In his opinion on Wednesday, Shinobi argued that increasing institutional adoption of bitcoin will lead to a premature ossification of the bitcoin protocol. While I share your concern to some extent, I am less convinced that this is necessarily true.
bitcoin is inherently a permissionless system. For protocol changes specifically, it “simply” requires users to update their software. And when it comes to implementing soft forks, it really only requires most miners to upgrade. (Admittedly, this is a simplification for the sake of brevity, but I'd say it's still “pretty true” to say it this way.)
Miners will for the most part follow economic incentives. If a protocol upgrade makes bitcoin (say) more scalable or more private, there is actually good reason to think that this would make bitcoin more valuable, which in turn means there is good reason to think that miners will activate the update.
Even in an extreme scenario where a soft fork occurs via a User Activated Soft Fork (UASF) splitting the blockchain, and even if in this scenario institutions prefer the legacy version of the chain (this is the scenario Shinobi is ultimately imagining), It's not obvious to me that the non-updated chain “wins”.
Simply owning a lot of bitcoins gives you no “say” over which side of the chain split is more valuable. Initially, everyone receives coins on both sides. Only If you are willing to buy or sell these coins (e.g. “flip” coins on one side of the split to get more coins on the other side), does their economic weight matter? But this means you have to take a risk: skin in the game.
Would large institutions really be willing to bet everything they own on the version of the protocol without the update? That's a big assumption.
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.
