Who Watches Bitcoin's Watchmen? Scaling's Great Game of Egos

Miners, startups, developers: CoinDesk editor Pete Rizzo takes a look at the cast of characters behind bitcoin's escalating scaling debate.

AccessTimeIconJul 7, 2017 at 1:00 p.m. UTC
Updated Sep 11, 2021 at 1:31 p.m. UTC

Pete Rizzo is the editor for CoinDesk, where he oversees content production for CoinDesk.com and CoinDesk research products. He previously served as editor for PYMNTS.com.

In this opinion piece, Rizzo discusses developments in bitcoin's scaling debate, adding color to the cast of characters involved in the hopes of highlighting essential parts of the disagreement at play.

"Thermodynamic miracles... events with odds against so astronomical they're effectively impossible, like oxygen spontaneously becoming gold. I long to observe such a thing."

– Dr Manhattan, "Watchmen"

While much has been said about bitcoin, this discussion is not without its inherent problems.

One of the least addressed is the extent to which language itself has done disservice and damage to the development of what can only be considered a human technical achievement still struggling to be understood. Indeed, a great irony that has emerged with "bitcoin" is that a distributed system with so many intricate components can even be referred to in singularity at all.

It shouldn't be a surprise then that the idea that bitcoin can or should change the delicate balance of its protocol rules has been the biggest victim of limited vocabulary.

Should bitcoin become a 'digital currency' or 'digital gold'? Should this choice be dictated by scientific analysis, or guided by strict interpretation of vision? Any choice of words creates biases that, owing to the system's distributed nature, are incapable of being broadly enforced.

Bitcoin as an idea is now owned by many real people, all with different backgrounds, who understand the technology in different ways, who have different wants owing to their specific positions related to the protocol and who have profited differently from these associations.

What's clear now, however, is that at least three principal groups are capable of exercising power over that system – miners, entrepreneurs and developers – all of whom have different understandings of what "bitcoin" is and how they believe "bitcoin" should be. (Users, the fourth principal group, now seem caught on the sidelines in what can only be described as a power struggle that, at this point, has become entirely a game of human egos.)

Fueling the flames of the debate is a specific proposal stands to impact the balance of power between these parties, altering its ideological and sociological balance through technology.

Organized by investor Digital Currency Group and backed by miners and entrepreneurs, Segwit2x intends to enact Segregated Witness, a network optimization originally proposed by developers, before increasing bitcoin's hard-coded block size three months later.

As a political creation, it is a compromise of long-discussed compromises. But, while the code is a collection of pre-existing ideas, its enactment stands to be quite radical, impacting the system in a way that could, at the very least, reshape bitcoin's power structure, and at most, cause bitcoin to splinter into two.

But if it's true that language has impaired development and understanding of bitcoin, so too has it failed to properly categorize how stakeholders see themselves as players on a grand stage, writing a narrative with the ability, they believe, to impart lasting change on the world.

The following attempts to use – broad generalizations – to relay my experiences and interactions with the various constituents in the hope of explaining their positions and views on the scaling debate in aggregate, and how they relate to repercussions of the Segwit2x proposal.

The entrepreneurs

"We can do so much more. We can save this world... with the right leadership." – Ozymandias

Perhaps the easiest group to understand are the entrepreneurs.

On the whole, they are young, Western, and libertarian. They are doers that prefer action, and (generally) believe in compromise over ideals.

Ambitious founders, natural and charismatic leaders, they are public faces. They have been the subject of magazine articles, they have thousands of social media followers. They have spent years traveling around the globe extolling the virtues of a "payment system" that was truly different. That was limited today, yes, but "capable of change".

To them, the prolonged scaling debate has shaken an unspoken core belief, that everything in bitcoin was subject to revision, able to be made better by the other doers and thinkers that would doubtless follow their example.

"Bitcoin is open source. Ten-minute confirmation times can be changed," 21 CEO Balaji Srinivasan, then the stealth startup's chairman, declared in 2015.

It is likely that this argument was put forward in board rooms. To important people. Celebrities. Influencers. It was both true, and capable of not being true, though this latter complication was perhaps too easily discarded.

I don't suppose it would be a stretch to assume that many bitcoin entrepreneurs have had a limited understanding of bitcoin as a technology not in theory, but in practice. While their notions are correct, they have also existed without being challenged by the complex human system of developers and miners that would enact it.

Many seem to have considered the protocol an afterthought, assuming problems would be worked out in their favor and in the advancement of a definition of bitcoin as an open-source payment system that would create new business opportunities.

That a new philosophy would emerge that would argue that blockchains are protocols that would be unlikely to sustain a significant class of startups, wasn't foreseen, and doesn't seem to be something that is broadly acknowledged.

It's perhaps this last part that has the biggest impact on their relationship with developers, as extracting value from a system often necessities an intermediary role, one that developers now argue, from a scientific standpoint, might have meant to be eliminated.

The developers

"Not even in the face of Armageddon. Never compromise." – Rorschach.

What then of the developers? The open-source group often referred to as Bitcoin Core.

They prize idealism and patience. It was once told to me that new developers are trained in hours-long question-and-answer sessions that run through the night. The knowledge must pass down, drip by drip, to those who could expand their mind and attain it.

They are also elusive, stubborn in their views and guided by paranoia (though the latter is as much of a strength as a weakness). Not a small number use pseudonyms owing to the belief that bitcoin has successfully culled back human rights from what they perceive as the violence of centralized governments. Early to the software, they turned to bitcoin as an alternative to traditional money, an idea that could reshape society if steadily shepherded.

I once asked two high-profile developers if they cared if they even lived to see bitcoin become what they envisioned. They seemed to think that this was unlikely, and didn't seem worse off for the realization.

To developers, the lack of "progress" on scaling is evidence bitcoin is withstanding human collusion. Any advancement that comes at the sake of practicality or a "greater good" is a perversion of the system, akin to using a dictator to save democracy.

It's perhaps not an understatement that their relationship with miners is challenging for similar reasons. To most bitcoin developers, miners have been chiefly an intellectual consideration. That is to say, they are considered insofar as they are necessary to the system as vital, but ultimately replaceable parts, of that system.

They believe that bitcoin derives security from computing power, but don't particularly care who provides it. Should one group seek to impose their will on the system, the laws of economics, they seem to think, will eventually bring along a more accommodating crowd.

As for the startups, there seems to be a lingering resentment between these camps – some have even gone so far as to label the prioritization of the needs of startups as an "attack" on the system itself.

The miners

"I am tired of Earth. These people. I am tired of being caught in the tangle of their lives." – Dr Manhattan

It's often understated just how amazing it is that bitcoin mining evolved the way it did, mutating quickly from a computer-based competition between individual users to an industry that supports three-to-four distinct and highly specialized business models.

If bitcoin miners have become barons with outsize influence on the network, even influence that was never intended, they sit on a throne of skulls. Miners outcompeted the world, produced chips faster at scale, filled data centers faster at scale and generally competed better in an industry so difficult that it is in a constant state of reinvention.

But miners are people. They are predominantly young, of Chinese descent and extraordinarily wealthy owing to the success of their businesses. Most have approached the scaling debate with all the enthusiasm of tag-alongs to a party who were suddenly asked to dictate the music. They were thrust into a situation they didn't quite understand (or understood very differently), one that has been exacerbated by cultural differences in governance and business etiquette.

The constant in-fighting and intellectual combat aren't things that they signed up for, or that they seem very interested in participating in. The common mood among them of late seems exasperation.

As for developers, it might be an understatement to say this is strained (some have gone so far as to call for the Core developers to be fired outright).

Whatever goodwill that once existed has now mostly eroded through public displays of animosity, and the fact that for miners, there are plenty of other ways to make money through a diversified ecosystem of cryptocurrencies and crypto assets.

The monster

"Battle not with monsters, lest ye become a monster."

Left alone, arguments would likely persist without action. However, the situation is now being shaped by the perception of external threat.

Since the beginning of 2017, $90bn has been allocated to alternative cryptocurrencies, all but obliterating the narrative that bitcoin as a specific iteration of cryptocurrency could serve as the "internet of money". Once defended by its early lead and network effect, venture capital interest has now largely migrated to ethereum, which they believe is better facilitating this shift.

In the court of public opinion, investors have already eaten their words.

For bitcoin, this now poses a moral paradox with two visions at play. Developers seem to be arguing that the power of bitcoin lies in the ability of each and every user to validate the network's entire transaction history, and that no sacrifices should be made toward this end.

Not doing so, they reason, is a return to the system of banking today, in which intermediaries are trusted with this role and users are powerless. It is not enough that a system would be faster or more convenient, and perhaps, more decentralized. It is not enough to sacrifice today what could be achieved, however theoretically, tomorrow. The process, they reason, must be slow, as this is the nature of scientific advancement.

Entrepreneurs, however, hear the ticking of the doomsday clock (personified by their runways and business outlooks). The great cryptocurrency bubble, for them, is a necessary monster. Should it not exist, another would be created as a means of benefitting the "greater good" (as gauged by the health and success of their businesses in promoting bitcoin).

Miners have already made their choice which of the two visions of the network with which to align. What's guiding this choice is less clear, though most, when pressured seem to suggest that they believe it will increase the value of bitcoin.

How a 2MB block size increase can compete with 1,000x ICO gains, or why an increasingly diversified cryptocurrency ecosystem does anything but strengthen bitcoin's value proposition, don't seem to be questions any are interested in answering.

The Ozymandias choice

"In the end? Nothing ends, Adrian. Nothing ever ends." – Dr Manhattan

So, what to make now of this modern missile crisis?

Bitcoin scaling has so far been a game played across many continents. It is a muse for which thousands of hours have been spent in the composition of think pieces, proposals, arguments and all manner of human creations.

It has led the technology's best minds to plead and stomp and grind their fingernails into their palms, to vow to never come back to bitcoin again. But, they have always returned with new ideas, new enthusiasm and the promise of something better.

What happens then if they go their separate ways?

The union of startups and miners would appear to be tenuous. What will happen when larger blocks push down opportunities for miners to collect fees? Or when the new developers can't match the track record of Bitcoin Core? A marriage of convenience doesn't necessarily make a lasting one.

Should developers end up on their own blockchain, who will offer essential infrastructure to ensure the technology is broadly used? True to the idealism or not, many bitcoin users are customers of startups. Much of the narrative the public has consumed is influenced and informed by their success.

Doubtless hard feelings have been inflamed by both sides.

But more than anything, it would seem any split or change in power would undermine the very thing bitcoin sought to provide to the economically disenfranchised – security. In an increasingly diverse crypto asset ecosystem, more and more devoid of rationality, it's hard to see the value in sacrificing what can only be achieved through continued unity.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which organized the Segwit2x proposal.

Watchmen graffiti via Wikimedia


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