Bitcoin’s Other Scaling Problem

Bitcoin’s Other Scaling Problem

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Although many Bitcoiners subscribe to laissez-faire political and economic beliefs of the libertarian variety, some “invisible politics” has reared its ugly head in the ‘Bitcoin Community’ thanks to the digital currency’s scaling issues. The growth of Bitcoin has created a variety of social governance problems that have left many in the ‘Community’ confused.

Also Read: Bitcoin Block Size Growth Plan ‘BIP100’ Gets Update

Bitcoin Governance

While focus has been largely on scaling Bitcoin at the technical level to make room for increasing transaction demands, the distributed governance of Bitcoin itself has proven difficult.

“There are two types of governance. Governance of a specific software project and governance over consensus rules,” submits Eric Lombrozo, Bitcoin developer and CEO of Ciphrex. “For historical reasons, the two have been conflated in the minds of many people.”

Mr. Lombrozo suggests problems could manifest in several ways.  “Governance over a particular software codebase doesn’t require universal agreement over all changes as long as it remains compatible with the existing network,” he says. “It’s only when compatibility is broken that it creates issues that affect everyone in the community.”

Further adding questions to Bitcoin’s social issues, when former Bitcoin developer Mike Hearn left Bitcoin for R3CEV, he lamented how Bitcoin had become “completely controlled by just a handful of people.”

Benevolent Dictator?

Critics have claimed Bitcoin needs a “benevolent dictator” to expand and onboard an increasing number of transactions. “Someone, or some group, must decide how to meet users’ requirements,” Reuters reported on the opinions of some in the Bitcoin space.

Cornell Computer Science professor, Dr. Emin Gun Sirer, cites Ethereum, a blockchain smart contract model, and its “benevolent dictator model” as a working example of distributed governance.

Vitalik Buterin, Ethereum founder and main programmer, in effect holds controlling decision-making power over that open-source creation community, some say (even though those who disagreee can fork the network).

Mr. Buterin has defended this model. “Over the last couple of years it’s become apparent that having a static protocol is just not a viable approach,” Buterin said at a blockchain conference. “Software has to evolve … and there has to be some mechanism for agreeing on how software is going to upgrade.”

Mr. Lombrozo points out, however, that Ethereum’s ‘benevolent dictator’ could not stop a split in the Ethereum blockchain, resulting in an duplicate version dubbed ‘Ethereum Classic.’

Gavin Andresen, Bitcoin’s former Chief Scientist, has discussed in YouTube videos how Bitcoin has evolved from a similar model after pseudonymous founder Satoshi Nakamoto’s departure.

“If you go back in history, it was really simple. It was whatever Satoshi decided at the beginning. That’s really where we started. We had one source code. We had one [pseudonymous] person who made all the decisions about what should Bitcoin be, how should it evolve, and what should it do,” he said.

Andresen added: “As soon as Satoshi stepped back and threw the project onto my shoulders, one of the first things I did was try to decentralize that. So, if I get hit by a bus, it would be clear that the project would go on. That’s why, at this point, there are five people who have commit access to the Github Bitcoin source tree. And there’s kind of this consensus process for what changes are made to the code — and even what consensus-level, low-level changes to the Bitcoin rules should happen.”

In an Internet Policy Review (IPR) article called The invisible politics of Bitcoin: Governance crisis of a decentralised infrastructure, this question is analyzed in depth.

The article paraphrases Yochai Benkler, who said “there are no spaces of perfect freedom from all constraints, only different sets of constraints that one necessarily must choose from.”

Bitcoin might be boasted as a trustless technology, but there’s still a catch.

“It remains subject to the (invisible) politics of a handful of individuals – the programmers who are in charge of developing the technology and, to a large extent, deciding upon its functionalities,” reads the IPR paper.

Can Technology Drive Social Coordination?

The paper concludes: “The mistake of the Bitcoin community was to believe that, once technical governance had been worked out, the need to rely on government institutions and centralised organisations in order to manage and regulate social interactions would eventually disappear. Politics would progressively give way to new forms of technologically-driven protocols for social coordination– regarded as a more efficient way for individuals to cooperate towards the achievement of a collective goal while preserving their individual autonomy.”

In a series of tweets, Mr. Lombrozo has shared his opinion about how Bitcoin might overcome the current gridlock caused by intense disagreement over numerous issues; namely, how to scale bitcoin to meet current transaction demand amid the social scaling problem itself. Many of his tweets have urged people to look beyond intense social media squabbles and start their own Bitcoin-based “cool” projects.

“Decentralized systems require individual effort in discovering sources and filtering out hubris and noise,” he also tweeted. “This is true at the social level as well as the machine level.”

What do you think about Bitcoin’s other scaling problem? Let us know in the comments below.


Images via Shutterstock, YouTube


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  • Derek Pater

    ripple XRP will claim 80% of the 25 trillion in yearly banking transaction costs, making banking 70%
    more efficient

  • straightcomment

    Bitcoin may be at the maturing point, like many global governance and technical interoperability challenges, where it could benefit from a non-profit standards body to take over its governance and specifications, like IETF. That would certainly slow down innovation and technical advancement dramatically, but could also further de-risk and legitimize the bitcoin currency with global reserve potential. Blockchain innovation and advancement could continue quickly in altcoins.