I know I'm supposed to be all cheerful today, given Bitcoin's entered a new epoch. As the Halving is now behind us.
But there are a bunch of things about this epoch that make me quite uncomfortable.
First of all, what we are seeing today, fees north of $100 USD to get a transaction on chain, isn't a fad. It is the future of a successful Bitcoin.
While it may be a jpeg craze that's bringing that future to us today, any real adoption of Bitcoin would deliver us there anyway. There is a rare gift in this jpeg and ponzi insanity, with eth noobs burning millions of dollars on crap that will go to zero in a few months.
And I for one, thank them for their sacrifice.
But will we take this gift and use it, or let it go to waste?
What consequences do high fees have on Bitcoin's user base and utility today and in the future?
Well, most normal people are priced out of Bitcoin as we speak. $100 tx fees are more expensive than pretty much all other ways to transfer money online today. Layer 2 protocols like the lightning network have to work and carry that burden, but as it stands, the LN network can't carry it either.
LN's security model depends on being able to settle disputes on chain, if the on chain fees are too high, the cost of justice becomes the same as the cost of theft. And thus there is no justice.
The solutions being thrown around are not great.
The big blockers think more on chain capacity will solve it, but that's questionable.
Ethereum has 12 second blocks 2mb thick, with variable block size, and still can't move ETH for less than $16 dollars on a Tuesday. Let alone a future where the world's economy depends on it.
Further more, degens are clearly willing to spend insane amounts of money to degen. Gambling is a usecase and is probably as old as prostitution. The history of this industry is littered with shtcoins, and I see no evidence that that will change any time soon. While the colors and names of the xeetcoins change, their form and end continue to be the same and continue to manifest.
If 100 million people are using crypto today, then there's still another 8 billion to go, whom have to gamble their way out of stupidity and into a recognition of the value of hard money.
If most maximalists came here after getting burned with shtcoins, then we still have 100 years of shtcoins to go, before the world gets a little wiser.
So, even with big blocks, degens will still fill them up with garbage, and gamble their money away, for the chance to make it big. Not all people, but enough of them.
The blocks will get full no matter how big. Look at solana, a chaos of MEV and meme coins. Impossible to sync.
So if we increase the blocks, syncing and verifying the integrity of Bitcoin becomes a luxury, and if we don't find a way to scale self custody, then all we have left is the ability to verify the integrity of Bitcoin used by Bitcoin Banks who will get regulated and KYCed.
If we can't have cost effective self custody, then what's the point syncing a full node? To verify the supply of a Bitcoin that can be fractionally reserved by Bitcoin banks anyway?
The threads become somewhat undone. Maybe Hal is right that a free market of banks can find equilibrium. Maybe a world where Bitcoin ownership scales through Bitcoin banks, would be better than fiat.
I believe it would.
But losing self custody would be disappointing anyway, wouldn't it.
So let's filter the chain right? what does that even mean?
There are no soft forks or even hard fork upgrades to Bitcoin that I'm aware of that can keep the shtcoiners away. Bitcoin is a digital environment, a data base at the end of the day, you could put completely legit transactions on it and have a second layer of interpretation distort their 'legal' value. As demonstrated by rare sats.
You can call rare sats a scam all you want, but collectors DGAF. The first sat of this new epoch is special and as long as enough people agree on which sat that is, it will have more value than other sats. Collector's value.
The history of money is also littered with collector's pieces. From special gold jewelry to silver coins, to historical bills that are no longer in circulation. I see no reason to think Bitcoin will be different in this regard, if it really is a form of money.
But let's filter everything we can anyway, let's build a filtering engine that can update it's self to the innovations of the gamblers, they say.
Let's enforce it at the mempool layer, so that gamblers can not easily share their transactions. That sounds like a great idea.
Is it enough? maybe the gamblers will run out of money before they build out private mempools that actually centralize mining further. Maybe they wont.
Is that a risk we are willing to take? If the public mempool loses it's dominance over transaction relaying today, where will solo miners get transactions to add to blocks?
Even solo miners with warehouses of asics will have to join some apex private mining pool to get transactions to mine at all. Playing at a disadvantage against them. Specially as the mining reward thins out.
The death and weakening of the public mempool is a victory for private, corporate mining pools. A middleman layer hardening.
Call me crazy, but private mining pools dominating the market in a scenario where Bitcoin is hostile to the gamblers, seems like a centralizing force. Doesn't seem to me like a good thing.
And all of that assumes that Bitcoin's core developer ecosystem is functional enough to change Bitcoin in the first place. Half of the space thinks ossification is a good thing for Bitcoin. Ossification means no consensus changes, and in some cases no non-consensus changes either. So a free for all as we see today, and a hacker's market.
I actually quite like the hacker spirit within the wizards and other gamblers. At least they are getting shit done.
But where does that leave Bitcoin as a money?
The last solution being explored is an upgrade to Bitcoin's scripting languages, in the form of LNHANCE, among other aligned proposals. These attempt among other things to open the door for sharing UTXO's.
Shared UTXO's would let us keep cost effective 'unilateral exit' from one side chain for example, to another. Or from any side chain to the main chain.
Maybe. In theory. As far as I understand.
It would also make Lightning a lot more efficient, over time. But that requires change.
Can Bitcoin still change?
I write this not to scare you, nor to demoralize you. But to energize you.
I don't know what the solution is. But I believe in the fundamental ingenuity and goodness of humanity. Despite it's general greed and casual foolishness. I believe that the source of all wealth in this world is actually within us. It is within out ingenuity and willingness to make it a reality.
Wealth as safety, wealth as beauty, wealth as peace.
I believe that if we really try, we can find the right solution to these challenges to Bitcoin. And bring the world cost effective liberty and the highest quality money the world has never seen.
It's on us to figure it out.
Cheers and on to the new epoch!
It's gonna be wild.