Is Bitcoin Really Bulletproof?

Bitcoin has had many trials in the years it has existed and the “Bitcoin is Dead” rhetoric that made its way around the internet is now a running joke with its own website to catalog the now obviously fallacious stories.

Over the last several years, the ecosystem of bitcoin has been a rollercoaster ride of the market. Its rapid expansion, the hacks, and of course sensational headlines made it easy to lose sight of what Bitcoin means and what it represents fundamentally.

Core and Cash

Recently, there have been fundamental debates about what Bitcoin is, was, or ought to be around the globe. And for the past year, Bitcoin has been plagued by high fees and long confirmation times due to the one megabyte limit on each chunk of transactions it processes approximately every ten minutes.

Fixing this problem and allowing Bitcoin to scale has been the topic of discussion for years now. Enthusiasts are now debating furiously, reaching for The Book of Satoshi and changing their twitter handles to reflect their stance on the now imminent doubling of the block size and the contentious hard fork it represents.

Core developers see Bitcoin as only a settlement layer on a larger ecosystem. This means Bitcoin will only be used for infrequent high-value transactions and Smaller transactions will be handled by side chains which are linked to Bitcoin in the same manner that your city streets are linked to major highways. This means that all the commerce happens on Main St. but when you need to truck goods cross country,you on ramp to the interstate.

Now “Segwit2X” will allow Bitcoin to double its transaction bandwidth pretty much immediately by doubling the space within each block. Thus, transaction fees should fall greatly, at least for the time being.

Bitcoin Cash forked off from Bitcoin on August 1st, 2017 and increased their block size to eight megabytes and that, along with lower transaction volumes than Bitcoin. This has lead to transactions fees that are a fraction of a penny.

The expanded bandwidth solutions now allow Bitcoin to be practical for all forms of payments without the urgent need for side chains and other more complex solutions. So, a cup of coffee will have the same very small transaction fee as buying a million dollar home with Bitcoin.

Bitcoin is emerging as a store of value and you don't need to pay a storage fee or trust anyone but yourself and it will be there. And Bitcoin is now secured by the largest computer processing network in the world. Now, its cryptographic roots ensure, for the time being, that no entity, no matter how powerful, can violate your control over those Bitcoins if you have used best practices to secure them( So long as you control your private keys, your Bitcoin will be there).

Across time, multitudes of exploits have been patched or rebuffed by the network and confidence in the technology has grown. This growing confidence in the ongoing proof of concept also grows its value. But Bitcoin does not stop their in it abilities.

The Original Superpower

What’s good about a store of value if you cannot transfer it to other parties in exchange for something, right? Here again, Bitcoin delivers big time as not only can you send to anyone in the world for an acceptable or unacceptable fee no one can stop or censor that transaction or intercept the funds.

The transactions see no borders, no middlemen, and no caps. A non-confiscatable, immutable store of value that can be sent around the world in any amount to anybody in minutes, if you so desire.

This superpower being the worst nightmare to states such as China and others, yet there are now over 200 billion reasons for any hacker or other entity to crack Bitcoin's core security. But are there somehow threats to Bitcoin which could undermine it?

The Greatest Threat to Bitcoin is the Bitcoin Foundation

Legal entities known as foundations as they exist today are, generally speaking, designed to do one very specific thing, like to pass wealth from one generation to the next. But they are designed to outlive their founders. It is no coincidence that the legislation which created the modern tax-exempt foundation was passed the same year the IRS was formed, that is 1917. And by law, these foundation's funds and activities are controlled by a board of directors which during the lifetime or tenure as founders, will likely have great sway over who is on the board and what it does. However, after they move on, many of these non-profit organizations and the wealth they control is infiltrated by other board members, that is, the same members who eventually direct the legacy of the founders into activities or ventures that would stray from, or be even antithetical to, the founder's desires.

But In the case of the Bitcoin Foundation, there may be funds present and its main charitable work and legacy is the maintenance of Bitcoin Core Client. The creation of this foundation was controversial as many claimed it could have a centralizing effect on the ecosystem. If its legacy were to be redirected in a negative way, the long-term consequences could be dire. Another organization was to be formed, The Satoshi Nakamoto Foundation, to compete with the Bitcoin Foundation.

As a matter of fact, a foundation's legal status as a non-profit leaves it open to regulatory scrutiny, audits, and other potentially coercive activities by central authorities. Of the original founders of the Bitcoin Foundation, none are left on the board. Many left in disgrace as their Bitcoin companies failed or they were arrested and made an example of. And others who have left are currently at war with the current core developers. There are some that are still backing the foundation. But, I think it's safe to say that since the founders have left, some of the foundation's goals are antithetical to those of some of the founders. In short, I am not saying that the foundation and core are corrupted but rather that they are most certainly corruptible, and if not now, then someday. So what's to be done if that day should come to pass?

When You Come to a Fork, Take It

In the current financial systems, monetary units of the many nations are governed largely by hybrid public-private partnerships between the state and the large banking interests and there is indeed enormous power in the hands of these financial governors. This has resulted into the vast expansion of the state and the banking sector at the expense of the debasement of the currency becoming a default mode of life around the world.

Somehow, no matter what party is put in control by the people, the central bankers remain and these power centers are so entrenched in our system that to remove them is about as close to impossible as you can get without blood in the streets. And when a person has obtained a certain position in life, moving back down the ladder is a bitter pill that will be fought off at almost any expense. The aggregate of all people clinging to their particular power center creates extreme political inertia in many governance systems and Bitcoin is no exception. This means that Bitcoin, in addition to its existing superpowers, will have to reinvent monetary governance.

As we've seen in the debates, Bitcoin may need to adapt itself to survive and grow. But who decides which path to growth is best ?Up until now, the open source Bitcoin Core Client has been largely maintained by core developers under the mantle of the Bitcoin Foundation but the super majority of miners and full node operators must upgrade to any new software they release for it to take effect. This characteristic of Bitcoin could hold another revolution or another superpower though to date, all software updates have been adopted in mass without much controversy.

Our current situation in Bitcoin is one of a contentious hard fork. Core has one idea of the future. Segwit2X (and Bitcoin Cash, too) have theirs and the different sides have decided that they are going to stay in their corners and let the fur fly on the day of the update to 2X. So what will Bitcoin do? Will it let the market decide?

When it happens, there could be two Bitcoin chains. It will take time, but at some point, the BTC ticker will eventually be attached to one or the other chain. When that happens, nothing short of a miracle would occur. In one corner we have Core and What their plan is, exactly, no one knows yet. They have also threatened to do things as drastic as an algorithm change to send a giant middle finger to the SHA256 miners who are apparently largely backing 2X.

In the other corner, we have The Segwit2X team, who's plan is pretty clear, and they are just rolling forward. Though both groups contain equally competent developers they still have, in many areas, divergent views on the future of Bitcoin.

There Can Be Only One

While everyone would caught up in price action, possible gains from chain splits and high transaction fees ,there are much greater implication through the update.

If Segwit2X is chosen by the market and becomes the Bitcoin, the core developers, for the time being, with all of their connections, their ambitions, will be effectively, immediately, and summarily fired. The Segwit2X team will now be the default core dev team. Just like that. No fanfare, no inaugurations, no recounts, no court battles. The network, the miners, and the overall market will have elected them (or at least fired Core) by some overwhelming majority. However, upon their “election” to be the tenders of the code, there will be something different about being a core dev . They will be on notice that if they don't serve the community and the market's desires, they will be fired and have the carpet ripped out from under them by the next team which is on point and on the pulse of the market. After this precedent is set, protecting your power won't just be digging in your heels, campaigning, and maneuvering. You'll need to actually listen, build consensus, and you'll be less likely to just back in your corner yelling, “Bring on the contentious hard fork!”

I am not saying that core has turned a deaf ear to the community and they are terrible people or anything like that. What I am saying is that they are the ones with something to lose here. It's obvious that they are really doubling down to defend their position, perhaps because they fear the loss of their power. I think that they do realize the stakes, but perhaps they feel that the momentum of being “The Real Bitcoin” will carry them though. If they are proven wrong and ousted, the game will forever be changed for Bitcoin. No more will there be a sacred brotherhood, an unbroken chain of ordained keepers of the code. The open-source decentralized network will tend to choose the most competent, innovative, and trustworthy custodians, and if at any time they begin to fall behind, they can accept their footnote in the Bitcoin experiment as their rights to carry on as the tip of the spear are abruptly and unceremoniously terminated. “The Real Bitcoin” will trend in the direction of being the best Bitcoin, not the Bitcoin with the most inertia or history or connections.

Many hypothesize that the current spike in price ahead of the current fork is based on the sentiment that this fork is going to be like the last major fork: a profitable chain split with an accompanying relief pump in price.

Perhaps this is the case, but I would caution that this fork is a completely different animal. While Bitcoin Cash (BCH) had automatic replay protection, Segwit2X does not (though it can be enabled). This means that if you spend Bitcoin on one chain there is a high probability it will spend on the competing chain as well. While there are several scenarios where the two chains coexist indefinitely, it is more likely than during the last split that after FUDy battle only one chain will survive and the other will more or less die or become labeled an “altcoin.” This process could take weeks or maybe even longer. We can only speculate as everything about this is completely unprecedented. There may be another secret of humanity waiting behind this chain split. Putting aside any opinions I may have about whether the block size should increase, I am personally much more interested to see if this contentious fork will be the point when Bitcoin can take a big step to mitigating its greatest vulnerability. Can it replace its programmers? I think it can and it will someday, perhaps only a few days from now.

Source:
https://fee.org/articles/bitcoin-is-bulletproof-but-this-could-be-its-kryptonite/