Is computing power equal to power? Not really

“Power is a strange thing”

Varys: "Three nobles sit in a room: a king, a monk, and a wealthy man. Between them stands a common mercenary. Each noble orders the mercenary to kill the other two. Who lives and who dies?

Little Devil: That depends on the mercenary.

Varys: Really? He has no crown, no gold, no jewels, and no favor from the gods.

Imp: But he has a sword and the power of life and death.

Varys: Why do we pretend to recognize the king's right when the lives of soldiers depend on it? Power lies in the heart of man. If you believe it, you have it. If you don't believe it, you don't have it. A trick to deceive people is like a shadow on a wall. Even a small man can cast a big shadow.

——From "Game of Thrones"

Today, a real-life game of power is playing out in the world of Bitcoin.

Due to different concepts (essentially out of consideration of interests), two different camps have emerged: on-chain expansion and off-chain expansion. The off-chain expansion is represented by Bitcoin core, and the on-chain expansion is represented by Bitcoin Unlimited.

If Bitcoin core and Bitcoin Unlimited really split, then which one is the real Bitcoin?

One party chooses to announce through an exchange:

"You are fake, I am the real one."

The other side countered that:

“Hash power is power, and the chain with the most hash power is naturally the real Bitcoin.”

So the question is, who holds the power to decide the fate of Bitcoin?

Let's listen to Wang Situ's analysis one by one:

The power of Bitcoin can be roughly divided into: (1)代码控制权; (2)规则更改投票权; (3)舆论导向权; (4)上线交易权; (5)用脚投票权;

They correspond to developers, miners, media, exchanges and coin holders respectively.

1. Code Control

There are two types of code rights. One is the right to submit code. Bitcoin is an open source system, which means that anyone can submit their own code opinions for the Bitcoin project. The second is the right to put it into the Bitcoin code base. I call this power code control. Today, only three people in the core camp have it. They are Wladimir Van der Laan (Bitcoin core maintainer, he is the one who releases the new version), Gregory Maxwell (Blockstream) and Pieter Wiulle (Blockstream). There were two other developers who had this authority, Gavin Andresen and Jeff Garzik, but they have been removed from the core because of their different opinions. In other words, Blockstream is indeed the most influential company in terms of code control of core software.

As a result, various alternative versions of the Bitcoin protocol, including Bitcoin classic and Bitcoin Unlimited, emerged.

II. Rules Change Voting Rights

According to the current design of Bitcoin, changes to the Bitcoin protocol or rules require miners to vote to decide. For example, the isolated witness proposed by the core requires a computing power threshold of 95%, while Bitcoin Unlimited requires a computing power threshold of 75%.

This power struggle is about resources. Whoever deploys more computing power (has more money) has more say, or you can convince others to agree with your ideas. In today's world, the institutions or individuals with the most computing power have the most voting rights to change the rules. The following picture shows the top 10:

(Data from btc.com)

III. Right to Guide Public Opinion

Many people in the Bitcoin community have overlooked this power, which I call the power of public opinion guidance. The core bases of bitcointalk and r/bitcoin firmly control this power. The administrators can delete any speech that is not conducive to the core. If the non-core camp wants to win, it must master this power, and r/btc came into being. Fortunately, Babbitt in the Chinese community is a neutral platform where any party’s views can be expressed.

IV. Online Trading Rights

This power was not apparent at first, but as the fork became more and more serious, some exchanges began to take sides. For example, several exchanges represented by BTCC directly planned to list BU coins as altcoins, and some exchanges such as Gemini announced that they would list the longest chain coin as genuine Bitcoin.

Exchanges have the power to decide whether to list a certain coin or list it as a competing coin. I call this power the right to list for trading.

5. Voting with your feet

This kind of power, I believe everyone is very clear, "I don't like the code you wrote", "I don't like your decision", "I don't like you as a person"... These can all be reasons for you to vote with your feet. Coin holders can express their opinions by selling or buying coins.

VI. Checks and Balances among Powers

When you compare all the powers together, you will find that the situation becomes very complicated. Developers have code control, but they need to consider both miners and coin holders. If they lose the support of either party, this power will become a decoration. Now that the core developers and the big miners are at odds, there are helpless alternatives such as changing the PoW algorithm and user-activated soft forks. Now they can only pin their hopes on coin holders.

The factors that miners need to consider are basically the coin holders. Assuming that after the split, one of the chains has gained more user expectations (indicated by a higher coin price), then according to the theory of miners seeking profit, the computing power of this chain will be higher. However, it is not ruled out that there are powerful miners who can ignore the user's choice in the short term, resulting in an irrational situation of higher coin prices and shorter chains. In this case, users will be influenced by miners and have a lower probability of changing the situation.

As for the media, which is neutral, they will definitely follow the trend. As for the media that is controlled by various parties, there is nothing much to say.

As for exchanges, the smart ones will remain neutral for the time being and wait for the winner to be decided before choosing a side. Otherwise, there is a chance that they will be voted down by users.

In fact, in the final analysis, the power of currency holders is still the greatest. Of course, you must also clearly realize that the difference between 1 satoshi and 100,000 BTC is also huge.