Join 82,269 users already on read.cash

Roger Ver's Conundrum

3 262
Avatar for gatmac
Written by   4
1 year ago

Roger Ver doesn’t seem much like a socialist to me. In fact, based on his musings on Twitter and elsewhere, he seems fairly libertarian. I am no expert on libertarian doctrines, but they seem to emphasize individuals making decisions for themselves, especially economic ones, and not being coerced into decisions by others.

Roger Ver also seems to oppose the unrestrained rights of governments to kill people anywhere with impunity. But that is outside of this article.

It’s hard to disregard the libertarian philosophy completely. Governments do intrude too much in our lives, taxes are too complicated to ever be in compliance, and governments do misallocate resources. Even governments that purport to be democratically representative of their populations will waste trillions of dollars to overthrow petty dictatorships in the Middle East, despite widespread, almost universal opposition to their pea-brained plans.

BTC will remain the dominant cryptocurrency for the next two years. It has the name brand recognition and the network effects to ensure it remains the on-ramp to all other cryptocurrencies for new participants. Then, in almost the blink of an eye, in the year 2022, BTC will become irrelevant.

The problem with libertarianism is that it's an ideology. An ideology is set of doctrines or beliefs that purport to be universally applicable by their adherents, but nearly every ideology in its pure form reduces to insanity. If everyone disregards basic traffic rules, because rules shouldn’t limit their personal freedoms, transportation systems would screech to a fraction of their current efficiency. This is an example of a coordination problem. Maybe HOV lanes seldom work as intended, but we do need some common rules to optimize traffic patterns.

No human lives in a vacuum, and survival depends on cooperating with other humans. I invite my wife into my life and my home because I trust she won’t choke me in my sleep, or torture our children (in fact, my bar of trust is a little higher than that.) She cooks and I take out the trash. When I purchase items at the store, I trust them to maintain sanitary conditions, and to fairly represent the products they are selling, and we both benefit from the transaction. Cooperation problems saturate our lives. How do we get self-interested, distrustful people to work together for mutual benefit, when self-interests, narrowly defined, should prevent them from doing so? Why do people vote? Why do societies invest in the infrastructure needed to benefit mutual interests, broadly defined, at some time in the future that isn’t now?

Bitcoin has offered partial solution to coordination and cooperation problems among decentralized parties, through an ingenious combination of cryptography, protocols, and economic incentives that punish cheaters. We coordinate by using wallets, agents, exchanges, validators, and mining pools that adhere to these protocols. We cooperate by using these mechanisms to exchange economic value anywhere in the world.

But Bitcoin has not solved every coordination or cooperation problem that the ecosystem now faces.

We would say, oh, no no no, you don’t understand, this stuff is totally compatible with businesses. Businesses use free software, it’s possible to profit from using free software, it totally works. But what I would tell myself, if I could use a time-machine, is ‘hey, that’s not good enough, just being compatible is not good enough.’ It was actually a fatal flaw in the whole design of the movement, the whole vision of the movement, that it depended on ongoing volunteer labor or donations from people, it didn’t have a built-in economic feedback loop where, the more people we freed, the more and more resources would be directed into this movement.

Zooko Wilcox on Let’s Talk Bitcoin! #422 “The Internet Was Illegal” And Other Early Stories with Zooko Wilcox. 

Bitcoin solves one specific problem well: how to add new transactions to the ledger, in a decentralized fashion, with parties who don’t trust each other, in a way that rewards good participants and punishes bad ones. The Bitcoin contribution was both important and brilliant. I don’t want to minimize it, but it has a limitation: it optimizes behaviors around performing as many hash operations as possible as cheaply as possible, and incentivizes little else. Some specific problems that the Bitcoin ecosystem never solved in terms of incentives:

  • How do we build wallets that are easy to use but safe and secure.

  • How do we prevent third-party intermediaries from misleading and cheating participants.

  • How do we incentivize merchants to use Bitcoins for payments.

  • How do we incentivize third-parties to introduce Bitcoin to merchants and help them build the necessary technical and business management systems to conduct transactions safely and securely.

  • How do we bring the benefits of decentralized finance to the billions of people are underbanked, many of whom are illiterate?

  • How do we evolve the protocol to improve transaction latency, scalability, confidentiality, and integrity? Who builds it, and why?

We have made progress, but we have a lot of room to grow. Among the current participants in the Bitcoin (BTC) community, the answers to these questions, to the extent they have ever been discussed, are “who cares?” BTC enjoys about 65% of the market capitalization of all cryptocurrencies. It is the 800 lbs. gorilla that is at the greatest risk of losing when these issues are solved--when these questions are even asked. So the BTC community has the most incentive to ensure these issues are never solved.

I am going to do something I seldom do: make a prediction. BTC will remain the dominant cryptocurrency for the next two years. It has the name brand recognition and the network effects to ensure it remains the on-ramp to all other cryptocurrencies for new participants. Then, in almost the blink of an eye, in the year 2022, BTC will become irrelevant.

Enter a Fuzzy, Hong Kong Corporation

On January 23rd, 2020 Jiang Zhuoer, CEO of BTC.TOP posted a controversial plan on Medium titled Infrastructure Funding Plan for Bitcoin Cash, in which he and three other significant miners for BCH proposed a protocol change that would redirect 12.5% of coinbase rewards to a Hong Kong-based company that would invest the funds in software development for infrastructure.

The proposal, as stated, leaves much to be desired. How will the funds be distributed? Who will govern the funds? What specific development projects will be undertaken? What are the development priorities? It has generated a lot of controversy, but much of it has been directed at the wrong items.

One concern is over decentralization and whether this new model of funding breaks it. This is a red herring. Development of the Bitcoin protocol has never been truly decentralized; it has always depended on a small team who were trusted to introduce changes that benefit all the current participants.

Another concern is over coercion. Should miners who don’t wish to contribute to the fund be coerced into doing so? This idea of coercion is a long-standing coordination problem in social systems. Traffic laws were one example I cited earlier.

Let’s take another example: labor unions. Without endorsing them, I will suggest they provide some benefits and protections for employees. I can appreciate the suggestion that nobody should be forced to take part in a labor union, even if a majority of employees at the company vote in favor of unionization. Some states have passed “right to work” laws that eliminate coerced participation. But to not coerce participation invites free-riding, as those who don’t want to pay union dues still get the benefit of others participating (and they also suffer the repercussions without getting any vote or say.)

Another example is insurance, which would become unaffordable if only the riskiest entered the risk pool. In the United States and other countries, operating a vehicle requires proof of insurance. This is not optional, especially for the least riskiest.

So should miners be forced to take part in the “voluntary” donations to a development fund? Shouldn’t miners who wish to participate in the infrastructure plan be allowed to ignore blocks from miners who are attempting to free-ride, assuming they do so voluntarily? Whose wishes take priority?

Roger Ver has endorsed the plan, and for that has been accused of being a socialist by the BTC Maximalists. It’s important that we discuss these issues intelligently, because the future of cryptocurrencies may be at stake. We cannot discount the opponents as BTC Maximalist Trolls. We also should not ignore the larger questions of incentives and investments that plague the industry.

3
$ 6.02
$ 5.00 from @MarcDeMesel
$ 1.00 from @DavidRAllen
$ 0.02 from @BigBlockIfTrue
Avatar for gatmac
Written by   4
1 year ago
Enjoyed this article?  Earn Bitcoin Cash by sharing it! Explain
...and you will also help the author collect more tips.

Comments

Where is the photo from? Is it a film?

$ 0.00
1 year ago

Two minor typos: (I wish there was a better way to do this read.cash)

Bitcoin has offered “a” partial solution to coordination and cooperation problems ...

How do we bring the benefits of decentralized finance to the billions of people “who” are underbanked, many of whom are illiterate?

$ 0.00
1 year ago

RE: Traffic rules. Generally people don't want to wreck their car, be injured, or die. There's no law that says you can't drive your car into a brick wall. Yet people don't do that. How is that possible without rules?

Also, you can have rules without having rulers.

$ 0.00
1 year ago