On the correct approach to Bitcoin upgrade (and rebuttal to ahr999's "Consensus Rules")

Author: Jiang Zhuoer from Litecoin Mining Pool
Stakeholders: BTC/LTC mining pools + miners + coin hoarders

Today, ahr999 wrote an article titled "On the Consensus Rules of the Bitcoin System", criticizing my claims, saying that I was "only thinking about how to get rid of all dissenters". This made me feel the need to write an article in response to discuss what is the correct approach to Bitcoin upgrades.

Before discussing, I think it is necessary to explain a principle: any argument raised in the discussion must first be logically self-consistent . For example, when I was doing Bitcoin popularization, I often heard such arguments:

Bitcoin is not backed by government credit, so can it still be considered a currency?
Dear, is gold a currency?
yes.
So dear, may I ask which government’s credit is backed by gold?

This is called "logical inconsistency". What follows is a common pattern that ahr999 and I have discussed many times on CoinTech:

Dear, could you please answer this question directly?
Honey, stop talking about other things all the time.
Dear, I dare to answer any of your questions directly, why do you always avoid answering my questions?

1. 95% consensus = complete consensus?

Let’s first look at ahr999’s core argument:

If everyone in the system agrees on something, then we call it complete consensus.
…
But this definition is not operational, so we can only settle for the next best option and look for the closest solution.

In statistics, we call events with a probability of less than 5% as low-probability events. This means that as long as the consensus reaches 95%, we can assume that the probability that the system has not reached consensus is 5% , which is a low-probability event. Therefore, in the Bitcoin system, we approximately believe that 95% represents complete consensus. Moreover, we also usually use 95% confidence to express measurement errors.

It's a very simple equation. The yellow part above shows that the consensus reaches 95% = 5% of the people who don't reach consensus ≠ 5% of the probability of not reaching consensus . Why did they replace people with probability? How did they turn the 5% opposition into a 5% probability? Obviously, ahr999 has replaced the concept of "consensus" with "probability".

If ahr999 meant "95% measured consensus (computing power consensus) = 95% probability of 100% actual consensus (user consensus)", then it is even more ridiculous in mathematics. If the measured value is 0.95, then the actual value distribution is a bell-shaped curve centered on 0.95, and the probability of the actual value 1 will not be 95% anyway.

Furthermore, let’s not talk about concepts but reality. Taking the ETH hard fork as an example, if “splitting into two chains” is taken as a concrete manifestation of “the system ultimately failed to reach a consensus”, then let alone 95%, even if we measure the consensus (computing power consensus) at 99.5%, the result will be the same: “the system ultimately failed to reach a consensus” .

After the hard fork of eth, 99.5% of the computing power chose to fork, and only 0.5% of the computing power remained in the original chain (the difficulty dropped from 62.413 T to 0.303 T, a decrease of 99.51%). According to ahr999's point of view, this is already 99.5% of the measured consensus (computing power consensus), and the consensus has been reached completely, so it can definitely be increased.

What is the result? As long as the small fork survives and can generate transactions, there will be speculators who will take a gamble . After Poloniex launched etc, a large number of speculators bought etc with the mentality that "etc may beat eth and increase by 20 times", which raised the price of etc and attracted miners to come back to mine etc with higher returns. Ultimately, the original chain of the small fork had enough computing power to survive and the eth hard fork failed.

If not only the measured consensus (computing power consensus) is 99.5%, but the actual consensus (user consensus) is also 99.5%, is it useful? Of course not. There is no shortage of speculators in this world. What if there are only 0.5% of users left? As long as the small fork is still alive, a large number of speculators outside the system (for example, those who speculate in BTC are attracted to speculate in ETC, and those who speculate in stocks/foreign exchange are attracted to speculate in BTC) will immediately pour in, turning 0.5% users into 20% users in a matter of minutes.

ahr999 criticized my proposal to kill small forks:

Jiang Zhuoer published two articles successively, discussing how to kill another chain.
Jiang Zhuoer had no intention of reaching a consensus with others. He didn't even have the concept of consensus in his mind. He was only thinking about how to get rid of all dissidents.
The essence of Jiang Zhuoer's plan is to eliminate different opinions rather than seek consensus.

So the National People’s Congress specially enacted a law called the “Anti-Secession Law” to discuss how to kill Taiwan?
I would like to ask ahr999 a few questions.

Dear, you are against killing small forks and against the majority coercing the minority, right?
ahr999: Yes

Dear, you are against splitting and creating two Bitcoins, right?
ahr999: Yes (many times during discussions on CoinTech)

Dear, you also said that “there is no 100% consensus on any issue”, right?
ahr999：Yes.

Dear, you agree that there are opponents, but you are against letting them develop and create two bitcoins on their own, and you are against forcing them. So what do you plan to do?
ahr999: Can we wait for 95% measurement consensus (computing power consensus)?

Dear, ETH has reached 99.5% measurement consensus (computing power consensus), but it has split into two coins.
ahr999: Then... we can invite aliens to come and count the real user consensus, and then wait for 95% of the users to reach consensus.

Dear, there are still 5% of users who oppose it. They develop and create two bitcoins. According to the experience of ETH, plus speculators, the number may reach 20%. What should you do?
…
Dear, what do you think about the many soft forks in BTC's history and the many instances of the majority coercing the minority?
…
Dear, could you please answer this question directly?
Honey, stop talking about other things all the time.
Dear, I dare to answer any of your questions directly, why do you always avoid answering my questions?

The biggest mistake of ahr999 is that he acknowledges the existence of minority opposition but opposes coercing the minority opposition. Instead, he fantasizes that the minority opposition will automatically disappear when there is a 95% consensus. Is this possible?
You know, ETH has reached 99.5% of the measurement consensus (computing power consensus), so why doesn’t it still split into two coins?

2. Correct Bitcoin Upgrade Posture

What should be the correct Bitcoin upgrade posture? Under what conditions can the fundamental rules of a group be modified?
Dear friends, please note that this is an easy question.

Constitution of the United States of America
Article 5, ...if ratified by the legislatures of three-fourths of the several States, or by conventions of three-fourths of the several States, it shall become a part of this Constitution, and shall be of full force and effect.

Why is the vote for constitutional amendment not 95%, not 51%, but 75%?
Logically speaking, when it comes to changing the fundamental rules of a group, there are only two options: "the majority coerces the minority", "the minority coerces the majority", or "split" .

The correct upgrade posture must properly balance the interests of the majority, the interests of the minority, and the risk of division. After thousands of years of exploration, mankind has already given an answer to this question: it cannot be a slight majority (51%), nor an absolute majority (95%), but a relative majority (75%).

There are already bright and smooth paths that countless predecessors have walked on, so why do some people always want to cross the river by feeling the stones again?

3. The correct conspiracy theory posture

The modification of the fundamental rules of a group will inevitably produce corresponding interest groups and interests. Some people hate conspiracy theories, and I understand them emotionally, but from the perspective of public interest, conspiracy theories are necessary - conspiracy theories are a form of public public opinion supervision . If you say that in the currency circle with millions of users, everyone is an open gentleman and there are no villains with dirty ideas, I don't believe it. For example, if Mt.Gox survived until now, it must have found a way to control 10% of the computing power to prevent expansion and prevent the price of the currency from rising, otherwise it would definitely go bankrupt .

However, conspiracy theories must also comply with the Basic Law and basic logic. Otherwise, they become dirty smear campaigns and personal attacks.

ahr999 suggests:

Jiang Zhuoer likes to write about conflicts of interest in his articles, which seems to indicate that he is a die-hard Bitcoin fan. I would also like to make a statement: I do not own Litecoin.
Jiang Zhuoer supports Bitcoin on the surface, but he actually holds a large amount of Litecoin.
Jiang Zhuoer is not worried, because even if Bitcoin is dead, he still has Litecoin. But I am different, I am really worried!

I'll just use data to speak for myself. The cold storage of BTC and LTC in the Litecoin mining pool is public. The current market value of 3,000 Bitcoins is 12.75 million RMB, and the current market value of 100,000 Litecoins is 2.57 million RMB. The Litecoins stored in the mining pool are just a fraction of Bitcoin. Then you say I am plotting to kill Bitcoin so that the Litecoins in my hands can appreciate? Conspiracy theories must also comply with the Basic Law and basic logic.

What should the correct conspiracy theory posture be?

Take ahr999 as an example. It is said that ahr999 sold the coins and missed the opportunity. This is all a low-level trick of catching wind and shadows. If you want to make a conspiracy theory, you must start with real evidence. ahr999 said:

In addition to RMB, I only hold Bitcoin, which I hold heavily and continue to increase.

Did you see that? ahr999 personally admitted that he holds RMB, and according to his previous self-described situation and "heavy positions", he probably holds more RMB than Bitcoin. I borrowed several million RMB to mine, which is a negative amount of RMB, and I'm all in Bitcoin. In comparison, is ahr999 more motivated to hope that the price of the currency will not rise now, so that he can increase his holdings at a low price for a while?

4. The correct posture for understanding things

Of course, the above is a joke. I absolutely believe that ahr999, as a long-term Bitcoin fan, must hope that the price of Bitcoin will reach the moon. But why do two people with the same goal and who should be in the same camp have such a big difference of opinion? Why does one act as if Bitcoin will surely die if it does not expand, while the other thinks that expansion is a trivial matter?

The correct understanding of things does not fall from the sky, but is obtained from practice . I dare not say that I have a deep understanding of Bitcoin in terms of technology and economy, but I have done in-depth exploration (I have two degrees in computer science and business administration from the University of Science and Technology of China). After entering the cryptocurrency circle, I have worked in mining pools, mining, mining farms, altcoins, cryptocurrency speculation, futures, and arbitrage hedging. In terms of depth, each of them is definitely not as good as many people, but in terms of breadth and richness of experience, it is still worth mentioning. Moreover, I have made profits in all fields without stepping into any pitfalls.

In addition, I have done a lot of popular science about Bitcoin. I have dozens of answers on Zhihu related to Bitcoin. The longest answer is 60,000 words (What is Bitcoin? - Jiang Zhuoer's answer), which has received thousands of likes. In the process of popularizing science, I have come into contact with a large number of Bitcoin newcomers and I know very well what various groups of people think about Bitcoin.

ahr999's practice, as he said:

We depositors rarely care about the progress of Bitcoin, because we don’t have time to read Bitcoin news and study Bitcoin dynamics every day. Our biggest wish is to hoard Bitcoin and sleep. Therefore, we hope that Bitcoin upgrades are completed under full consensus, so that we can solve the problem once and for all without worrying about forks or additional issuance. After 10 or 20 years, the Bitcoin in your hands will still be the same Bitcoin as when you bought it.

For example, there are many natives in Beijing, Shanghai and Guangzhou who live off a few houses and do not need to work. They just sleep after collecting rent every day and do not need to make any contribution to the city. However, while they are sleeping, the housing prices keep rising, so they have summed up their experience:

You don't need to do anything and house prices will continue to rise.

Even further think:

Those outsiders are so annoying, they fill up the roads, hospitals and schools. They'd better all get out of here smoothly. It's not so comfortable during the Spring Festival without outsiders.

Everyone knows the actual reason. Without the influx of outsiders and the expansion of the city, the rise in housing prices is like water without a source. The same is true for Bitcoin. Without the expansion of the scope of Bitcoin use and the increase in new Bitcoin users, the price increase that ahr999 hopes for is like a tree without roots.

Some people have a wrong understanding of Bitcoin, that is, they think that Bitcoin, like gold, does not need many transactions or transaction convenience to store value naturally and continue to rise. The error of this view is that they do not realize that the reason why gold does not need to be traded is because gold has 6 billion users, and everyone in the world recognizes the value of gold and accepts gold.

What about Bitcoin? However, in the early stages of development, there were only a few million users at most. If there was no plan to expand the scope of use and increase the number of Bitcoin users, it would be like the natives of Beijing, Shanghai and Guangzhou, who do not welcome but hate outsiders. If you think that Bitcoin can store value out of thin air without user growth, then why not find a fake currency that no one uses to store value?

In my article "Also Talking about 4,000 yuan being the beginning of the Bitcoin bull market", I discussed the data correlation between Bitcoin users (number of active addresses) and currency prices. The two show a high correlation, which is also the theoretical basis for me to vigorously promote capacity expansion from a very early stage.

No expansion, no users, no bits.

Expansion & Bull Market Series:

"【Basic Science】Can Bitcoin support all human transactions?"
"Also Talking About 4,000 Yuan Is the Beginning of Bitcoin Bull Market"
[Completely end the debate between soft and hard forks] A safe hard fork is a soft fork expansion