The Astonishing Bitcoin Resilience
It is difficult to think of anything else in living memory that has gone through so much stress testing, so many attempts to break it, to stop it, and even to delay it, and yet bitcoin not only has kept on, it has thrived.
There appears to be a certain quality. Perhaps you can call it a strong conviction, a movement, the will, people’s power, or just an unshakable belief, an idea.
Best clarity perhaps can be reached by calling it being self evident. An insight that doesn’t cross one’s mind, but once expressed, is obvious.
Such obviousness, however, was not immediately apparent. It is therefore more correct to say the phenomenon is freedom.
Most techies were probably introduced to bitcoin in 2011. They were debating whether it makes sense. The terms of debate appeared to be Yes or No, with little in between. A hack of the MT Gox exchange led to pretty much all techies deciding bitcoin doesn’t work.
The case was closed and the currency was to enter no history book, no footnote, but the dust of internet pages.
It didn’t because it kept running. Some nodes were still on somewhere in the world. Some still believed. They were free to keep on running it. So others at the edges of society started looking. Is this a solution?
Students and much of the millennial generation was probably introduced to bitcoin in 2013, but for this resilience story, we’ll go to 2015 when the scalability debate begun.
A tradeoff had to be made between costs and benefits. Some prominent developers were of the view that the costs to run the network should be increased to allow for greater benefits, such as accessible and cheap transactions.
Others were of the view that costs should be kept minimal as the above stated benefits can be provided by enhancing the technology through moving the tradeoff to a layer that runs on top of bitcoin.
Again, the question here was Yes or No. The above arguments therefore devolved into a Yes campaign and a No campaign. As with any campaign, there were broad views within both, turned into soundbites.
What is interesting here, from a resilience perspective, is not the debate which was needed to reach clarity, but that the majority pretty much ignored it.
The way it was resolved is also interesting and effectively proved bitcoin’s proposition as free money not quite controlled by anyone.
It is that forking which also made it clear why costs have to be kept low. Those few nodes running in 2011 would have probably been shut off had costs been high, and with that, there would have been no article examining its resilience.
Nor do we know whether there would have been a fork had costs been high. Keeping them low while scaling is now the challenge.
Until this point, bitcoin is being laughed at by the older generation in power. Now, however, they’re taking it seriously and, it can be argued, they launched a regulatory attack.
A power struggle of sorts between the elected and bankers has arguably been going on since the second half of 2017.
It started with China’s central bank exercising jurisdiction over money by shutting down crypto exchanges in September 2017.
They have no elected there. The elite just allowed them to do so, in the process turning a generation against the continued tech transfer to China, with calls now rising to bring tech manufacturing home as Trump largely finds support in his trade negotiations both on the left and the right.
The most clear glimpse of this power struggle was when Putin asked the Russian central bank to stand down over a proposed crypto ban.
We move to CFTC’s fiat settled futures. This is a regulatory attack in as far as they still haven’t allowed bitcoin settled futures. In addition, it is quite astonishing they have not allowed any exchange to offer regulated margins. It seems Bitfinex is the only one that does offer such margins, but in an unregulated way.
SEC’s regulatory attack on this space is of course known to all. The chairman happens to be an elite bankers lawyer. His wife works for Goldman Sachs.
In South Korea they came close to a significant regulatory attack, but they fell short of it. As a democracy, people exercised their rights to petition and all the rest. The elected gained the upper hand.
In India, it remains to be seen, but so far the central bank has prevailed. In Europe, the elected have won by far.
The above is somewhat of a simplification, but it lays clearly where bitcoin’s resilience comes from. Different people have different views, as do different countries. They have different interests too.
Bitcoin’s global nature, therefore, combined with inherent decentralization, and the freedom it provides to use it or not, makes it arguably an unstoppable force.
It’s unclear what else is left to try except for rounding up all coders. Even then it would be in just one country and bitcoin can run fine on current code. Just one node is needed in the entire world.
So bitcoin arguably won. It runs. It works. Its resilient. It withstood all tests so far. This is now global infrastructure.
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OhNoCrypto via http://bit.ly/2FUbkJa @Trustnodes, @Khareem Sudlow