by Michael Krieger, Liberty Blitzkrieg:
So it is said that if you know your enemies and know yourself, you will not be put at risk even in a hundred battles.
If you only know yourself, but not your opponent, you may win or may lose.
If you know neither yourself nor your enemy, you will always endanger yourself.
– Sun Tzu, The Art of War
Before I get started, let me just state the obvious. I’m admittedly the furthest thing from a Bitcoin expert imaginable. Some people associate me with Bitcoin because I was relatively early in seeing its tremendous potential for positive change, writing my first public piece on the subject in August 2012, when the price was about $10. If you never read it, here it is: Bitcoin: A Way to Fight Back Against the Financial Terrorists?
For the next couple of years I wrote about Bitcoin extensively, proselytizing about it to anyone who would listen; especially to some of my friends who remained in the financial services industry, though most of these efforts proved fruitless. As time went by, more and more people became interested in Bitcoin, and I simply became outclassed as a commentator on the topic. I decided to opine less and listen more, especially since I started to spend much less time reading and thinking about Bitcoin, and became much more focused on politics. With so many far more knowledgeable Bitcoin thinkers out there, I’ve taken an entirely appropriate backseat on the punditry front. If I feel I have nothing meaningful to add to the debate, why enter the debate at all?
Vinny Lingham’s writings were instrumental in my decision to take a backseat in the realm of Bitcoin commentary. When I saw his deep understanding of the technology coupled with a track record for making accurate macro price forecasts, I knew how important his voice was, and I started highlighting his work as opposed to producing my own. Over the last week or so, Vinny has weighed into the Bitcoin scaling debate with two very important articles. I’ll admit, the first article freaked me out significantly for several days. Particularly this part:
It’s inarguable that Bitcoin is the single strongest brand in the crypto space. I believe it probably received $2–5bn in free media exposure over the years. A Hard Fork would create 2 brands of Bitcoin — essentially handing over some brand value to Bitcoin Unlimited. I wrote a post about Bitcoin’s power and network effect over 2 years ago — it’s worth reading if you haven’t.
If a split is portrayed badly in the media and creates confusion, we will possibly go into another 2 years of sideways and down. Do we have that much time again with other competitors on the heels? And let’s be frank, a Hard Fork is not Bitcoin dying. It’s Bitcoin duplicating. Now we have two Bitcoins, both won’t die, maybe one will. Which one is the real Bitcoin? Do not underestimate how many enemies Bitcoin has — a fork will just give them all the ammunition they need to confuse the market.
The whole point about Bitcoin being a long term store of value is that there are only 21m coins, ever. Stability, security and scarcity are the differentiation properties of Bitcoin, a contentious Hard Fork attacks these properties and will be strongly reflected in the price. After a Hard Fork, we will be sitting with 33m “Bitcoins”, on track for 42m and we’ll be having arguments about which one is the legitimate Bitcoin for years to come. You can expect legal cases to arise around the use of the brand, as the Ethereum Classic Investment Trust has shown.
Imagine someone says: I want to buy Bitcoin. Next question is: Which one?! After that, the very next question will be :
“What if one of these coins fork again — then we will have 63m coins, and so on and so forth.”
I can tell you with 100% certainty that a huge part of the appeal of Bitcoin for so many of us was the network’s stable, transparent supply curve. One of the biggest critiques of the naysayers in the early days was that it was just code, what’s to stop it from being nefariously altered in the future? Unfortunately, we’ve come to a point in the road where we’re being confronted with this exact contentious reality. So how did we get here?
First as Vinny explained in his Fork in the Road post:
Bitcoin was largely built on the premise that economic forces and self interest would help govern the security of the network. We talk a lot about decentralization but the reality is that the hardware that powers Bitcoin is produced by a handful of companies who also control mining pools which can be used against the network.
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