Vitalik talks about Bitcoin expansion: Soft forks are an anti-market way of doing things

The battle for Bitcoin expansion is currently at a stalemate, but what does the Ethereum community, as a competitor, think about this? Recently, r/ethereum community member PumpkinFeet published a discussion post titled "As an Ethereum enthusiast, do you support the current Bitcoin core expansion plan?" Interestingly, Ethereum founder Vitalik Buterin also responded to his views in the post. Vitalik believes that second-layer protocols such as the Lightning Network are cool technologies, but at the same time these technologies are also dangerous. In addition, in his opinion, the management method of hard forks is far better than soft forks. Fundamentally speaking, soft forks are an anti-market way of doing things.

My basic view is:

1. Layer 2 protocols are cool technology, but they are also dangerous. For example, any interactive protocol, including transaction channels, Lightning, Raiden, Ethereum Alarm Clock, interactive verification, etc., has a property that a 51% coalition of miners can not only prevent transactions or reverse recent transactions, but they can also steal. This is because they can simply deceive or censor any other challengers. In addition, even without miner collusion, there can be an attack in which a large economy can become an adversary of the majority of participants, and then he can try to deceive everyone. There will not be enough block space for all adversaries. I think these problems are surmountable, both the Lightning Network team and researchers like Jeff Coleman have thought of various ways to mitigate these problems, but it is completely wrong to claim that ultimately overcoming these problems is easier than solving the block size problem. Ironically, some of the more effective mitigations are easier to implement in Ethereum than in Bitcoin.

2. The problem of miner collusion is actually more subtle. In the case of on-chain transactions, all transactions are tied together by a "suicide contract", so miners cannot launch a 51% attack on one person without seriously disrupting the experience of everyone else. In the off-chain interaction mechanism, you can selectively censor, so it is not clear whether there will be so many "red lines" to prevent miner collusion.

3. The idea of ​​letting ordinary users run full nodes for a long time is completely unrealistic, and light nodes are the perfect solution. If you are willing to trust miners and think that they will not conduct a 51% attack, then you should be willing to trust miners and let them tell you the basic situation.

4. Hard forks are far better managed than soft forks. Sure, soft forks provide "stability", but their implementation is coercive, like you don't like a change but are forced to go along with it because it's the default. In my opinion, soft forks are fundamentally an anti-market way of doing things. Soft forks also give miners a lot of decision-making power, which is strange because miners are security maintainers, not users (who the system serves). In the real world, we have a term for highly coercive behavior: military dictatorship.

Even so, Bitcoin Unlimited has its own problems, and I can see that it makes sense as a political decision, but if I were a dictator, I would not be interested in it and would probably opt for some plan with a telescopic cap.

That said, if Bitcoin looks like a highly scalable payment network, the whole second layer protocol debate applies to it. Even $3 in transaction fees is no problem for digital gold. I think Bitcoin can exist as a store of value on its own. I have a clear portfolio theory right now, where there is a balance, if cryptocurrencies end up growing with world GDP over the long term, then it will be somewhat uncorrelated with other classic assets, and everyone will have an incentive to hold some of them, which is undervalued. In other words, Bitcoin is overvalued. The same portfolio theory applies to many crypto assets, and I ran a model last week where I even advocated holding Litecoin.