Crypto: in Analysis Ep. 29: Uncensored Bitcoin? Decentralized Ethereum?


The history of Bitcoin is a graveyard of narratives. Being a neutral instrument, an essentially mathematical phenomenon, it cannot replicate any of the predicates that speak of it. Given the assumptions about what it is, Bitcoin can only remain silent. This has led to the disclosure of many misunderstandings (some deliberate, others due to ignorance). Among the malicious narratives we could list the one according to which the revolution is not Bitcoin but “blockchain”; Also, that Bitcoin is only for criminals; or that its volatility will never let it be a predictable store of value. Many of these tales still swarm like zombies in a graveyard.

Multiple narratives have also spread from the Bitcoin trenches. Nic Carter, of Castle Island Ventures, has done a great job compiling those different visions that have been had on Bitcoin in its 12 years of existence. The different actors who deal with Bitcoin, either because they use it or because they are created with the moral authority to decide how others should use it, have different opinions on this monetary technology; some compatible, others in conflict with each other.

could be The most controversial narrative among Bitcoin’s promoters and detractors is that of its incensibility. The fact that Bitcoin is open money, which can be used by anyone without asking anyone’s permission and without being anyone’s debt or obligation, doesn’t appeal too much to regulators. Those who have always enjoyed the privilege of control and supervision cannot be held accountable.

If power is, as Max Weber states, the “possibility of imposing one’s will, even against all resistance”, those in power will do everything possible to exercise their will. And that doesn’t necessarily mean banning Bitcoin; with more and more institutional money involved, it would be frowned upon. But it means imposing your will on which transactions are permissible and which are not. And while Bitcoin already regulates it at the protocol level, allowing only transactions that comply with the rules of consensus (its internal constitution), this regulation may not please the will of many governments.

This week, the creation of a new mining pool was announced by one of the most established blockchain analytics firm on the market, BlockSeer. Among its proposals is that of not validating those transactions that can be linked to a predetermined blacklist.

At first, given Bitcoin’s architecture at both the consensus level and the game theory level, this doesn’t seem like a huge threat. The real vulnerability is seen when the possibility arises that governments, coordinated at the global level, will start demanding such censorship through legal means. As is happening with exchanges and their compliance with FATF rules, once a miner is extorted by telling him that he will be considered a criminal or a crime facilitator for validating a transaction, the risk appears to increase and game theory begins to tip the scales unfavorably for incensibility.

There are also more discretionary governments, who prefer not to wait for long periods of law and who prefer to act, let’s say, more without consultation so that their message is clear. This week we also learned about the disconnection of several mines in Venezuela as a letter of invitation to an event on the regulation of the sector in the country. An obvious act of censorship which, while it did not directly affect the power of hash, did affect those who work to protect the network from a specific geography.

Another narrative that was fiercely commercialized was decentralization. Although decentralization lives in the world of grayscale, i.e. it is not something black or white, in so-called distributed systems, that a highly centralized component could bring down a house of cards. This is what happened this week on Ethereum. There was a chain fracture, meaning the consensus failed. Part of the nodes did not validate the same rules as the others and this resulted in the creation of conflicting versions of Ethereum.

Several actors can be held responsible, both the developers of the geth clients for not making the need to update the nodes more explicit, and those who manage the nodes for not keeping up to date. But in reality the fact that centralization stands out more has been the paralysis of more “decentralized” services and applications because the Infura infrastructure provider has remained to validate the previous version of the client. Not only the dependence of the services on a single infrastructure, but the use of a single client by this provider, caused a momentary collapse in the Ethereum network.

Narratives are always shaped with the friction of rubbing against harsh reality. With these technologies being alive and open, in which multiple actors influence their fate, we are likely to continue to see how these narratives are tested and contracted against the relentless yardstick of facts.

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In analysis with CryptoNews It is a space to delve into the bitcoiner ecosystem today. Provide your listeners with broader context on the week’s news events across markets, mining, privacy, technology, and more by drawing on the research, knowledge, and experience of your hosts. The goal is to give the public more elements to form their critical opinion, always pushing them to do their own research, educate themselves and not blindly trust anyone.

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