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28 tweets,
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1/ I rarely write tweetstorms because I prefer the longform written word for topics of weight.
2/ But I haven’t had the time to sit down and write a piece on SegWit2x, so I will share my thoughts here.
3/ To cut to the punch, I believe SegWit2x is antithetical to Bitcoin. This is for ideological and economic reasons.
4/ Economically, Bitcoin would only make sense as a digital gold; scarce supply (deflationary) currencies don’t work well.
5/ This is for two reasons. a) it makes no sense to spend something today that will be worth more tomorrow.
6/ b) Historically, wealth tends to aggregate with few. We’ve seen this happen post-WWI under the gold standard.
7/ Some type of supply inflation is thus needed in order to adjust the price of national imports and exports.
8/ Traditionally, this is what central bankers would do. They do an imperfect job, but they are good people.
9/ If you work for a central bank, you’re underpaid compared to colleagues in industry.
10/ Therefore, many central bankers don’t work for the money but for the influence they have on world economies.
11/ Back to B2X and economics. Scaling Bitcoin a la B2X is forced and unnecessary for digital gold.
12/ Using bitcoin for payments requires scaling. But gold and speculatory uses don’t need high throughput (tps).
13/ Layer 2 scaling (lightning network) would theoretically give improved scaling. Strong engineers hate level 1 scaling. It’s inelegant.
14/ All scaling would do is make sending around your digital gold cheaper. It wouldn’t make people spend bitcoins.
15/ That’s because at this point people have been naturalized to view bitcoin as an asset whose price appreciates.
16/ If I were running a bitcoin business, I would give up on BTC for payments and pick another coin (which has supply inflation).
17/ Now for the ideology. I suspect this section is where most of the disagreements will flow from.
18/ In short, the logical conclusion of big blocks is miner centralization. This isn’t ideal for a few reasons.
19/ But first, a primer on public blockchains. They’re horribly inefficient. Slow. Redundant.
20/ But what they allow for is one attribute that traditional database technology doesn’t have: censorship resistance. It’s a killer app.
21/ Censorship resistance is an accidental benefit created by decentralization (DEC). Everything else about DEC is inefficient.
22/ Small blocks enable decentralization.
23/ Should the centralized mining today be threatened by governments, people could switch to mining BTC elsewhere.
24/ Big blocks would make this more difficult. Small blocks are cockroaches. They will always exist. Squash one and 20 more show up.
25/ That is why the status of Bitcoin as a censorship resistant store of value (digital gold) should not be threatened.
26/ Censorship resistant value is new. It’s innovative. It’s disruptive to government-issued value. And it can win.
27/ What people now need is a fungible digital cash. It will not be bitcoin. I would advise companies begin looking for it.
28/ This tweetstorm was written during a very stormy flight. Sweaty hands may have misspelled a few things!
