difficult adjustment
This article was published in Bitcoin Magazine. “Main Problem”. click here To get an annual Bitcoin Magazine subscription.
Click here to download a PDF of this article.
Well, here it is. Block 800,000. None of us reading this will ever see another Bitcoin block height starting with 7. We are less than a year away from another halving, awaiting the systemic impact of federal regulation and agency adoption, and standing on the precipice of the US primary election for Bitcoin. It is irreversibly inserted.
Welcome to the big leagues. Bitcoin is recognized as the most powerful brand in the world, and everyone wants some of that sweet orange action. The individuals, companies, and leaders behind Satoshi’s code have become so influential that they can no longer be ignored. As the New and Old Worlds collide, the need for serious reflection and attention to the heroic efforts that have been made thus far remains more prudent than ever. Our collective work is just beginning, and the task at hand requires collaboration and careful consideration among the decentralized stakeholders that will shape the future Bitcoin economy.
No, Bitcoiners cannot afford to sit by the river waiting for the corpses of their enemies to float away. You will need to build a suitable raft. A solution that accommodates all users in a way that outperforms legacy alternatives. An incorruptible monetary policy that is “set in stone” by design does not guarantee complacency. Bitcoin may be resistant to change, but the way we interact with change will evolve based on the lessons of the past decade. In reality, maintaining the integrity of a system requires innovation and iteration, not stagnation.
We are antifragile
Bitcoin has successfully aligned incentives on a scale previously thought impossible, but its aspirations can only be realized by the actions of its custodians. There is no pre-mining. There is no tokenized mechanism to create capital from nothing. Although this is just one of the fundamental differences from our market competitors, it is perhaps the most meaningful principle to consider when assessing the challenges ahead. There is no marketing team and there is no foundation. The process is not determined by venture capitalists or corporate interests.
The next wave of Bitcoin will likely be pushed out rather than pulled in when the financial platforms, currencies and services they currently use fail to meet their practical needs. If an entire country’s banking system collapsed overnight, existing alternatives would fall short of the expectations and ideals we set for ourselves. Even with all the reason and force in the world to go full orange pill, they would have to compromise on the vaunted sovereign property we got to enjoy as early adopters.
There are reasons to be concerned about change, but despite the growing pains, Bitcoin investors have proven that they have the ability to come together and define our destiny. We navigated an existential crisis when it seemed the most unlikely. We devoted years of focus, research, and resources to the Lightning Network, a task that seemed impossible. Despite the increasing distractions and noise, we remained undeterred and continued to work on solving difficult problems. Because the easy way out is not an option. In the midst of the crater left by cryptocurrencies’ recent massive increase and capital destruction cycle, we stand tall, proud and optimistic. We are antifragile.
As Bitcoin matures, we can apply that experience to our journey and leverage it to inspire a new generation of Bitcoin users with greater responsibility and maturity. We must remain a ragtag group of hackers, cypherpunks and entrepreneurs. However, there are opportunities to adapt to evolving market realities to increase the results of our efforts and resources.
Thankfully, five years of research by dedicated developers and engineers is finally coming to fruition. Science projects no longer exist, and numerous primitive and versatile technologies are coming to market and can open up new design spaces for products and applications. This is a timely addition that will provide a better experience for onboarding and using Bitcoin.
The pressure for change is truly relentless and will come from all sides. Agents of chaos will try to leverage this energy to counter Bitcoin. The only solution is to focus on building carefully and shipping carefully. The scale of the infrastructure challenge before us is daunting, but it is absolutely necessary. In fact, there is more that can be squeezed out of Bitcoin than has been proposed for a long time, including wallets, contracts, and transactions. The entire Bitcoin stack is about to be upgraded again in a major way.
The benefits of expanding the scope of our toolkit are self-evident. To achieve this, we can help galvanize these efforts by raising awareness of the exciting innovations knocking on Bitcoin’s door. Herein lies the challenge inherent in any globally decentralized project. How do we aggregate this information and improve discoverability for contributors? How do we make this knowledge accessible to stakeholders?
Bitcoin discourse remains challenging, fragmented, and often troubled. Even though we’ve created a huge amount of content over the past decade, they still remain scattered across the internet and uncategorized anywhere. Maintaining Bitcoin references requires a huge amount of effort and few people dare to take on this task.
Despite our monthly roadshows, we are burdened with the relative impossibility of coordinating outside the conference hall. Developers sometimes send smoke signals through their mailing lists, but who can realistically follow them if they aren’t yet well-versed in the dark arts of protocol development? Twitter is a cacophony of ideas that are quickly abandoned in favor of “something new.”
Bitcoin has Attention Deficit Disorder.
Perhaps paradoxically, Lightning has fared better in this context and has shown remarkable results in attracting new types of contributors. The abundance of resources and the focus of diverse projects have given rise to new groups of hackers who can build around those resources. This energy and commitment should permeate other areas of Bitcoin as well. We are at a tipping point and application developers will be excited about Layer 1 and other off-chain protocols.
Some have already caught this tidal shift and are actively charging towards the incoming waves. Being 10 steps ahead of everyone else, they have been busy preparing the next chapter of programmable money. They are educators and leaders who help create an early architectural culture and coordinate everyone involved. Promising areas of innovation are spreading across physical and digital spaces. Their drive is palpable and deserves more attention.
Champions must continue to emerge and collaborate to amplify these growth signals. Ideas must be distilled into practical user stories. We have the opportunity to convey a cohesive picture shaped by collective will. We have more talent and resources than ever to achieve this. A new guard of contributors to the industry has emerged with refreshing energy and optimism. By highlighting their work and fostering conversation, we can give them the exposure they need for the rest of the ecosystem to rally around them.
Meaning, not a meme
A new frontier is at hand, where wallet designers can leverage standardized practices to implement spending policies that help users secure their Bitcoin across space and time. Utilizing multi-signatures and timed output will become common practice. No longer limited to power users, all wallets should support a variety of templates that can provide greater confidence in the management of your assets.
The prospect of smart Bitcoin vaults could open up a new responsive dimension to wallet security. Lost or corrupted keys will no longer be the complete disaster that has plagued us since the inception of Bitcoin. Users have the opportunity to recover funds at risk even “in flight”, improving the self-management experience for new users as well as the most experienced users. Meanwhile, innovative signature protocols are paving the way for large organizations to leverage Bitcoin’s unique properties in an efficient and privacy-preserving manner.
Our contextual security framework allows us to safely and reliably engage third parties by limiting their ability to spend or transfer specified balances. Joint storage is possible without infringing on the user’s sovereignty. A new class of services will emerge that will allow Bitcoiners to work with designated entities to improve onboarding and ultimately completely redefine the managed services market.
Commitments allow us to enhance the above features and potentially scale for the next billion users. With proper consideration, the covenant could also usher in a new era of innovation for Bitcoin Script. Multi-party protocols can open up a whole new design space for sovereign ownership and private transfer of large UTXOs. Outputs nested in the Taproot tree power Lightning, allowing it to scale into the connective tissue of this new infrastructure.
Smart contracts have arrived. While some may legitimately challenge this notion, arguing that Bitcoin operations, and Lightning in particular, have always been a function of smart contracts, the emergence of DLC products presents the strongest case to date. Options, derivatives, non-custodial trading, and lending will be the foundation for the next generation of Bitcoin-based financial products. Decentralized markets and order books based on Nostr and using new Web of Trust primitives can thrive as a viable alternative to KYC fiat offerings.
Bitcoin is entering its most formative period to date. Now is the time for us to get our act together and grow from the youth fights of the past. Most of the elders left the ship. Satoshi is long gone. Users must step forward and accept the responsibility given to us. I would argue that we have much more in common than we have apart.
Narratives will continue to stir pots and divide opinions, but together we can find common ground. Work together, not against each other. All too often we are guilty of looking at our navels. Bitcoin’s history is already filled with disenfranchised gladiators and exhausted champions. There should be no civil war when barbarians are at the door.
Bitcoin is not a bloodsport. It is a game of extreme personal responsibility. But when applied properly, it benefits everyone on board. Only by aligning individual incentives can we achieve the future we want to see. Rough consensus and executable code. It’s not the meme, it’s the meaning.
The network should be of practical use to everyone. Otherwise, you risk becoming practically useless to everyone. We all have a responsibility to keep the protocol as permissionless and serviceable as when we discovered it. Reject indifference and embrace agency.
This article was published in Bitcoin Magazine. “Main Problem”. click here To get an annual Bitcoin Magazine subscription.
Click here to download a PDF of this article.
