Bitcoin Core Contributor: Why Bitcoin's Status Is in Danger

Author: Matt Corallo, Bitcoin Core Contributor; Translator: Baishui, Golden Finance

The next few years will be like the block size war for Bitcoin, it is a time to decide life and death.

The question used to be who gets to decide what Bitcoin is, now the question is what Bitcoin is.

For most of us, Bitcoin has always been a tool for freedom - the freedom to trade with who you want without trusting any third party that might stop you from doing so. But this is now a problem.

While Bitcoin’s price has soared, developers have focused on building the tools to ensure this happens — building a strong, stable foundation in Bitcoin Core, building the Lightning Network to enable cheaper payments and better privacy than “telling everyone everything you’re doing”, exploring (and implementing) a ton of ideas for other extensions, from sidechains to statechains to timeout trees to Ark to…

Sadly, all the ideas about Bitcoin (or any cryptocurrency) actually contribute to the transaction trend where there is some untrusted party in the flow of funds — whether it’s Rollups or sidechains with one or ten chain operators, mobile Lightning Networks with LSPs, statechain operators, ASPs, etc., we have yet to build a way to pay in cryptocurrency without an (untrusted!) party involved.

As regulators crack down, and more and more players in the Bitcoin ecosystem are only interested in the 21 million Bitcoin limit and consider any form of non-KYC payment methods hostile to the value of their investment, these centralized parties are increasingly being targeted, and in the past few months we’ve even seen cases of active closures to avoid regulatory scrutiny.

While there may have been an opportunity to clarify (US) regulations so that untrusted parties in the flow of funds don’t need to perform the KYC nonsense that stifles the traditional financial world, we wasted it, spending all of crypto’s political capital pushing for securities reform to ensure token issuance is (maybe) legal, instead of trying to ensure people can make meaningful transactions without the world knowing what they are doing.

To make matters worse, with mining (pools) as centralized as ever, and most miners relatively unwilling to change, every layer of Bitcoin is centralized and ripe for regulatory capture. While a revival of Sv2 or p2pool has a chance to improve this, the push for increased expressivity in Bitcoin and the resulting MEVil may have all but closed the door to decentralized mining.

With Bitcoin as it is, it’s hard not to be concerned about the bleak outlook for the future. Building a system that supports trustless global transactions will always be an uphill battle, but I continue to expect that most Bitcoin holders will remain focused on that goal. Instead, today's Bitcoin community is focused on petty bickering and infighting.

Unfortunately I don't have any good solutions here. If Bitcoin supporters want to preserve what we built and are fighting for, the focus needs to be on drastic improvements to default wallet privacy across the ecosystem, aggressive investment in regulatory change (not through lobbyists focused on securities regulation for crypto token issuance), and scalability solutions that operate globally, not just in the U.S. Sadly, all of these areas are woefully underinvested, and at a fraction of the amount invested in other areas of Bitcoin.