Faced with the threat of ossification, Bitcoin Core should adopt BIPs 300 and 301, integrating Drivechain solutions for continued security.
This is an opinion editorial by Samuel Greenberg, who believes that Bitcoin is the best hope we have for a just world and passing it on to the next generation.
At some point in less than ten years, the block grant fall below a bitcoin – and continue its decay in each subsequent epoch of halving. This means that the security of the network will increasingly depend solely on transaction fees.
We should expect, in that same period, that the world’s powerful trust institutions become acutely aware of the serious threat Bitcoin poses to their hegemony. If transaction fees are insufficient to sustain widespread and distributed mining activity, then there may be an opportunity for those powerful institutions to control enough hash rate to attack the network. We as a community must take this threat seriously and resist becoming complacent that Bitcoin’s success is somehow predestined and requires no additional effort on our part.
Since the Blocksize War concluded in 2017, network improvements have been extremely difficult to implement due to an obsession, correctly, with mainchain security. Given its importance, skepticism towards a proposed Bitcoin Core code improvement is reasonable and desirable. That being said, resisting all proposals in the name of the precautionary principle is self-defeating if a proposal contributes to network security. Developers should function as custodians to perfect the network, rather than gatekeepers bogging it down.
The challenges that Bitcoin will soon face
Bitcoin, like other protocols, will ossify at some point; however, there are two critical issues that are vital to remedy before it permanently hardens. The first is the uncertainty that the transaction fees will be enough to secure network as block subsidies decrease over time. The second, which is indirectly related to the first, is that developers don’t have a place to safely and permissionlessly innovate useful and fee-generating features for the network.
To ensure the continued security of the network, the mining ecosystem must be robust and widely distributed. It is incumbent on miners to seek attractive energy sources, be prudent in capital planning, and maintain operational excellence. Unfortunately, if there simply isn’t enough income accessible to go around, all the best practices in the world won’t cut it and miners will be forced to shut down and sell their ASICs.
The total revenue earned by all miners across all activities (transaction fees, block subsidy, and others) in a given period, or Bitcoin’s “safety budget,” has been driven predominantly by a block subsidy that is declining exponentially. We as a community have a responsibility to help strengthen the network security budget, finding new ways to increase revenue from transaction fees or working to maximize the value of Bitcoin in general or locating other novel uses for miners. . The value and security of the network are directly related to its useso the solution must involve increasing the use of Bitcoin.
We need to balance the affordability of mainchain transactions with the imperative of a consistent and reliable fee market, ensuring that the network is not susceptible to attack. The transaction fees generated from the utility of Bitcoin as money can only prove to be an unstable source of income. This approach (which is currently the dominant one) could eventually require users to pay hundreds or even thousands of dollars per discrete transaction to be included in a block, undermining Bitcoin’s usefulness as money.
Our most reliable countermeasure is to maximize the utility of the Bitcoin network by enabling the community to develop as many useful tools and apps as possible (all require transaction fees). Drivechain is the ability to secure the Bitcoin network with permissionless innovation. As stated, innovation is currently inhibited as developers are understandably cautious and conservative when considering a network upgrade on the mainchain. Furthermore, there is no procedure for integrating a new idea: a proponent often must work for years to gain social momentum by convincing people one by one, a miserable and self-defeating use of their energy.
Crucially, this forces real users who pay a fee to patiently wait for developer priests to bless a desired feature or look elsewhere for it. This is an egregious misalignment; no group of people should decide what is valuable of use If we believe in free markets, not only in currency, but also in ideas and vision, then we must trust the market to freely decide what is useful.
Introduction to the transmission chain
In 2015, Paul Sztorc proposed BIP 300 and 301 (or “Drivechain”), which describes a protocol upgrade that would allow developers to innovate without permission on top of the Bitcoin protocol stack. Drivechain’s vision is to allow users to deposit and withdraw their bitcoins on sidechains with a fixed one-to-one conversion rate (enforced by BIP 300 “Hash Rate Custodians”). Miners could collect all transaction fees from each of these sidechains in the form of Bitcoin transaction fees, without needing to run additional node software (described by BIP 301’s “Blind Merged Mining”).
Drivechain requires a soft fork and establishes a clear mechanism to embed network innovations, securely, on a sidechain (a “second layer”), while the current functionality of the mainchain remains unchanged. Bitcoin users can choose to completely ignore any and all sidechains. But unlimited feature development can be implemented for users, all of which can contribute fees to the security of the Bitcoin network.
This additional utility on the Drivechain-enabled Bitcoin network captures value in two ways: First, since sidechains can only be accessed by depositing bitcoins at par, and they can always be redeemed at par, their existence is a new source of demand, which generates an appreciation of prices against dollars. ; and second, by pulling dollars from rival blockchains into Bitcoin, we generate price appreciation compared to other cryptocurrencies, with Bitcoin being the money needed to access and use an unlimited multitude of sidechains. Thus, Drivechain broadens the scope of the need for bitcoin as money.
Addressing criticism of the transmission chain
The Bitcoin community should not tolerate rival projects. We should integrate all the good ideas from all the other projects in the Bitcoin network. We should have privacy coins, smart contracting coins, and every other coin anyone can dream of.
As sidechains are not get-rich-quick vehicles (via pre-mine and post-pump-dump models), they mark the beginning of true open source coordination; users can give away great ideas for someone else to build, without worrying about losing the advantages. All valid solutions would compete for users’ attention based solely on their usefulness and usability. Any use of any project created on a sidechain would benefit everyone holding bitcoin (in proportion to the scale of use on the sidechain).
There are several common criticisms that the community is asking drivechain advocates to address, the most common being the claim that “miners can steal from sidechains”. but let us consider that these sidechains would be sources of income for miners, so there is little incentive for miners to destroy them. Furthermore, all use of sidechains is voluntary, so users choose to deposit their bitcoin knowing that there is theoretical risk.
An important context is that, due to the code behind BIP 300, a sidechain attack would take six months if a minimum of 51% of the miners colluded. The attack must occur in broad daylight, and at any time the network can react to defend itself, requiring only 2% of miners to defect (pointing their hash rates at other pools). Is there some precedent for this, for example in September 2022 when the Poolin mining pool suspended withdrawals, their hash rate dropped from more than 10% to less than 2% in a matter of days: the network is capable of defending itself against the misconduct of the mining pool.
Other common criticisms amount to dismissals like “We have nothing to worry about with regards to fees” or that “The network is fine the way it is.” Both attitudes are epistemologically overconfident: we have no way of knowing what the future holds, and Bitcoin’s survival is too important to be left to hope. If it’s the case that the mainchain transaction fees are enough, then the sidechain transaction fees add up and only work to further secure the network.
Bitcoin represents a normative good for humanity, now and in the future. Like the internet decades ago, it is impossible to imagine the good that will come from this technology, and we must always seek to nurture and defend it. Drivechain is a relatively small and light touch, serving as a reverse gear that unlocks tremendous latent potential. Humanity has always solved its problems through innovation. We should want Bitcoin to become a more useful tool, capable of being applied to a broader set of problems, all while ensuring its primary use as money.
It will take great courage and effort to establish a consensus for Drivechain to merge with Bitcoin Core. But we can become part of the consensus building effort. Can educate ourselves and advocate within our circles. We can signal our support and make our voices heard.
This is a guest post by Samuel Greenberg. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
