave it here.
This guy takes the cake. I mean, if you’ve ever heard him talk, it’s..it’s just embarrassing. I don’t know of anyone else in this entire industry that is so full of shit whilst simultaneously sounding like his head is so far up his ass..
I don’t know him personally, and he might be a nice guy, with some funny notions of what makes sense and what doesn’t, but from everything I’ve heard him say, propose, discuss — I’m not a fan.
Seriously…lets assume everything else I’ve said is bullshit, this right here is Game. Set. Match.
And it gets better.
The 3 biggest proponents of BCH are:
- Roger Ver.
- Craig Wright.
- Jihan Wu.
It’s Moe, Larry & Curly all over again..
You’ve got delusional monkey, meets bullshit artist, meets conflict of interest.
That’s 10000000% the last place in the world I want to put my money.
If you don’t know who they are, go do some research. I’ve done mine, and this is my bias view. I have not met either of them, so I’m happy to do so and be proven wrong via logic, sense and facts.
I’ll leave you with my favourite video from ol-mate Craig. If you’re impatient, fast forward to 1m 50sec …see humility at it’s finest… 🤦🏽♂️
@Craig — hope you don’t mind a challenge ;)
Anyway…that’s enough beating up on Bitcoin Cash for today.
This series of articles is not meant to be about bashing BCH…It’s about breaking down facts, finding flaws in logic, weaknesses in strategy, etc.
Stay tuned for Part 3, the Conclusion, because I will bring it all together with something works for all involved. Seriously.
To Be Continued…
This is a 3 part article — hopefully making it easier for you to digest.
I’ll update the links to Part 3 here once they’re done, otherwise just jump on my profile and find them.
If you have not yet read Part 1, START THERE. Don’t waste yours, mine or anyone else’s time asking questions that are answered there:
The Definitive Guide. Case closed. Lets move on. Plzhackernoon.com
I would also strongly recommend you read this article because it will give you the foundational elements and historical perspectives you need to better understand where I’m coming from:
How a strange species of ape went from Barter to Bitcoin. An Essay.hackernoon.com
About the Author
As with probably most crypto maniacs, I have something to do with a bunch of things, although my core project is working to get more people involved in this exciting new space. (Project to be formally announced soon)
I do also read…alot.
If you’d like to connect with me, I’m on LinkedIn, Twitter (which I should probably start using more), and I’d really appreciate it if you followed me here on Medium + shared this article around (some claps would be great too).
View Aleksandar Svetski’s professional profile on LinkedIn. LinkedIn is the world’s largest business network, helping…www.linkedin.com
Read writing from Aleksandar Svetski on Medium. Entrepreneur who tries to ‘think’. My outlet for all things Crypto …medium.com