Viewpoints and interpretations: Jiang Zhuoer’s disagreement with Bitcoin Core

❖Preface❖

Jiang Zhuoer published an article today titled "Why does Core persist in trying to issue more BTC?" This article contains a lot of information and is very professional.

TVB strives to give a popular interpretation and express its own views at the same time.

❖Related interest groups❖

➤ Bitcoin Core

According to the Bitcoin Core website: "Bitcoin Core is an [open source project] responsible for maintaining and releasing the Bitcoin client software called 'Bitcoin Core'."

According to Bitcoin.org: "Bitcoin Core is programmed to decide which block chain contains valid transactions. The users of Bitcoin Core only accept transactions for that block chain, making it the Bitcoin block chain that everyone else wants to use."

Translated into English: The Bitcoin Core program can decide which blockchain contains valid transactions. Users of Bitcoin Core only accept transactions from that blockchain, making it the Bitcoin blockchain that everyone else wants to use.

It can be seen that Bitcoin Core is a Bitcoin client, but it is not just a wallet. According to bitcoin.org"

The Bitcoin Core program can determine which blockchain contains valid transactions. It can be seen that Bitcoin Core is the updater of the Bitcoin network code. How Bitcoin is accounted is controlled by Bitcoin Core.

➤BCH(Bitcoin Cash) Community

We all know that BCH is a forked chain of BTC, and the key point of the fork is block expansion.

In the past, TVB always thought that BCH was the son of BTC. After reading Jiang Zhuoer’s article today and studying what Bitcoin Core is, TVB finally understood that BCH and BTC are in a competitive relationship. I will continue to explain what the competitive relationship is.

➤Blockstream

Blockstream is a blockchain technology company whose products include Bitcoin sidechain Liquid, Bitcoin wallet Blockstream Green, Bitcoin mining equipment hosting business, Blockstream Satellite Network, Lightning Network, open source blockchain platform Elements for developing side chains, etc.

According to Blockstream’s website: “Liquid is a sidechain-based settlement network for traders and exchanges that enables faster, more confidential Bitcoin transactions and issuance of digital assets.”

Jiang Zhuoer’s view is that Blockstream is the company behind Bitcoin Core.

Here is an article titled Bitcoin Core ≠ Blockstream which contains both supporters and skeptical voices.

https://www.reddit.com/r/Bitcoin/comments/622bjp/bitcoin_core_blockstream/

TVB believes that as a side chain of Bitcoin, Liquid inevitably has a vested interest in the Bitcoin network and Bitcoin Core.

➤ Bitmain

Although Jiang Zhuoer did not mention Bitmain, Bitmain is an important force in the BCH community. I would like to add that because Bitmain is very supportive of the BCH expansion concept, many people equate Bitmain with BCH. In addition, Liao Xiang, the founder of BTG, another BTC fork, often attacks Bitmain and Wu Jihan for this reason.

BCH≠Bitmain.

In addition, as the world's largest cryptocurrency mining machine manufacturer, Bitmain controls a relatively large proportion of BTC computing power. Therefore, Bitmain is bound to have a vested interest in the Bitcoin network and BTC.

❖ Differences ❖

In fact, speaking of interests, all groups are stakeholders of BTC. I drew this relationship into a diagram, and I believe that anyone who sees the Bitcoin Core proposition will oppose the proposition of issuing more BTC.

➤ Divergence point: Sustainability of the BTC network

We all know that BTC is a POW consensus that relies on computing power. If there is more than 51% computing power, an attack can be launched on the BTC network.

The driving force of BTC computing power is the income of miners. Miners spend money to buy mining machines, which is essentially buying computing power. If there is no money to be made, miners will not buy computing power.

We know that miners’ rewards come from two parts: one is the newly issued BTC, and the other is the transaction fees in the block.

The problem is that after the halving this year, the reward for each block is only 6.25 BTC. As time goes by, the output of BTC is halved again and again, and the reward for miners will become less and less. Then, miners may quit mining, the computing power of the entire network will decrease, and the BTC network will be threatened by attacks.

This is a concern for the sustainability of the BTC network.

➤BCH community’s claim: capacity expansion

Let me first talk about the BCH community’s proposition.

To make the BTC network sustainable

→It is necessary to increase or at least maintain the total network computing power of the BTC network

→The best thing is to find a way to increase miners’ income

→For each block mined, since the amount of new BTC is decreasing, we need to find a way to increase the transaction fees in the block.

→That is, increasing the transaction volume in the block, i.e. capacity expansion.

Jiang Zhuoer put forward an argument: "Core's lock of 1M violates Satoshi Nakamoto's plan. Satoshi Nakamoto set a block expansion plan and even wrote examples in the code, so that after the new coins are mined, the handling fees provided by the 'very large number of on-chain transactions (Satoshi's original words)' can maintain the operation of the miner (POW) system."

➤Bitcoin Core’s claim: additional issuance

First of all, Bitcoin Core is firmly opposed to capacity expansion.

The reason is audit resistance. What is audit resistance? It means resistance to audit and regulation from the government. Bitcoin Core insists on a block size of 1M. Because of the small block capacity, BTC can run on more low-end devices. "In this way, the government cannot kill BTC. Not being killed by the government is the highest goal, so the block must be locked at 1M and cannot be expanded."

Secondly, due to opposition to capacity expansion, Bitcoin Core proposed to issue more BTC to exceed 21 million.

In addition, their core figure Peter Todd put forward two views. One is that there is no difference between 0% and 0.5% inflation rate; the other is that the 21 million BTC upper limit is a religious belief.

❖My opinion❖

Seeing this, I believe that most people will support the BCH community’s views and oppose Bitcoin Core.

Maybe some people are too lazy to care about whether the capacity will be expanded, but I believe that no one will support the issuance of additional Bitcoins, and no one will accept that the number of Bitcoins will exceed 21 million.

➤Conflict of interest behind capacity expansion and additional issuance

On the surface, it seems to be a dispute over capacity expansion. In reality, it is a dispute over interests.

(TVB is impartial and objective) Bitmain naturally supports this proposition, because Bitmain is a mining machine manufacturer and mining pool operator. If the miners' income is high, the mining machines will sell well and the mining pool's income will also be higher.

Bitcoin Core feels threatened by Bitmain's computing power, so they hope to maintain a block size of 1M and hope that more terminals can participate in the Bitcoin network. As a Bitcoin terminal software, Bitcoin Core can have more users.

To put it bluntly, Bitmain has an advantage in the computing power of its devices, while Bitcoin Core has an advantage in the number of devices. Opposing capacity expansion is essentially an attempt to maintain this advantage.

On the contrary, whether it is the BCH community or Bitmain, they support the expansion, not only considering their own interests, but also considering the future development of Bitcoin. It can only be said that BTC expansion is in the interests of both the Bitcoin community and Bitmain.

➤ Expansion may be the trend

The BCH community considers not only the interests, but also the development of the BTC network.

First, the anti-audit feature proposed by Bitcoin Core is simply nonsense. Even if many non-mining terminals are participating in BTC, the government can still ban BTC. It is very simple. A law that prohibits its use can deter many people. Why did Satoshi Nakamoto create BTC? His motivation was to compete with the centralized US dollar, not to oppose the government. There is no need to regard anti-audit as the supreme purpose. Therefore, it is difficult to justify the small block size for anti-audit.

Second, as the BCH community believes, capacity expansion can increase the number of transactions in a block. With more transactions, the handling fees will naturally increase, and the miners' income will increase. Therefore, even if the amount of newly issued coins becomes smaller, the block reward can be maintained, and the computing power of the BTC network can be maintained, so the sustainability of the BTC network will be formed.

Third, TVB believes that miners’ benefits should not be considered first. Let’s talk about the BTC network. We know that BTC produces one block approximately every 10 minutes. If the consensus of BTC becomes stronger in the future, and there are more and more transactions within 10 minutes, the 1M block capacity may become insufficient, so it is natural to expand the capacity.

Therefore, the main driving force behind BTC expansion comes from demand. Bitcoin Core’s opposition to expansion is completely irrational and selfish.

Supplement: Some people mentioned that the Lightning Network solves performance problems. The relationship between the Lightning Network and the Bitcoin network is like the relationship between WeChat Pay and banks. The essence of the Lightning Network is to establish a channel with a certain Bitcoin node as the core, and all payment work is carried out in this channel. However, this payment process is no longer on the Bitcoin blockchain, so its security is not fully guaranteed. The Lightning Network is more suitable for small payments, and the Lightning Network cannot replace capacity expansion.

What I don’t understand is why the capacity cannot be expanded? Expansion will not bring any harm to Bitcoin. On the contrary, issuing more coins can really go against Satoshi Nakamoto’s original intention and change the scarcity of Bitcoin.

➤ Issuance of additional shares is impossible

Based on Peter Todd's remarks, Jiang Zhuoer estimates that the inflation rate of 0.5% will occur after 2024.

TVB believes that it is impossible to issue more Bitcoin.

First of all, if Bitcoin Core modifies the BTC program code and issues more BTC, this is not good news for most coin holders because the scarcity of BTC will change after the issuance of more BTC.

No one will be happy when the number of BTC exceeds 21 million, except Bitcoin Core.

Therefore, even if Bitcoin Core modifies the program code and issues more BTC, there is a high probability that it will fork. No matter which coin is called BTC after the fork, the coin with a maximum limit of 21 million will definitely be more valuable because it is more scarce.

The logic is:

If BTC is issued more → BTC forks → the BTC with 21 million is the faith

Secondly, Bitcoin Core’s original intention was not to issue more BTC.

Please note that Bitcoin Core does not necessarily want to issue more BTC. They just want to oppose capacity expansion in order to maintain their monopoly on BTC.

Therefore, when the price of BTC rises, even if the newly generated BTC continues to halve, the miners' income will not decrease, the computing power of the entire network will not decrease, and there is no need for Bitcoin Core to issue more BTC.

The logic is:

BTC is not issued more → BTC is scarce → BTC price increases → miners’ income remains unchanged → network computing power remains the same → no need to issue more BTC

❖Written at the end❖

We have always believed that Bitmain has a lot of Bitcoin computing power, forming a centralized system.

This is actually totally wrong.

Because if Bitmain is centralized, BTC can be expanded directly. There will be no BCH later. It is precisely because Bitcoin Core has control over the BTC program that BCH was forked.

The real centralization of BTC lies in Bitcoin Core. Bitcoin Core is a monopoly.

There are at least four BTC mining machine manufacturers and many BTC mining pools on the market, and at most they can form an oligopoly!

TVB believes that it is very likely that one day in the future, BTC will have to expand. This is not to satisfy the miners’ income, but because the number of transactions on the BTC network has increased and the existing blocks cannot meet the demand. As for the increase in issuance, it is impossible to increase the issuance!

Therefore, the common point of TVB and Jiang Zhuoer is that they are against Bitcoin Core.

The difference is: Jiang Zhuoer believes that BCH is the real BTC, while TVB supports BTC that one day Bitcoin Core cannot control and has to expand. (Of course, BCH is also a good project)