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Exploring Bitcoin's Core Values and Its Justifications (Part 1)

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The Boundaries of the Bitcoin Community Vision

Original title: "Exploring the Core Value of Bitcoin and Its Justifications (Part 1)"

Original Source: Ethereum Enthusiast

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Nic Carter wrote an article titled "Bitcoin's Survival Crisis" article mentioned the inherent positioning problem of Bitcoin. Because no one has the authority to establish a position for a decentralized system, this position also relies on an intersubjective consensus on a set of core values.

You can think of these core values as the minimum commonalities between all Bitcoin holders. I have attempted to define this formally in Unpacking Bitcoin’s Social Contract standard (Chinese translation), however, it should be noted that this Experimentation is necessarily highly subjective, and what I'm chasing is an ever-evolving goal.

When people disagree about what Bitcoin is and what it should be, it can have two different effects on the real world. On the one hand, there is an unwritten rule that the Bitcoin protocol is only updated when the vast majority of important stakeholders agree on a proposal. If there is no consensus on the basic principles, no significant proposal will win the support of enough interested parties. We call this “protocol ossification,” and the vast majority of stakeholders don’t seem to care about it because (1) Bitcoin doesn’t require drastic changes, and (2) this resistance to change is seen as A valuable characteristic that distinguishes Bitcoin from traditional centralized systems.

However, another risk is that there may be some external events that require changes in Bitcoin, such as external attacks or vulnerabilities in the Bitcoin system, Or lack of market support. In this case, when antagonisms arise within the community, that same governance impasse can quickly turn into an existential crisis.

Although mutually exclusive narratives can coexist for a period of time, they will eventually reach a level of irreconcilability. For example, the disagreement within the Bitcoin community on whether the purpose of Bitcoin should be to "reduce payment costs" or "serve as a store of value", and the disagreement within the Ethereum community on "code is law" and "social consensus is law" . The reasons given by both sides are very convincing, because there is no middle party to determine the final winner. The only way to resolve disagreements is through ambiguous social consensus and market signals, and in some cases, towards permanent community splits.

Perhaps the biggest question today is how to solve the incentive problems that may arise due to the reduction of block rewards and the increasing regulation of the blockchain. In the stronger case, how to protect the privacy of Bitcoin. Nic and I tried to discuss the visions of bitcoin in " explains these and other potential narrative conflicts.

As Nic puts it, "systems with higher internal consistency and values that are more widely shared are more likely to survive." That is, optimal A social contract satisfies two conditions:

(1) There are few rules (to allow as many people as possible to join).

(2) Even if there is a problem with the software, users will never leave.

In today's article, I want to explore Bitcoin in terms of its core values, the logical angles that may trigger narrative conflicts, and the impact of these on the future of Bitcoin The vision boundary of the community.

Questionnaire

In order to explore this issue, I conducted a simple questionnaire , asking my Twitter followers what they think are the core values of Bitcoin. I'm asking the question from the negative side - what changes or events would make them think bitcoin is meaningless? The subtext here is that users will eventually sell their coins and leave the Bitcoin project.

All questions revolve around 5 levels of themes:

Censorship resistance;< /p>

Intermediation

Inflation

Settlement Security

Means vs. Ends (see below.)

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Censorship Resistance

- If you are a minority party in the crowd, subject to protocol scrutiny when using bitcoin, do you think bitcoin is still bitcoin? -

- If most users (but not You) are subject to protocol censorship when using Bitcoin, so do you think Bitcoin is still Bitcoin? -

The first survey topic is about censorship resistance, one of the core values in the Bitcoin social contract. The results of the survey were exactly as expected: People valued censorship resistance, both from their own perspective and from the perspective of others, to the point that it seemed irrational to outsiders. After all, people don’t stop using PayPal because it refuses to serve legitimate arms dealers and political dissidents, or stop using Twitter because it censors conservative media or politicians.

This only shows that Bitcoin actually has a social contract. Compared to other systems, if the Bitcoin system introduces censorship, people will feel more violated, even if it does not affect them personally.

It is true that the design of Bitcoin makes it very uninteresting to censor, because if you don't package someone's transaction, someone else will. The latter earns more transaction fees in the long run. This is the case, and unless a miner (or coalition) controls more than 50% of the computing power, non-compliant blocks can be ignored without risk. If an attacker can deter other miners from building transactions from addresses on a public blacklist, this can be achieved without controlling 50% of the computing power. [See "feather forking"].

Whether users have strongly stated that they will not accept others being censored, whether this counter threat can make it unprofitable for miners participating in the feather fork, Very important. This also disproves a popular view that only transaction fees, not block subsidies, can protect Bitcoin from censorship, because attackers will not be able to build a chain with non-censoring participants, and will lose themselves share.

Intermediary

If people need to be censored when using Bitcoin, the only possible options are the following two There are two review methods: 1) review by miners at the consensus level; 2) review by trusted intermediaries at the application level.

Generally speaking, Bitcoin can avoid the Third party (Chinese translation), but this is limited to the case where the user directly interacts with Bitcoin. If most activity goes through trusted third parties, we’ll see trustless assets wrapped in trust mechanisms that ultimately fail like the gold standard. As for why middle parties pose a great threat to Bitcoin, see 《Why Bitcoin Standard will drive bitcoin to its demise".

- If Bitcoin's Layer 1 and trustless Type Layer 2 is too expensive for you to use and can only be accessed through the interface provided by traditional banks. Do you think Bitcoin is still Bitcoin? -

Given that Bitcoin holders often point out the shortcomings of gold, I would have thought that their tolerance for Bitcoin introducing a middle party would be low. However, I am amazed that so many people can accept it. Perhaps these people are just very pragmatic, because the low-level and upper-level transactions that Bitcoin can support are really limited, high transaction fees will dissuade most small users and transactions, and most people may not feel that they can afford it.

Nevertheless, there are good reasons why people are overly concerned about introducing an intermediary to Bitcoin, and why Bitcoin will outperform gold. This is because of the unique advantages of Bitcoin: Bitcoin is a digital bearer asset, and anyone in the world can create a new Bitcoin bank without complying with local regulatory rules. Furthermore, intermediaries can be trusted because there is greater competition among them, which is more beneficial to users than the current system, which is protected by regulation. Since Bitcoin is so easy to transfer, users can easily switch to different intermediaries, thus reducing exit costs.

Although Bitcoin users are generally skeptical of other non-Bitcoin blockchains, they prefer the blockchain to the black box of traditional banking. The advantages of the chain in terms of transparency and effectiveness.

- If 50% of the total Bitcoin supply They are all tokenized on other public chains, so do you think Bitcoin is still Bitcoin? -

- If 90% of the total supply of Bitcoin is tokenized on other public chains, do you think Bitcoin is still Bitcoin? -

I think this trend is likely to continue as we will see a variety of different trust models in the future , from completely trustless (TBTC), computing power guarantee (Drivechain), alliance guarantee (Liquid), to single custodian guarantee (BitGo), etc.

Inflation

The easiest way to stimulate Bitcoin users on Twitter The method is to raise inflation despite all warnings. So I thought the aversion to inflation would show up in the survey results, but the results were surprising.

My first question is about "unexpected inflation"...

- If the supply of bitcoins increases by 1 million due to a bug, and there is no clear way to roll back (e.g. because there is no Vulnerabilities found immediately), so do you think Bitcoin is still Bitcoin? -

- If a bug increases the supply of bitcoins by 1000, and there is no clear way to roll back (eg, because the bug wasn't discovered immediately), do you think bitcoin is still bitcoin? -

The next question is about "deliberate inflation". This measure is usually used to subsidize miners through additional issuance when Layer 1 transaction fee income is insufficient.

- If Bitcoin is permanently issued by 0.1% , do you think bitcoin is still bitcoin? -

From the survey results, many people can accept "unexpected inflation", even if the number of unexpected inflation is large (total supply increased by 1 million), But the tolerance for "deliberate inflation" is lower.

This is something we need to discuss further, as it may seem unreasonable at first glance. If the inflation rate is 0.1%, it will take 48 years to mine the same amount (1 million) of bitcoins. However, more people are more willing to accept a one-time increase of 1 million bitcoins than a slow increase of 1 million bitcoins. Even though chronic inflation is safer for Bitcoin, accidental inflation poses a greater risk!

We know that many Bitcoin users place great value on scarcity and Bitcoin's 21 million issuance cap, but they are also pragmatic. If it was a bug that led to the creation of additional Bitcoins, then the damage has already been done, and (assuming the bug is fixed) does not necessarily lead to an increased probability of an inflation bug. If we were intentionally inflationary, it would feel more like a betrayal of core values than an accidental mistake.

One thing that often annoys me is that people pay more attention to issuance than devaluation. The former refers to an increase in the supply of Bitcoin, and the latter refers to a decrease in the purchasing power of Bitcoin. This concept is very short-sighted, because additional issuance ignores the other half of the market - the demand side!

Let's do a very simple thought experiment. Assuming additional issuance is the only point that needs to be optimized, we can modify the protocol to stop issuing bitcoins starting tomorrow. However, in addition to restricting additional issuance, the purpose of Satoshi Nakamoto's issuance plan is (1) to allow more people to have the opportunity to purchase and mine Bitcoin, and (2) to reward miners until the block space market matures.

As far as it is concerned, Bitcoin without block subsidies is not safe, which will lead to a decline in the price of Bitcoin. It can be seen from this that additional issuance is beneficial to the price and purchasing power of Bitcoin. It just depends on the sustainability and long-term predictability of the market value.

Nic is on the opposite side of me on this point. He believes that the social contract should be as simple and consistent as possible. "We should optimize the price of Bitcoin" is the opinion of most people, but this is more abstract and subjective than "We should avoid additional Bitcoin issuance". Therefore, the best practice is actually to limit additional issuance, rather than limit depreciation, because the former is more objective and easy to verify.

Settlement Security

Bitcoin settlement security is a topic that I am very interested in. Partly because I have debated this topic with the Bitcoin community, and partly because unlike inflation or censorship, settlement security is something every Bitcoin trader experiences directly.

- If the time required to achieve finality Too long, do you think bitcoin is still bitcoin? (e.g. medium sized transactions take 1-2 days to achieve finality) -

More than half of the respondents believe that Bitcoin, which takes several days to settle will no longer work. In my opinion, the results of this survey refute the current mainstream view that it does not matter whether miners are rewarded high or low, users just need to wait for more blocks to be confirmed (by Nick Szabo et al.). This view ignores that Bitcoin is in a highly competitive currency market, and while Bitcoin can sacrifice efficiency for scarcity and censorship resistance, there are limits to this sacrifice.

Nevertheless, more people chose "show results" on this question than on other questions, indicating that they were very unsure.

-if some users (most transactions All) are subject to accidental double-spend attacks, so do you think Bitcoin is still Bitcoin? -

On the issue of double-spend attacks, the number of pros and cons is equal, which is justifiable in a system where property rights are paramount. However, if we think about it deeply, double spending is similar to bouncing a check or reversing a credit card transaction. If some people were able to reverse credit card transactions, would this render the entire system meaningless? Especially considering that users themselves will not be affected, only exchanges and large sellers will suffer losses.

Perhaps the same logic applies to censorship resistance. Unlike credit cards, Bitcoin transactions are subject to finality, so any malicious action is more like an attack on the entire network.

Nevertheless, the other half of the respondents would continue to use Bitcoin when there was an occasional double spend attack, which I think is a healthier attitude. If Bitcoin users want to obtain absolute security, this means

1. If accidental double-spend attacks cannot be tolerated, Bitcoin users need to bear more high security costs. As the block space market develops, this view will eventually conflict with the "no inflation" view. In this case, one of them would have to be sacrificed, potentially splitting the community. If we want to avoid this situation, sometimes the standard can be relaxed appropriately, and "the lesser of two evils" is more conducive to long-term development.

2. Users must be prepared to reject further reorganization through social collaboration. To do this effectively, processes and hierarchies must be introduced, but this reduces the social scalability of the system.

Overall, I think users' preferences for fast and reliable settlement and their preference for protection against inflation are the most likely (not absolute) conflicts.

Means vs Purpose

At the end of the questionnaire, I would like to randomly propose a few Issues that have nothing to do with the core values of the coin. My goal is to see if people can tell the difference between ends (the goals we set for the Bitcoin system) and means (the mechanisms used to achieve the system).

- If there is no workload consensus mechanism, So do you think bitcoin is still bitcoin? -

This is probably the most shocking part of the entire questionnaire, in favor of the idea that "Bitcoin should have a fixed supply" The PoW mechanism must be implemented." There are more people who hold this view. As I have repeatedly said before, I see Bitcoin as a set of goals and shared rules (a social contract) that is automated by software. In 2008, Satoshi Nakamoto proposed that PoW is the key to solving this problem. However, this does not mean that PoW itself is one of Bitcoin's goals or core values.

- Source:< a href="https://uncommoncore.co/unpacking-bitcoins-social-contract/">Unpacking Bitcoin』s Social Contract -

< p>Actually, PoW is a mechanism designed to achieve the following two goals:

1. Trust-free distributed timestamping of transactions—— ;Decentralized Clock (Chinese translation) pass

2. Realize bitcoin distribution in a safe and trustless way< I would not Opposed to replace this mechanism. However, more than any other community, the Bitcoin community's stance on the PoW mechanism is very firm, because as more and more PoS networks are launched, Bitcoin users are determined to "not give an inch."

One thing to clarify here is that I don't think Bitcoin needs to be afraid of PoS tokens at all. However, the arguments in favor of PoS (greener, no threat from China, attackers can be identified and punished) have high narrative value, plus I think most Bitcoin holders have concerns at least subconsciously.

- if there is no 2.3 MB block Size limit, so do you think bitcoin is still bitcoin? -

- if there is no whole Bitcoin Core development Team, do you think Bitcoin is still Bitcoin? -

As for the other two questions, the results of the survey are as I expected. Respondents believe that the current block size limit or the current core development team are not "means" per se, but the result of means used to implement Bitcoin's core values.

For example, the block size cap is designed to ensure that Bitcoin full nodes can afford the cost, because full nodes need to verify the history of the entire blockchain, and communicate with All newly mined blocks are kept in sync. Additionally, the block size cap ensures scarcity of block space when the block subsidy is exhausted. In this way, the transaction demand from users will bring sufficient transaction fee income for miners.