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Bitcoin without Nakamoto vs Bitcoin Cash – A possible future

The bitcoin situation – core’s small blocks & lightening network plan – makes me sad, but long-term hopeful. Here’s a possible future.

BTC stays around for the medium term and continues to appreciate in value. The ongoing influx of institutional money and legitimisation from highly visible investors looks set to continue, and will help to secure that outcome. The lightening network is eventually implemented. Fast, low fee transactions are possible again. Adoption continues to increase.

But thanks to the deliberate small-block policy, Censorship resistant transactions (ie. on-chain transactions) are now prohibitively expensive. Only large financial establishments are able to transact that way profitably. Everyone else using bitcoin – the little guy – is economically compelled to transact through a lightening hub liquidity provider – a trusted party, a financial middle man.

So BTC continues to grow in this way, with the support of old world money institutions, and governments – lightening hubs will be regulated as providers of financial services – and therefore enmeshed in the dreary game of statist politics.

In my view it will have effectively been co-opted at this point, EstablishmentMoney 2.0. De-facto centralisation, and a million miles from the crypto-anarchist vision that bitcoin owes its genesis to.

The silver lining: While this is happening, alternative crypto currencies (perhaps BCH, perhaps something else) will continue doing their thing, gaining new users on net. And offering something that BTC will be increasingly unable to provide in practice – censorship-resistant, trustless internet money.

As BTC sees increasing use in the world, these better cryptos will look less and less alien to joe/jill public.

So you mean you use it just like bitcoin, but no one can spy on my activity or decline my transactions?

That’s a dramatically lower barrier to adoption than Nakamoto Bitcoin had to overcome to find its foothold. Next time round the odds are better.

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  1. You’re post about bitcoin cash operates on the presumption that 1) Satoshi Nakamoto’s vision is unfulfilled by the lightning network, which is questionable at best, considering a higher block size also leads to centralization and 2) We should keep bitcoin( whatever you’re talking about) exactly as Satoshi Nakamoto intended it. The problem with this logic is Satoshi built into bitcoin a consensus mechanism which is to say, he wanted people to be able to change the course of bitcoin’s future if a significant % of people agreed. Which is to say, fundamental to bitcoin is the ability to change the direction of it should the need arise. Personally, I feel a privacy-centered bitcoin is preferable.

    On the Lightning network point, due to recent adoption of Seg-wit, fees have dropped significantly. Once the lightning network is up and running any user will be able to open lightning channels to transact with other users peer to peer on the system. To be fair exchanges may implement lightning network and open channels to other exchanges, which would in a sense be a liquidity provider, but doing so would also dramatically decrease the cost of on-chain transactions, and still no individual is prevented from opening their own lightning channel to other individuals. As adoption grows, and more nodes appear, the system gets more decentralized.

    Bitcoin cash faces an alternative problem, the more you increase the block size(the next planned fork is 32mb/block) the more GB of storage is required to hold a fully validated node. At some point to do functions like micro-transactions, so much GB of storage will be required that nodes will be economically unfeasible for most people, and centralization will increase as the bigger the block size, the fewer individual computers can hold the full node. Even a partial node solution still eventually runs into this problem. Considering that the amount of transactions per day is but a tiny fraction of what it could be someday, BCH will require an exponential growth in block size. The problem is the computer companies are not creating more storage space to maintain the pace.

    The two platforms can co-exist, but I don’t think anyone, including Satoshi Nakamoto has a right to say X is the true Bitcoin. Whatever bitcoin is it is bigger than any individual now.