Whenever concerns arise about bitcoin's long-term prospects going in a negative direction, a common dismissal refrain is “Well, tell us what to do about it then.” This is used to rule out all concerns of regulation leading to regulatory capture, of deeper involvement of certain entities leading to greater risks to the consensus process, of any type of failure mode involving resistance to bitcoin censorship and its ability to allow freedom to really erode.
“Well, what's your plan?”
Use bitcoin. The bitcoin consensus revolves around two important variables: economic actors and miners. Economic actors decide whether a set of consensus rules has value by deciding whether to honor their part of a transaction based on whether it is valid according to their consensus rules. Miners decide within which set of consensus rules they will mine, choosing the one that presents them with the greatest value.
Users who actually use bitcoin, that is, to transact and operate businesses, services and other protocols to make use of the block space, gain influence through both mechanisms. A set of consensus rules needs two things: users to value it and miners to mine it. Users purchasing block space attract miners with more revenue than the block subsidy generates. To the extent that fees constitute miners' income, the users who generate those fees have a much more proportional kind of “power” over the miners. In case of disagreement over the consensus rules, they decide which side to give that income to, meaning that the miners would have to follow those rules to obtain it.
The threat of institutional adoption and regulatory encroachment largely presents a risk to bitcoin in the long term if people simply stop doing anything with bitcoin but hold on to it. In that type of environment, regulations can affect miners and brokers and greatly influence events related to consensus changes. They may try to veto useful and valuable changes, and try to push through useless or harmful ones.
So what do we do to counteract that? In fact, we use bitcoin for more than just holding and investing. That This is why scalability is so important. Because it allows more people to interact directly with the system in that way, to directly exert their influence. The more we use bitcoin, the more influence users will have to collectively exert over the consensus in the future.
If Bitcoiners relegate bitcoin to nothing more than an asset to hold, something to leave dormant, then we will eventually lose it. We will lose our voice and influence in the markets that bitcoin facilitates, we will lose our influence over the consensus rules that miners choose to mine, we will lose everything.
Bitcoiners should be active, not passive. We need to transact, we need to build more businesses, consume more block space. With payment networks like Lightning or Ark, uncensored derivatives markets using DLC, even silly things like Ordinals and Inscriptions. Demand for block space must come from diverse and distributed sources, not just massive institutions and companies easily subject to regulatory and government influence.
bitcoin is largely a matter of “use it or lose it.” I would prefer that people who really care about freedom not lose it to apathy.
This article is a Carry. The opinions expressed are entirely those of the author and do not necessarily reflect those of btc Inc or bitcoin Magazine.
