As I read the bitcoin news each day and see the price of bitcoin cycling up and down, I’ve been thinking about the different sides of the blockchain scaling debate, and wondering what the best solution is for miners. While I realize that many of us signal (via our pool) our support of one proposal or another, a stable consensus seems elusive. As support for one proposal shifts to another, the forces that represent one idea or another shift to a different adoption method, and that can be frustrating for those of us who have had to change pools and reconfigure, in some cases, many miners.The thing that really matters, from my point of view, is the public ledger.
I consider myself a hobbyist. I have 20 or so miners, most of which only support SHA256, in a colo. But when I add things up, I easily have more than $30k invested in my mining hardware. If you say it out loud, it feels like a huge investment, and if bitcoin were to suddenly go insolvent due to a hard fork, or fundamentally, bickering, it would indeed be a huge loss to me and my family. This is why I think it so important for all of us to think very seriously about the future of bitcoin. People talk about all sorts of things—payment systems, etc.—but the thing that really matters, from my point of view, is the public ledger.
In my day job, I am in charge of enterprise architecture for a major corporation. This corporation, like so many others, invests capital in innovation and research, and blockchain technology is a focus of some of these investments. But no matter what types of blockchain tech you’re looking at, the “big” blockchain is bitcoin. For now. In order for bitcoin to maintain its dominance, it needs to scale to multiple applications—not just rest on its first “killer app,” which is the coin itself. When we look at off-chain scaling solutions, the big concern I have is how many alternative chains will exist. When those chains begin to pick up on the opportunity inherent in non-coin transactions, we, as miners, have lost the battle. The major source of fees in the long term will evaporate into the pockets of the people who run those alternate chains.
If, as miners, we don’t act now, I assure you, someone will make a choice for us,
Last week, we all had the opportunity to hear what exchanges were going to do if there was a fork. Then Exchanges said that the document they had signed maybe didn’t look the same as it did when it was signed. Why was the document’s hash not published to the blockchain? Why weren’t the signatures cryptographic? Why can’t we have an irrefutable record of who signed exactly what? We can’t because there is no room. That document’s hash would have cost an unrealistic amount of money to embed due to current size restrictions and the ridiculous backlog of data waiting for a block.
Perhaps the exchanges could have used an alternate blockchain. I am sure Etherium would love to have that business. The truth though, is that business should be ours. With a variable block size, companies and individuals would have the ability to embed transactions of all types into the blockchain. Such transactions will just become more pervasive over time and along with the coin economy would drive huge fees due to volume, not scarcity, to our mining community. Anyone who has attached themselves to the scarcity wagon is in for a rude surprise. Someone is always willing to do something cheaper. Sometimes they can even do it cheaper and better. Let’s not give up our dominant position as the main blockchain that everyone wants their transactions written to. Take time, and make a choice—a choice that will promote our long-term position as the coin, and the blockchain for the future. If, as miners, we don’t act now, I assure you, someone will make a choice for us, and it won’t be the best long-term choice for our wallets.
The opinions expressed in this article are my own views and not those of my employer, Cisco.