This is my first dedicated Steem post, of the topic we are all thinking about at the least, and deathly terrified of at the worst. Which is, whether the August 1st BIP 148 "flag date" will end with a positive or negative solution to the Bitcoin scaling debate, for both the short and long-term.
As an 18-month Bitcoin veteran - or more appropriately, four years, given that I lost exactly one Bitcoin to Mt. Gox - I, like all Bitcoin holders, have been through a tremendous amount of stress. As if the Bitfinex hack (August); Chinese regulation scares (January and February); Bitcoin Unlimited (March); and now Bitmain scares weren't enough, we've had to endure nearly daily Bitcoin crashes - some accompanied by FUD; and others, plain old price plunges - as each successive plunge brings about fears that someone knows something, about how and/or why Bitcoin is about to crash.
As for the seemingly unending scaling debate, there have been MANY scares thus far. However, even the March Bitcoin Unlimited saga - which was pretty darn scary - pales in comparison to this. As this time around, there is a DEADLINE DATE for the s--t to hit the fan. As I see it, both sides feel VERY strongly about their respective views - with one, Bitmain, potentially, in my view, "partnering" with the Chinese government, which may or may not desire to Bitcoin to survive; let alone, thrive. Yes, I know it sounds far-fetched. However, as a Spock-like "logician," it's difficult to discount the possibility entirely.
That said, the most likely scenario is that no external forces to the Bitcoin community are involved. And thus, it is indeed a battle between "the 99%" - i.e, Bitcoin users, merchants, service providers, and hoddlers; and the "1%" - large miners like Bitmain - to get what they want. Which may or may not be significantly divergent, although we'll probably never know Bitmain's true intention.
The way I see it, the reason Bitcoin Unlimited failed - as well as all prior attempts to fork, or otherwise contentiously change Bitcoin's protocols - is because the economic majority didn't desire it; as proven in spades, by the fact that all such attempts - particularly related to HARD forks - have caused not just price declines, but freefall plunges accompanied by maximum FUD, regarding whether Bitcoin itself will survive. In the big picture, the status quo ended up being suitable to everyone - from hoddlers enjoying the rising price, to Bitmain - who loves not only the "higher fees," but the ASICS boost advantage it likely utilizes. Thus, just three months after the great BU scare, the price had nearly tripled - from a then all-time high of $1,260 the evening Roger Ver's plans were revealed, to $3,000 - and higher in select overseas markets. In fact, an unprecedented sector explosion ignited - even compared to the dotcom boom - in a coming out moment for the entire crypto-currency space.
But of course, it was far from over - as whether or not scaling is "needed" - or more accurately, needed NOW - there is simply no way to avoid the issue. And now that the altcoin explosion has created maximum FUD about Bitcoin's loss of market share, particularly to Ethereum, the inevitability of it being addressed morphed to imminent. For the record, I view it to be patently ridiculous to say Bitcoin has "lost market share," given that aside from Ethereum, few altcoins have done anything useful, if at all. As for Ethereum, whether or not it wildly succeeds or spectacularly fails, there's plenty of room for multiple winners in the crypto space - particularly if my theory that it will be the future of money is correct. And if "success" is measured by market cap, it's even more ridiculous, given that most altcoin "market caps" are fabrications even the U.S. Bureau of Labor Statistics - which creates the fraudulent monthly "jobs report" - would mock. Truth be told, only Ethereum has made any significant headway into Bitcoin's market cap dominance - unless Ripple, which most crypto experts refuse to consider a true crypto-currency, is considered.
In my view, it was the explosion of Ethereum's market cap to nearly that of Bitcoin, that brought the scaling debate back to light so quickly. As clearly, fears that a "flippening" was imminent, brought to light the fears that SOMETHING had to be done quickly, lest Bitcoin would lose its first mover advantage, and be relegated to the status of crypto-currency buggy whip. Sillier words could not be spoken, but with the media trumpeting this "certainty" on a daily basis; particularly those with an incentive to attack Bitcoin's credibility; it became very difficult to drown this possibility out.
Frankly, I think Bitcoin's best use case - which is achieved, will dramatically strengthen the entire crypto-currency market's ability to evolve - is the immutable, rapidly increasing storage of value property it that is increasing with each passing day - particularly in a Ponzi-esque monetary world of hyperinflationary money printing. Which, as the Marketing Director of Miles Franklin, one of the nation's oldest, most trusted Precious Metal bullion dealers, is the focal point not only of my daily, free blog (found at milesfranklin.com), but my personal investment thesis. Thus, if Bitcoin NEVER scaled one iota - and thus, became "digital gold," with "high fees" but a skyrocketing price, it would be the most successful innovation of our lifetime, on a par with the internet itself.
More importantly, as Andreas puts it, Ethereum's and Bitcoin's use cases are generally speaking, lions versus sharks; or in layman's terms, apples and oranges. And given that, in my view, Bitcoin's biggest strength is its time tested, immutable blockchain - which consequently, has actually given it monetary properties in less than a decade of existence - considering Ethereum a "competitor" is an even bigger joke, considering its hyperinflationary "monetary policy," and history of egregious hacks and hard forks.
Which brings us to where we are today - starting with the BIP 148 "user activated soft fork," that to this day, I still have no idea how it came into existence. I mean, if the core developers didn't "mandate" its activation on August 1st; nor did the miners, or anyone else I am aware of; then WHO made it a mandatory action? Not that it might not occur anyway, but frankly, I blame BIP 148 for the developing "civil war" - or perhaps, complete non-event it might become - far more than Bitmain. As if there's one thing that's certain, it's that the average Bitcoin holder could care less how fast it scales - so long as the aforementioned immutability is preserved.
Frankly, to believe Bitcoin will not only be the world's best store of value, AND the transactional money of the future, is as wild, and bold, of a belief as I can imagine. As not only are both use cases extremely complex, but the level of competition will be incredibly fierce. That said, it already has a gargantuan, likely insurmountable lead in the former category - as opposed to the latter, which will likely be fought to the death by dozens, if not hundreds of companies. This is why it is so important to protect immutability - as trust me, in a world utterly decimated by fiat money - for centuries, no less - the ability to store value in an easily transportable asset (i.e., over the internet); particularly, one accessible to the billions of people who will never come across a gold or silver coin - is as valuable as water in a desert.
As for the scaling saga itself, I have read and listened to much commentary already, and will continue to do so with each new development. However, what appears most likely, in my view, is that somehow, someway, an "agreement" will be forged - not by a handful of industry leaders, but by the will of the majority. Which will occur - likely, without anyone being forced to "save face," because the destruction of Bitcoin's immutability is in NO ONE's best interest. Which, I might add, may well involve no change to the status quo- which is fine with me - although most believe there will be material protocol changes, like the adaptation of SegWit we all KNOW is in everyone's best interest - ASICS Boost notwithstanding. This, and the remarkable resilience the price has demonstrated in the wake of Bitmain's announcement - down 17% (from $2,750) at the low, and 10% as I write; compared to the Bitcoin Unlimited FUD plunge, of 30% from $1,250 - is why I haven't even entertained selling. And why, with each passing day of price strength, I believe the worst case will be avoided - somehow, some way.
Last but not least, I wanted to add one final opinion, that I'm sure few people share. Which is, that even if a chain split were to occur, it doesn't necessarily mean Bitcoin is destroyed. And frankly, as is starting to appear the case with Ethereum - whether purposely or not - it could well be the best solution. The reason being, that if the goals of immutability - via a single "value storage" blockchain - and infinite scaling are truly not compatible, perhaps a split into "Bitcoin Gold" and "Bitcoin Scale" could solve all these issues. The former of which, will be conservatively developed by Bitcoin Core, with the sole, stated goal if maintaining security and immutabilty; and the latter, by industry "leaders" like Bitmain, to experiment as they wish with their visions of infinite scaling. Heck, as a current Bitcoin holder, I'd have "shares" of both chains - enabling me to participate in the storage of value chain I care most about, with the "option" to profit if the infinite scaling chain works.
By the way, I was thinking about this for the past few days - but it wasn't until I read this fantastic analysis of the situation, by Giacomo Zucco, that my thoughts on the matter truly gelled; regarding both my views of Bitcoin's future, and the increased likelihood that the worst-case scenario, whatever that might be, will be avoided.
https://cryptoinsider.com/split-thoughts-bip148-uasf-segwit-bitcoin-life-universe-everything/
And finally, what Bitcoin commentary would be complete without the sage words of Andreas; who, in this must watch video, "scaling is a moving target," put it all into perspective - with knowledge, and insight, of how things will likely play out over the long-term. Which is to say, very well.
I always enjoy Andy and Andreas....two interesting views for suite. For what its worth, Clif High says this issue shall pass and all will be fine. We will see!
Hi andy, welcome to steemit. I am following
Enjoyed your thoughts on this. I'm completely out of BTC, and will remain so until things sort themselves out. But even if the best scenario plays out, I just don't see altcoins taking a backseat any longer.
Great post. Not sure if youve heard this news about, just recently a guy named Barry Silbert who is the Founder & CEO of Digital Currency Group (DCG) and who was one of the first and most active investors in the bitcoin space, providing seed funding for Coinbase, Ripple, BitPay, and a number of other companies who have gone on to define the industry, he coordinated a solution to Bitcoins scaling issues called SEGWIT-2x. This solution would satisfy both sides by Activating the SEGWIT and increasing the block size to 2mb blocks. He coordinated this SEGWIT-2x solution just before the consensus 2017 and he got 80% of the Hash Power Miners around the world to sign for it! Heres a interview about this - hope you like -
Life itself just forces changes. What was acceptable a few months ago is no longer. I have to agree with Tone Vays who also changed his mind on leaving Bitcoin alone or not. It has to scale with Segwit, end of story. If Bitcoin stagnates then two things will happen; the centralization of the mining will escalate and the core developers, seeing no hope in innovating Bitcoin will leave to work on other open minded platforms. Who needs brilliant computer scientists and coders to just maintain Bitcoin. Just like we know nothing of the anonymous Satoshi Nakomoto, we know nothing of the anonymous shaolinfry who is the author of BIP148 (Could Satoshi have just made his second brilliant anonymous appearance). I consider this act impeccably timely. The forces who stubbornly and purposely are thwarting the adoption of segwit are some of the miners, particularly Bitmain. We had to put a stop to this and force the issue. This stagnation had to stop and the users demanded action. So by forcing the issue and setting a deadline to focus everyone's attention to it, very positive events are starting to play out. Bitmain has been utterly exposed in their recent plans to hard fork into basically a Chinacoin, Bitmain coin, Jihan Coin, etc. after Aug. 1 and now more and more exchanges, wallets and merchants are demanding, if not BIP148, then BIP91 and as a backup segit2x. It's all very technical differentiating between all of the BIP's but in a nutshell none of these hectic emergency gathering of forces to activate segwit before Aug. 1 would never have happened if it wasn't for the deadline of Aug.1. This trend is very positive and will isolate characters such as Jihan Wu and Roger Ver. If not for BIP148 then the negative forces would continue ad infinitum to delay and stall segwit.
Andy it's no mystery how BIP148 and User Activated Soft Fork came about. BIP148 was proposed to the Bitcoin community via various channels and the code was uploaded onto Github. The Bitcoin users, who run the thousands of nodes, ate it up eventually and this powerful grassroots of users inserted it into their bitcoin core nodes. Remember that the miners get the rewards for mining and securing coins but the nodes have to approve everything. When Segwit gets activated even though Barry Silbert will get the credit for "saving" Bitcoin it will actually be the thousands of users/node operators who will be unsung heroes for if it wasn't for BIP148 and UASF this would have never happened. After segwit gets activated (not if but when) we will call this sequel "The Return of the Users".
Andreas has also mentioned that ethereum will have a much greater scaling challenge than bitcoin.
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Bitcoin will be fine.
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