The great bitcoin debate: #ossification vs. #innovation
🗣 The #bitcoin community has contrasting opinions on the future of the bitcoin network.
Some people are “monetary #maximalist” and believe that Bitcoin should remain as it is, as it’s already performing the function it was aimed for: transferring value across the world, in a censorship-resistant manner, with close to immediate finality and at a low cost 💸 .
Other people are “platform maximalist” and believe that Bitcoin protocol should extend its functionalities well beyond its monetary use case and that introducing new features is necessary to address #scalability issues, improve user experience, and expand use cases beyond store of value.
⛔ This debate is as old as Bitcoin and it will probably never end.
Advocates of ossification strongly believe in the fundamental properties of #decentralization, #security and #immutability of the network: Bitcoin has these three properties and we should not risk extending its utility beyond its monetary use case.
Any change to the protocol, despite being tested and retested by core developers, might bring unintended consequences and create vulnerabilities and potential attack surfaces to Bitcoin.
The Taproot update was thought to increase privacy, scalability and security, but has created the possibility to create “inscriptions” and to mint ordinals on-chain. 🤡 Monkey jpegs and other valueless NFTs, originally created on other blockchains, started to be written also on the Bitcoin blockchain, driving away extremely scarce and valuable blockspace from transactions to pure gambling activities.
This is a major unintended consequence of a protocol upgrade and represent a risk that ossificators don’t want to face.
Platform maximalists would like Bitcoin to be the everything protocol, where you can directly interact with various decentralized applications (dApps) and smart contracts, similar to platforms like Ethereum 💩 .
They envision a future where Bitcoin serves as the foundational layer for a wide range of financial services, decentralized exchanges, and even social networks, all built on top of its secure and censorship-resistant infrastructure.
👨💻 Introducing additional functionalities to Bitcoin's protocol requires careful consideration of trade-offs between innovation and maintaining the network's core principles. There are concerns about potential security risks, scalability issues, and decentralization.
Satoshi gifted humanity the best form of money ever invented. Absolutely scarce, transparent, and immutable money which removes state monopoly on the creation of currency and can grant real freedom to individuals, by allowing them to travel the world with their wealth transported in their minds 🤘 .
🐢 I believe that #innovation in Bitcoin shall come as fast as a turtle with a broken leg. What’s your position?
Price discovery is upon us!
No more clouds and blue skies ahead 😎⚡️
🍊💊 to friends becomes officially easier to give.
#bitcoin
Controversial thoughts on Satoshi Nakamoto’s treasury ⚱️
Much is being said about Bitcoin’s creator lately, due to the false claims from Craig Wrigth that he is the inventor of #Bitcoin.
He, she or they, whomever #Satoshi actually is. This topic should not bother anyone. The greatest invention of our time, digital, peer-to-peer money with no trusted intermediary was given as a gift to humanity and should be all that matter.
🥷🏻 Satoshi did not premine any coin for himself. He did not allocate bitcoin to a company’s foundation. He created and made available to the world the best money ever invented without looking for any personal recognition or acknowledgment. His only desire is to remain anonymous. And many people are just trying senselessly to attribute a face to him/her/them.
When people ask me “How can you trust money which has been invented by someone anonymous?” I always make efforts not to care, while I point at the brilliance and simplicity of the system he has created. Bitcoin operates on a #transparent, #decentralized #ledger where trust is not placed in any single individual but in the collective power of the network's participants ⚡️, which are expending energy to keep it decentralized and secure.
Others seem to be worried that Satoshi’s wallet contains approx. 1 million bitcoin. This is true. Satoshi’s wallet has only accumulated btc in the early days, mining ⛏️ the coins like anybody can do, and never spent any output – it is one of those few wallets appearing in the #Hodl waves with holding time > 10 years.
In his communications with the cypherpunk community, Satoshi defined any lost coin as a “donation to other bitcoin holders” as that btc supply remains inaccessible and is therefore contributing to increase the value of the other coins.
For how I see it, Satoshi’s wallet could be activated 10 or 15 years from now and could be the catalyst to drive price down 📉 from $ 1,500,000 a coin to $ 300,000 a coin.
Would this change my view on the reliability of the Bitcoin network or Bitcoin’s value proposition? NO.
I would see this as an additional gift to humanity, considering that coins available by then will only be those who are left to be mined, and Satoshi’s 1 million bitcoin could improve the distribution of coins in the world and allow many “plebs” to increase their bitcoin position. 🔅
In the end, Satoshi's anonymity and the mystery surrounding his identity serve as a testament to the decentralized and #trustless nature of Bitcoin itself. Satoshi’s wallet, whether will be activated or not, ultimately represents an opportunity for redistribution and further decentralization within the Bitcoin ecosystem.
Whether these coins remain dormant or are eventually reintroduced to market, their impact on the network's integrity and the principles of decentralization will be nil.
Bitcoin mining #trilemma ⛏
Bitcoin mining is known to be one of the most competitive industries on the planet, as working at the intersection between energy and money, two key items for the development of society, is a compelling task requiring being very strategic on the operational strategy to foster business sustainability 💹 over the long term.
Similar to blockchain’s trilemma ♻ which is based on #decentralization, #security and #scalability, where two conditions of the three can be fulfilled together but the last one ultimately resolves in not being optimised, bitcoin mining has its own trilemma.
Mining’s trilemma is based on availability of
(i) capital to deploy ,
(ii) mining machines, and
(iii) cheap source of energy.
These three conditions are key for strategic decision-making that miners need to navigate so to mine profitably and sustainably. Due to market dynamics, one condition of the three can never be optimised.
In mining, access to capital💲is a strong barrier to entry in the industry. Significant upfront costs need to be incurred by miners to get the necessary hardware, secure suitable sources of energy and cover the initial operational expenses. Once a site has been setup, capital is also required to remain competitive and being able to upgrade machines with more efficient ones, scale operations or weather market fluctuations due to changing bitcoin price or fees, the two revenue outputs from mining.
Once capital is secured, being able to acquire the right mining equipment does not come without issues. Mining machines 🖥 have complex manufacturing processes, require very specific microchips and their demand is tightly linked to bitcoin’s price – creating bottlenecks during bull runs and not finding many buyers during bear phases. Also, the obsolescence rate of mining equipment is very high and miners need to choose a balance between having more efficient machines and investing significant CapEx into them, or optimise their production by running older, less efficient machines, but at very low energy costs.
Energy is the main source of OpEx of miners🔌. Due to bitcoin fixed monetary policy and difficulty adjustment, access to the cheapest sources of energy can determine whether a miner is able to remain profitable after halving and other volatility events, or whether their OpEx are too high and lead to an unprofitable business. Finding cheap energy come with regulatory and geopolitical risks, as each country has its own specific environment concerning mining regulation, public perception of the activity and other social frictions.
Mining conditions are constantly changing within the trilemma due to market dynamics, investors’ sentiment, supply chain functioning, macroeconomics, and other factors. Bitcoin miners need to be dynamically adapting to different scenarios while growing their business, so to keep the Bitcoin network as safe and decentralized as possible.
H/t @Bob Burnett