I am stepping down as a moderator of btc
and exiting the bitcoin community. Thank you all for fighting until the end. I know I am going to get a lot of hate from pretty much everyone for this post, but I felt the need to post it anyway.
Why Give Up?
I think bitcoin is past the point of no return. There are a number of different routes that bitcoin could take this year, and as far as I can see, they all end up at the same destination; failure. I know I am going to get a lot of flack for this post, and I understand that. I have witnessed bitcoin being announced “dead” many many times throughout its history and I absolutely could be wrong, but almost every one of their predictions were based on a lack of understanding of bitcoin. I don’t feel my prediction is has a lack of understanding. If I am wrong, then I feel it will be through sheer luck that bitcoin survives. I was a bitcoin early adopter in 2011 and have invested far more time into bitcoin than is reasonable. I truly hope bitcoin does survive, but what I think will happen is not predicated on what I want to happen.
How might bitcoin fall?
I am not going to go through everything that has lead us up to this point. Many of your are well aware of what has brought us here. Bitcoin up until the beginning of 2014 was an unparalleled success. For those of you who weren’t around at the time, there was a huge amount of excitement in the community at all times. It felt like every month there was some announcement that had a positive impact on bitcoin. A new major company offering bitcoin payments, a bitcoin company offering a new service, a new piece of software being added to clients to make them more useful. Bitcoin was making continual progress and the community was unified. Compare the situation back then to day. We have now had 2 years of stagnation, and in many cases degradation of the network.
The network is now slow and expensive (and getting slower and more expensive), companies have been leaving bitcoin at an exponential rate. No new major companies have adopted bitcoin and there are no signs of this changing in the future. The community is irreparably divided and is at war with itself. Development has stalled.
Where bitcoin has stalled, other cryptocurrencies have been making enormous ground. Bitcoin does not exist in a vacuum. It has competition. Other cryptocurrencies already offer significantly more advance features than bitcoin. The only thing bitcoin has left over other cryptocurrencies is it’s network effect. The inertia of network effect is truly enormous. Bitcoin has been coasting on it for 2 years now. Technology develops rapidly though, and many people are always looking for the next big thing. Investors want to make money and developers want to work on the most advance and growing technology. There has been very little investment into new bitcoin specific companies over the past 2 years. The only new bitcoin company I know of that has received significant investment in the past two years is Blockstream. There has been a very large amount of investment into blockchain companies in general though. The money is there, it’s just not going into bitcoin.
Ethereum has now reached close to 1/3 of bitcoin’s market cap and there is no sign that it is going to let up any time soon. The ethereum community is a breath of fresh air compared to the current bitcoin community and it feels very nostalgic there. It feels very much like the bitcoin community did 3-4 years ago. They have showed that they are not afraid of using hard forks to upgrade the protocol. They have a leader who is intelligent, pragmatic and good at communicating and IMO who is likely to get the network through the early volatile years. The community showed that they value pragmatism and reality over ideology when they stopped a theft of a large percentage of the currency supply and did so without having any adverse affects on anyone other than the thief. They also achieved this while under attack from bitcoin
. They have been working with major organisations and companies to promote and forward the use of the network and they listen to the users of the network to find out what problems they have and which features they want, and then work towards satisfying the needs of their users. The developers of the network have known large holdings of the currency, which means conflicts of interest are less likely to arise and protocol development can directly correlate increased returns for the developer’s investment.
There are a number of possibilities, but I believe all end with very similar outcomes.
Scenario 1 - BU/EC gains 75% of the network hash rate
If BU gains 75% of the network hash rate, a hard fork will become likely (although not certain). Core and their supporters will start to try and burn down the network. All communication channels will overflow with FUD (some real, some fake). Core supporters with large bitcoin holdings will start dumping them on the market in ways that will cause the most damage to price. Core will start recommending at the very minimum a difficulty readjustment and quite likely also a POW change. Price will fall extremely far as speculators adjust their risk exposure and wait out the storm, traders will short the market to make as much money as possible during the fall, and core supporters try to get the BTC price to go as low as possible on the BU/EC side of the fork and BU/EC supporters try to get the price to BCC price to go as low as possible. Whatever the price is before the fork is certain, I think it is likely to reach 50% of that between the time a fork becomes certain and when the fork actually happens. After the fork happens the price could go down to literally any level. While this is happening, the Ethereum market cap is going to overtake bitcoin even if the Ethereum price does not increase (which it will). Bitcoin will not survive this. The moment Ethereum overtakes bitcoin as the biggest cryptocurrency, everyone will find out. It will be posted in articles in every technology news website on the internet. Once the casual bitcoin holders/users find out (hint most do not even pay attention to what is going on in bitcoin) they will quickly panic and either sell to fiat, or sell into Ethereum to speculate. Mining will almost instantly become unprofitable at that point. Monumentally unprofitable in fact. The payout of 12.5 per block will not even slightly cover the cost of electricity and because miners have no direct control over the price of bitcoin they will be absolutely powerless to do anything other than mine at a loss for a very long period of time. If bitcoin price drops to $100, which IMO is very conservative, then it is likely that 90% of the miners will have to turn their hardware off. This means that the difficulty adjustment periods will increase by a factor of 10 to 20 weeks. These miners that are left will need to mine at a huge loss for up to 20 weeks, or hope that somehow the price recovers. I don’t think even the biggest miners could survive that. Further difficulty reset hard forks will be proposed and it will be chaos.
While all of this is happening, Ethereum is likely to be running fine and price will likely be rising significantly as money from bitcoin pours into it.
Scenario 2 - BU/EC never gains 75% of the network hash rate
In this scenario there will be absolutely stalemate. Core will not be able to implement Segwit and therefore will not be able to change bitcoin into a settlement network, but also the transaction throughput will not be increased through larger blocks. The debate will have become so vitriolic that no further progress can be made within bitcoin. Bitcoin simply will not scale on OR off-chain. In this scenario the end is not so violent like in scenario 1 but then end result is the same. Ethereum (and other cryptocurrencies in general) will continue to gain market share throughout the year as Bitcoin remains stuck in stalemate. The bitcoin price continues decreasing and the Ethereum price keeps on increasing until Ethereum overtakes bitcoin. Once the flip happens, it will accelerate significantly as people realise what is happening. The end result is the same as the later part of scenario 1.
Scenario 3 - BU/EC lose most/all of the network hash rate
In this scenario Core manages to get Segwit accepted by the network. Most people in btc
simply leave bitcoin for good. Fees will remain high and transaction throughput low. Core will not increase the block size limit until after LN has been proven to work and users have been forced/coerced into using it. LN is not anywhere near ready for production and it is likely to take at least 2 more years until it is released and working and another year or two until it is fully implemented into wallets, and then another year until businesses are able to understand and use it in their backend. I.e. in an ideal world where everything works as intended in this theoretical system it will take 4-5 years until bitcoin has similar properties to what it had 2 years ago. This obviously ignores the fact that there has been no analysis on whether this would even work on an economic level, let alone a technological level.
As transaction fees rise users and business will be pushed into using other cryptocurrencies and fiat and at some point bitcoin’s network effect will be overcome by Ethereum’s. This scenario is essentially the same as scenario 3, but there maybe some initial price pump when Segwit activates and people enjoy and end to the debate. This will likely be short lived though.
What is most likely to happen (IMO)
If BU/EC is to continue to gain further market share of the hash rate and reach the 75% requirement that many parties have suggested. It is likely to take at least a couple more months of deliberations. For this to happen, a number of large pools will need to switch over. Bitfury has stated that they will not support BU and are mining Segwit and have even started mining UASF blocks. HaoBTC is still sticking to the HK agreement (which literally no one else is) and will not be running anything other than Core. This means it is really down to F2Pool and some of the smaller Pools. F2Pool has stated that it will stop signalling for classic and there is no indication that it will start signalling for anything other than Core (not segwit), and has stated that he thinks BU is dead.
This suggests that the most likely scenario is scenario 2. BU/EC will not activate, but nor will Segwit. There are some things that may or may not happen in this scenario. For example it seems that Core are willing to do a UASF to push Segwit through under the pretence that any of the miners that are not mining Segwit are illegitimate as they are against the “consensus”. This will force the miners into making some kind of decision either way. Many are likely to side with Core but I think a significant portion will side with BU initially. A number of different things could happen in this scenario depending on the ratio of hash power on each side of the split. If the split is mostly equal, I expect that two coins will survive for some amount of time. What happens with bitcoin from that point I have no idea. If BU/EC gains the most hash power then the debate will rage on as the BU/EC will refuse to attack the minority chain out of moral reasons. What happens with bitcoin from that point I have no idea. If Core gains the majority share then the BU minority chain will be attacked by some of the majority miners. Core and their supporters do not have any moral objections against this kind of attack. The minority BU miners will then switch back to Core and it will likely play out like in scenario 3.
So this is BU’s fault for forcing a hard fork?
No, this is Core’s fault by making a hard fork dangerous by telling everyone a hard fork is dangerous for the past two years and blocking every conceivable compromise. They have petrified the bitcoin community and convinced them that any kind of hard fork for any reason that does not come from them is dangerous. They have done this to hold onto the power they should not even have in the first place. They have become the self appointed kings of bitcoin. They have achieved this by threatening to burn down the network instead of making a compromise, and by attacking anyone who threatens to take this power away from them. Unfortunately, when Gavin stepped down, he handed to keys to the bitcoin house to the wolves and once they are inside, it seems it is not possible to get them out again. The only way to make them totally irrelevant is to exit and let them be kings of nothing.
Why did you even become a mod in the first place?
I have known bitcoin was on a negative trajectory for quite some time but I felt that one last push to save it was worth my effort. I wanted to help btc
be the best bitcoin subreddit to overcome some of the damage that bitcoin
has done to the community. IMO btc is
the best bitcoin subreddit, but it is far from perfect. I feel very strongly that the moderation of btc
is a microcosm of the situation in the bitcoin community in general. I feel there is far too much weight put on idealogical decision making rather pragmatism and realism. The moderation policies of btc
are ‘hands-off’ to a point I think is actually detrimental to the sub and to bitcoin. The issue is that, trolls overwhelm the sub and cause constant controversy. They act like a fire under the community and purposely rile everyone up. There is a reason for this. bitcoin
was controlled mostly through censorship. Censorship alone was enough to create an echo chamber. They do not have control of the btc
moderation team (well actually they managed to get two mods on here who have since left/been removed) so they must turn it into an echo-chamber by other means. They have achieved this by making sure every single post has comments from trolls that try to rile up the community. This makes the btc
community have more tunnel vision as they/we try to insulate ourselves from the trolls. The problem is that it means that the community becomes highly idealogical and focused on only one goal.
IMO it is a failure of this sub to not remove comments from trolls. This is pretty much a standard policy across the whole of reddit and the only reasons for not employing it are idealogical. Removing trolling is not the same as banning specific ideas or topics being genuinely discussed. Not doing so just makes btc
a frustrating place to try and discuss things. It also means that any actual discussions outside the block size debate get very little traction as everyone gets dragged into the angry posts.
I should be clear though, the other mods of this sub are great and absolutely want what is best for bitcoin.
Isn’t this all just FUD
I am not writing this to sway anyone. This is what I genuinely think will happen, but of course I could be wrong about every single prediction. It saddens me enormously to write this. The current trajectory for Bitcoin is down and the the trajectory for Ethereum and other cryptocurrencies is up. There will likely be people who say “but Ethereum doesn’t have any uses cases”, my argument to that is; what use-cases does bitcoin have right now that could not immediately be adopted by Ethereum today? There will also be people who say “but if bitcoin dies then all other cryptocurrencies will die with it, because how could anyone trust their money if it might just disappear”? My argument to that is; all cryptocurrencies are still in their infancy, even bitcoin. The writing has been on the wall for Bitcoin for quite some time. I do think there will likely be one ‘great’ cryptocurrency, but until that cryptocurrency is adopted by the masses, that title is still available. If the title of ‘biggest cryptocurrency’ can be taken then it was likely never meant to have it very long anyway. If/When a cryptocurrency manages to achieve mass adoption then it will have hundreds of millions of people, companies, organisations and even countries defending it. At that point the entire system will be working towards it’s success. At that point, the current moral ambivalence towards attacking a minority chain will be seen as ridiculous. After mass adoption of a cryptocurrency (for example Ethereum) has occurred, grandma’s will be writing to their local MP in support of the cyberwar against the Ethereum competitor ‘Othereum’. That is decentralisation
. Huge numbers of diverse entities working to defend it. This will never happen on a network as limited as bitcoin’s is. In fact bitcoin is actively losing allies.
I’m out. Ethereum is likely to take over this year as bitcoin becomes myspace. This may happen very rapidly. I hope I am wrong.
I hold both Bitcoin and Ethereum. I have held a number of different cryptocurrencies over the years, but my holdings were almost always 90-100% bitcoin until recently.
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