The recent uptick in bitcoin security budget discussions has me thinking why its occurring. I was recently listening to a podcast regarding hard forks of bitcoin and part of the discussion was identifying old bitcoins being sold on the hard forked new chain.
Making money with bitcoin means you are holding onto your bitcoin and building software to make it more usable or educating your friends and family about it. If there are opportunities to profit off of a forked bitcoin chain, those in a position to do so will connect to the forked chain, move them to an exchange and sell them, leaving their original bitcoin intact on the original chain.
Understanding what bitcoin is and the basic consensus components:
- hard cap of 21 million
- 10-minute block times
- limited 1Mb block space
- a specified distribution schedule
- an incremental difficulty adjustment
These are the hallmarks of bitcoin. Changing any of these defeats the purpose of keeping bitcoin resilient and secure as the base layer of money for everyone.
Since the inception of BTC, a number of forks have occurred. At each fork, once the new coin i.e. BCH, BTG, and BCD was available for sale on an exchange, many bitcoin holders sold these new coins bringing the price down permanently by +90% in value.
An important lesson is learned by investors at each fork, they learn that the components of bitcoin are what make it valuable. Anyone who wants to “fix” bitcoin by changing one of those is either misguided about how money works or is trying to profit off of people’s emotions and lack of understanding.
It would be no surprise to me to learn that individuals behind security budget discissions which include changing one of these important bitcoin values is only trying to shake you out of your bitcoin.
They convince you there is an issue with bitcoin as is and you should agree to change it and follow the change. While in the background, they sell their copied new fork of bitcoin then take that profit and buy more bitcoin; also known as bitcoin dividends.
This isn’t a new occurrence, Rodger Ver was an advocate of the BCH hard fork from 2017. At that time, increasing the block size to accommodate for more transaction throughput. This was sold to people on social media and they bought into it by selling their bitcoin and buying bitcoin cash. With Rodger Ver, he admits at the end of this video that bitcoin is #1 and BCH is #2 but you have to listen to him rant about how bad bitcoin is for the first 95% of the video. Watch him rage quit a stream because at the time he was telling people the new hard fork would retain the name bitcoin. He believed the majority of users would migrate. Of course, that didn’t happen, it’s still an epic video to watch from 2017.
So, what else about the security budget is a scam?
The scam is the idea of mining as a profitable endeavor in perpetuity. The companies we see today are profit seeking individuals, many of whom may not truly understand what they are doing but continue because the profit motive is strong. Interest from any parties, profit seeking or not, are good for bitcoin. These profit seeking individuals and companies are growing the bitcoin network and increasing its use case above and beyond simply as a payments network. It’s becoming the backbone of electrical grids; but its not going to happen overnight. These changes in the energy industry occur slowly as examples of uses for energy companies are discovered.
When reading an article or listening to a podcast about the impending security budget and how we have to be concerned about the profitability for miners. Ask yourself, in what world do you care about the profitability of your local bank? Why should anyone care about “miner” profitability? The answer is you shouldn’t, the market for mining bitcoin is a free one and open to innovation. People will seek out ways to incorporate bitcoin mining into households, incentivizing the general public to mine without knowing what mining is or that they are mining. This will be the shift from “for profit” mining to saving on heating/electric bills by operating a specific type of water or air heating system.
The final reason to mine bitcoin is altruism. The energy you add to the network is combined with all other participants to add new blocks. This process of adding blocks is what makes bitcoin secure, it’s the fact that you must pony up the electricity to add a block. You do this to increase the cost of admission for adversaries, thereby increasing the security of your bitcoin. This entire process playing out with bitcoin is game theory in action. People are building the computing infrastructure to replace centralized banking. Everything you see and hear about it includes participants trying to stop it, slow it down or accelerate it. It’s up to you to determine what makes bitcoin, bitcoin. If you are presented with a hard-fork, review the changes proposed to determine your course of action. If you are unsure, holding on to your coins for both chains and waiting to determine which chain remains as bitcoin. You can see this with price after a year or so from the hard-fork.
Visualize the scam from the BCH hard fork. Today you are being sold on the idea to hard fork soon to “save the miners”.
