Based on Blockstream’s behavior in the Bitcoin community, I have become absolutely certain that Segwit contains patents that Blockstream and/or their owners have planned to use offensively. I base this not on having read the actual patents, for they can be kept secret for quite some time; I base this on observing Blockstream’s behavior, and having seen the exact same behavior many times before in the past 20 years from entities that all went bankrupt.
In a previous part of my career, I was making telecom standards. This meant meeting with lots of representatives from other companies somewhere on the globe once a month and negotiating what would go into the standard that we would all later follow.
I was a representative of Microsoft. I would meet with people from Nokia, Ericsson, AT&T, and many other corporate names you’d recognize instantly, in small groups to negotiate standards going forward.
One thing that was quite clear in these negotiations was that everybody was trying to get as much as possible of their own patent portfolio into the industry standard, while still trying to maintain a façade of arguing purely on technical merits. Some were good at it. Some were not very good at it at all.
One of the dead-sure telltale signs of the latter was that somebody would argue that feature X should use mechanism Y (where they had undisclosed patent encumbrance) based on a technical argument that made no sense. When us technical experts in the room pointed out how the argument made no sense, they would repeat that feature X should absolutely use mechanism Y, but now based on a completely new rationale, which didn’t make any sense either.
The real reason they were pushing so hard for mechanism Y, of course, was that they had patents covering mechanism Y and wanted their patented technology to go into the industry standard, but they were unable to make a coherent argument that withstood technical scrutiny for why it was the preferable solution at hand, with or without such encumbrance.
In other word, classic goalpost moving.
As a technical team made up of many people from different companies, there would come a time when our patience ran out with assuming good faith for the fake technical rationale presented to get something patented into the standard, as we knew it was made up on the spot but sort of had to play along — but only up to a point, if the party losing the technical argument didn’t give in, didn’t play their part of the game we all knew was happening.
But there’s more to Blockstream’s behavior than just moving technical goalposts.
As I later came into politics, I saw this pattern much clearer – it was in basically every decision in politics. We called it “high reasons and low reasons”. The “high”, or “noble”, reason would be the one you presented to the world for wanting X as policy. The “low” reason, meanwhile, was the one that made you give a damn in the first place about it. These were often not connected at all.
You could spot these “high-vs-low reason” conflicts in the tiny details. For example, somebody would argue for new invasive surveillance to combat terrorism, or so they would say. And then you read a little closer, and the bill text actually says “terrorism and other crimes“, an important part which nobody paid attention to. Two years after passing, it turns out that the new surveillance powers were used 98% to fight ordinary teenagers sharing music and movies with each other, and that the original bill sponsor was heavily in bed with the copyright industry.
So the exact same pattern of having one overt and one covert reason was present in politics as well, unsurprisingly. But there’s also another pattern here, one that we shall return to: “We want this feature because of X, or because of any other reason”.
But first, let’s compress the last three years of dialogue between Blockstream and the non-Blockstream bitcoin community:
[BS] We’re developing Lightning as a Layer-2 solution! It will require some really cool additional features!
[com] Ok, sounds good, but we need to scale on-chain soon too.
[BS] We’ve come up with this Segwit package to enable the Lightning Network. It’s kind of a hack, but it solves malleability and quadratic hashing. It has a small scaling bonus as well, but it’s not really intended as a scaling solution, so we don’t like it being talked of as such.
[com] Sure, let’s do that and also increase the blocksize limit.
[BS] We hear that you want to increase the block size.
[com] Yes. A 20 megabyte limit would be appropriate at this time.
[BS] We propose two megabytes, for a later increase to four and eight.
[com] That’s ridiculous, but alright, as long as we’re scaling exponentially.
[BS] Actually, we changed our mind. We’re not increasing the blocksize limit at all.
[com] Fine, we’ll all switch to Bitcoin Classic instead.
[BS] Hello Miners! Will you sign this agreement to only run Core software in exchange for us promising a two-megabyte non-witness-data hardfork?
[miners] Well, maybe, but only if the CEO of Blockstream signs.
[Adam] *signs as CEO of Blockstream*
[miners] Okay. Let’s see how much honor you have.
[Adam] *revokes signature immediately to sign as “Individual”*
[miners] That’s dishonorable, but we’re not going to be dishonorable just because you are.
[BS] Actually, we changed our mind, we’re not going to deliver a two-megabyte hardfork to you either.
[com] Looking more closely at Segwit, it’s a really ugly hack. It’s dead in the water. Give it up.
[BS] Segwit will get 95% support! We have talked to ALL the best companies!
[com] There is already 20% in opposition to Segwit. It’s impossible for it to achieve 95%.
[BS] Segwit is THE SCALING solution! It is an ACTUAL blocksize increase!
[com] We need a compromise to end this stalemate.
[BS] Segwit WAS and IS the compromise! There must be no blocksize limit increase! Segwit is the blocksize increase!
This is just a short excerpt. I could go on and on, showing how Blockstream said that node count was completely negligible when Bitcoin Classic nodes started to pick up and how hashrate was the only valid measure, and how Blockstream is now talking – no, yelling – the exact opposite, when Bitcoin Unlimited is at 40%+ of hashrate.
This pattern is utterly typical for somebody hiding encumbrance in what they’re trying to achieve – for if Segwit locks in, it’s in bitcoin for eternity because of the way the chain is permanent, whether those parts of the chain are used by a particular actor or not.
There’s even more to it. It’s also typical for an actor who’s deflecting like this to try to invoke external enemies. Warhawks in governments have done the same over and over when they want to go to war: be aggressive about a narrative, call out anybody who challenges the narrative as a traitor and a saboteur, and beat the drums of war. It’s tribal, but it works. In this case, Blockstream have singled out two individuals as “enemies”, and people who want to be part of the community are encouraged to be aggressive against them. It’s practically straight out of scenes of the movie 1984.
All to get patents into bitcoin, regardless of whether you burn it and its community to the ground in the process.
That’s the only way their behavior makes sense, and it makes utter and complete sense in that way. I want to emphasize again that I have not read any of the Blockstream patent applications, and it would be pointless to do so as they can be kept secret for something like 18 months, so I wouldn’t have access to the full set anyway. But based on Blockstream’s behavior, I can say with dead certainty that I’ve seen this exact behavior many times in the past, and it’s always when somebody has a dual set of reasons – one for presentation and palate and another that drives the actual course of action.
With that said, Blockstream has something called a “Defensive Patent Pledge”. It’s a piece of legal text that basically says that they will only use their patents for defensive action, or for any other action.
Did you get that last part?
That’s a construction which is eerily similar to “terrorism and other crimes”, where that “and other crimes” creates a superset of “terrorism”, and therefore even makes the first part completely superfluous.
Politican says: “Terrorism and other crimes.”
The public hears: “Terrorism.”
What it really means: “Any crime including jaywalking.”
The Blockstream patent pledge has exactly this pattern: Blockstream will only use their patents defensively, or in any other way that Blockstream sees fitting.
Blockstream says: “For defense only, or any other reason.”
The public hears: “For defense only.”
What it really means: “For any reason whatsoever.”
Let’s assume good faith here for a moment, and that Greg Maxwell and Adam Back of Blockstream really don’t have any intention to use patents offensively, and that they’re underwriting the patent pledge with all their personal credibility.
It’s still not worth anything.
In the event that Blockstream goes bankrupt, all the assets – including these patents – will go to a liquidator, whose job it is to make the most money out of the assets on the table, and they are not bound by any promise that the pre-bankruptcy management gave.
Moreover, the owners of Blockstream may — and I predict will — replace the management, in which case the personal promises from the individuals that have been replaced have no weight whatsoever on the new management. If a company makes a statement to its intentions, it is also free to make the opposite statement at a future date, and is likely to do so when other people are speaking for the company.
This leads us to ask who the owners of Blockstream are: who would have something to gain from pulling the owner card and replacing such a management?
The owners of Blockstream are the classic financial institutions, specifically AXA, that have everything to lose from cryptocurrency gaining ground.
And they have bought (“invested in”) a company, which has an opportunity to get patents into the bitcoin blockchain, thereby being able to either outright ban people from using it, or collect a heavy rent from anybody and everybody who uses it.
The conclusion is unescapable here: Blockstream’s constant goalpost shifting has had the underlying goal to have Blockstream’s owners effectively own bitcoin through patent encumbrance.
As horrifying as that statement is, it’s the only way – the only way – that the actions of the past three years make perfect sense.