Toy with the following idea: with people used to Google searches having been free, instant and reliable for years, a new Google management decides that a “price market” should develop for searches, with Google prices suddenly costing upwards of 20 dollars, taking hours to complete, and being notoriously unreliable. Does this sound like a good scenario? Does this sound like a recipe for winning? It’s what has happened to Bitcoin — the old bitcoin — under the new management of Blockstream (who keep insisting, against all evidence to the contrary, that they’re not “in charge” of bitcoin).
Nobody I know shows off bitcoin (Bitcoin Legacy) to their friends anymore. It’s painfully embarrassing. Nobody I know uses bitcoin for anything anymore, for the reason that transactions take hours to complete, cost upward of $20 (my last two transactions cost $30 and $70, respectively), and have been made unreliable by design, through something called RBF.
When I got into bitcoin in 2011, transactions were free, reliable, and instant. Not free as in “very cheap”, but actually free. The vast majority of transactions did not pay a transaction fee, and this was also Satoshi Nakamoto’s original intention, according to email archives. It makes sense: you want to be able to write code that optimizes your money across addresses and databases without paying a lot of transaction fees in the process just for moving your own data around. It was extremely useful, it was amazingly cool to show off
Around 2014, a couple of people hijacked Bitcoin, for all intents and purposes, stripped the original known coder (Gavin Andresen) of his coding access privileges, and set out in a new direction. Bitcoin transactions should cost money, they decided, a lot of money, because the network wasn’t sustainable otherwise (nevermind that it had worked just fine up until that point with subcent optional transactions, and was planned to do so for another 140 years). The company was called Blockstream, and they were met with such fierce opposition from the community, they literally had to start deleting every post off the bitcoin forums (bitcointalk, Reddit’s /r/bitcoin, and the mailing list) that challenged the narrative that it was utterly moronic to deliberately congest the network to make it slow, unreliable, and expensive.
Yes, it just so happened that the people who formed this Blockstream company also were the ones controlling all the discussion platforms. Slowly, over years of influx of new users, people would only see Blockstream’s message of how good it is that transactions are expensive, slow, and unreliable.
It was around this point that new forums, such as bitcoin.com and Reddit’s /r/btc, slowly started to pop up and get attention — become a refuge, of sorts.
But the Blockstream fanboys were undeterred. “Look at how bitcoin rises in value!”, they would say. “Who cares about transaction fees! It’s a store of value, because the price goes up!” (This narrative also completely ignores what a economic store of value is, nota bene: it’s a predictable stable store.)
This, of course, is the equivalent of “Who cares about if Google is the slightest bit useful under the new management! Who cares if anybody uses Google anymore! Look how the stock keeps going up!”
The Blockstream fanboys would further point at bitcoin’s new uselessness as a sign of its success, believe it or not, drawing the analogy “nobody goes to that restaurant anymore, because it’s too crowded”, with the subtext that a crowded restaurant must be successful. But this is not success; this is utter failure to scale exponentially when you’re an Internet startup, and it spells dooooooooooom.
And so here we are in 2017, with a bitcoin that nobody I know uses for anything practical (last time I used it for something was about six weeks ago, when I bought a burger with bitcoin, which cost me about $2.50 in transaction fees, just as much as the burger itself; at least I didn’t have to wait eight to ten hours for the burger). What’s new on the scene in 2017 is something called a US Dollar Tether.
You see, you can’t buy big quantities of bitcoin — which is more or less “Blockstream stock” at this point — directly, not in amounts of millions of US Dollars. So this thing called Tether popped up, where a company named Tether claimed to issue US Dollar Tether, where one Tether was supposed to be good for exactly one US dollar. Today, the bitcoin price (the price of something that is unreliable, slow, and expensive, and which nobody uses anymore for anything remotely practical) isn’t driven up by people buying it for US Dollars anymore, but by institutions buying it for large amounts of Tether, which is “kind-of-dollars-but-not-really-but-we-still-pretend-so”.
The company Tether insists that they have backing; every Tether has a US Dollar backing it. There has been no proof to this. There have just been regular conjurings-up of new batches of ten, twenty, thirty million Tethers — not US Dollars, but Tethers — that are spent pushing up the bitcoin price as though the Tethers were dollars, and this happens basically every time the Blockstream PR machine happens to need a little boost. Maybe the Tethers are backed by dollars on a one-to-one ratio, as is asserted and refused to be proven. Maybe they aren’t. Sure as hell doesn’t look like they are.
This whole story reeks of a lot of people going to a lot of prison in a few years.
As to the people innocently claiming that it’s “cheap” with a $1 or $20 transaction fee to store data in the precious secure blockchain, I have this to say: get the fuck out of business, because you don’t have a clue as to how it works. If you’re deliberately saying that you have “costs that deserve to be met”, when there’s Google who offers people to search the entirety of humanity’s documents in milliseconds for free, you’re so mediocre you should sit down and bow your head in shame. Are your costs higher than the cost of searching the entirety of humanity’s documentation? In milliseconds? No? No they’re not. It’s you who suck at business. You’re so mediocre you’re not just hurting yourself but people around you, too. Get out.
Bitcoin needs to get back to instant, free, and reliable transactions.
Not “cheap”. Most of the transactions need to be free. All other dotcoms can do it, and therefore, bitcoin can too.
I remember the bitcoin I fell in love with in 2011. I remember the very few times a popup showed up when I tried to send money, saying “this particular transaction requires a fee”, as in requires a fee at all. It was a really rare event that this dialog showed up. The suggested fee would always be a sub-cent amount.
This is the promise of Bitcoin Cash, the bitcoin fork of August of this year. It’s about bitcoin being useful again. It’s about unwinding this idiotic bullshit new Google management that says it’s good if searches cost $20, are unreliable, and take eight to ten hours to complete, because it isn’t good, and I’m appalled that I have to write that out in cleartext to all the Blockstream fanboys insisting otherwise.
The promise of Bitcoin Cash is to bring transactions back to being instant, almost free, and reliable. To really succeed, it has to rewind a little further still — it needs the vast majority of transactions to be actually free, like the vast majority of Google searches are. But I have hope we’ll get there, too.