The alleged Bitcoin-focused company Blockstream has raised over $100 million publicly, but has yet to be forthright with the Bitcoin community. It’s time for people within the Bitcoin space to start holding them accountable. Blockstream’s dishonesty should have a bright light shined on it so everyone is aware of their manipulation and deceit.
In late 2014, Blockstream went public with their company after being financed by banking and venture capital firms such as AXA, Khosla Ventures, Horizon Ventures, and others. Within six months, Blockstream said it would be focusing its time not only on sidechains, which it was founded on, but on the Lightning Network too. Since that time, Blockstream hasn’t produced much to advance the Bitcoin ecosystem. However, they have undoubtedly done many things to derail it and cause harm to it.
Re-inventing the SWIFT Network
Four years after going public, Blockstream finally released its coveted sidechain system to the public. The only problem is the product they released, Liquid, isn’t intended for general use. It is made specifically for private Bitcoin exchanges. The premise of Liquid is to take Bitcoin transactions off-chain and move them to a private sidechain of federated exchanges. As Forbes writer Frances Coppola points out:
“It isn’t possible to improve liquidity while maintaining full decentralization and trustlessness. So Blockstream cheerfully compromises both of these prized features. It appoints a small group of trusted institutions to validate transactions and submit them to the main Bitcoin chain.”
Aside from the Blockstream Liquid sidechain being intended for a private consortium of businesses, astonishingly, Blockstream CEO Adam Back is openly pushing for individuals to convert their Bitcoin into Bitcoin Liquid (L-BTC).
Congratulations Blockstream, you just re-invented SWIFT.
It took four years for Blockstream to produce a working product, and the community is still waiting on a working version of Lightning Network (LN). It has been in development since 2015, and looks nowhere close to being completed as-advertised. The protocol is certainly not a decentralized peer-to-peer network that disavows trusted third-parties. In order for the platform to function as advertised, LN developers and Blockstream have to solve the path-routing problem.
Until that day comes, LN developers have suggested that users rely on Watchtowers to prevent fraud. Watchtowers are just a fancy way of saying trusted third-parties. Besides the Lightning Network not being trustless, the cost of doing business will make Bitcoin (BTC) only for the elite. Blockstream seems to be working tirelessly to make BTC transaction fees as high as possible. The on and off ramps of Lightning will all require on-chain transactions to the BTC blockchain. What will happen when fees on BTC are so expensive that users begin to realize it’s cheaper and more convenient to stay on the Lightning network?
Dishonesty and Manipulation
Aside from the technical pitfalls and shadowy underbelly of Blockstream, censorship campaigns and toxicity within the community have already driven people away. But who is driving this unsettling environment? It would be impossible to pinpoint a single actor, but it’s important the community calls out bad behavior.
Censorship, of course, has exacerbated the toxic environment over the past three years. It’s been rampant across the bitcoin ecosystem. This has created echo-chambers and fake news, manipulating readers to the point where they are brainwashed into thinking along party lines. The impact of censorship in Bitcoin are very real:
“Censorship can really hinder a society if it is bad enough. Because media is such a large part of people’s lives today and it is the source of basically all information, if the information is not being given in full or truthfully then the society is left uneducated […] Censorship is probably the number one way to lower people’s right to freedom of speech.”
Dirty Games: Hacking and Vote Manipulation
Besides censorship, there have been all kinds of toxic and dirty games being played by Blockstream. Let’s take an instance last year where the community discovered that moderators of the r/Bitcoin subreddit were involved in hacking and vote manipulation. As part of the discovery process and evidence, it was found their former CTO Gregory Maxwell played an intricate role in the event.
Not only has Blockstream been playing dirty on social media, but they have been engaging in a kind of social-media infused espionage. Just this past summer, individuals in the community discovered Blockstream is working with former national spies to run counterintelligence on the Bitcoin community. Adam Back, the CEO of Blockstream, admitted he hired a team to promote Blockstream’s propaganda in order to manipulate the dominant narrative.
Secret Work and Hidden Agendas
Blockstream has also been silently hiring people in the community to work on Blockstream products. Just two months ago it was uncovered that another “independent” BTC developer was really working for Blockstream, unbeknownst to the public. This is not the first time this sort of thing happened. In some cases, the hires have been downright weird and scandalous, which some may consider illegal. It’s obvious now why Blockstream took down their team page nearly a year ago and never put it back up.
Today, it was also discovered that another well-known person in the Bitcoin space has been working for Blockstream. Again, the community was completely unaware these individuals were working for Blockstream to further an agenda rather than contribute to bitcoin development.
In a public video interview released two days ago with Crypto Insider, Allen Piscitello admitted he has been working for Blockstream for the past year as one of their product managers. Many people won’t even know him. Some old-school Bitcoiners will know him as the infamous user AlpacaSW on Twitter, aka Alphonse Pace, who is responsible for a myriad of social media attacks. He was also one of the most vocal drivers behind the UASF in 2017.
UASF: The Fake Grassroots Movement
The User Activated Soft Fork (UASF) was promoted in 2017. Here is how it works: instead of miners activating a consensus rule change in Bitcoin, individual participants in the Bitcoin ecosystem could activate a fork by running the software they choose. By coordinating with each other on a specific date (flag day), they could all run the software with the rule changes in place.
The theory is that if the UASF is coordinated successfully by the majority of the user network, miners would follow. However, at the end of the day, it would take the miners to cooperate with the UASF for it to be successful. Without miner cooperation, the UASF could cause a chain split.
Since there is no proof-of-work with a UASF — as it’s just users and network participants —it would be easy to Sybil attack it. Therefore, it became clear in 2017 that the UASF was just a fake grassroots movement to activate Segwit surreptitiously. And who was the main group behind UASF? It was none other than Blockstream who were championing the soft fork, judging by posts such as UASF is a user-driven protocol development and user-activated soft forks and the intolerant minority.
The Truth Will Set You Free
One has to wonder, when will the lies and deceit end? My opinion is that it won’t. As a community, everyone needs to continue being diligent, thinking critically and independently. The community should insulate itself from companies that say they have the best interest of Bitcoin in mind, but are only working to further their bottom line and fill the coffers of major investors.
OP-ed disclaimer: This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com does not endorse nor support views, opinions or conclusions drawn in this post. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.
Images via the Wayback Machine and Disney.
Need to calculate your bitcoin holdings? Check our tools section.
Use Bitcoin and Bitcoin Cash to play online casino games here.