In his Take from Wednesday, Shinobi argued that the surge of institutional bitcoin adoption will lead to premature ossification of the Bitcoin protocol. While I share his concern to an extent, I am less convinced this is necessarily true.

Bitcoin is inherently a permissionsless system. For protocol changes specifically, it “just” requires users to upgrade their software. And when it comes to deploying soft forks, it really only needs a majority of miners to upgrade. (This is admittedly a simplification for the sake of brevity, but I’d say it’s still “true enough” to state it this way.)

Miners will for the most part follow economic incentives. If a protocol upgrade makes Bitcoin (say) more scalable or more private, there is actually good reason to think this would make Bitcoin more valuable, which in turn means there is good reason to think miners will activate the upgrade.

Even in an extreme scenario where a soft fork occurs through a user activated soft fork (UASF) that splits the blockchain, and even if in this scenario the institutions prefer the legacy version of the chain (this is the scenario Shinobi is ultimately envisioning), it’s not obvious to me that the non-upgraded chain would “win”.

Just owning lots of bitcoin does not give you a “say” on which side of a chain split is more valuable. Initially, everyone receives coins on both sides. Only if you’re willing to buy or sell these coins (eg.: “dump” coins on one side of the split to get more coins on the other side) does your economic weight matter. But this means you have to take a risk: skin in the game.

Would big institutions really be willing to bet everything they own on the version of the protocol without the upgrade? That’s a big assumption to make.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Well the “Trump Pump” seems to be ripping off spectacularly. Everyone is cheering, euphoric, happy, feeling on top of the world. Knock it off. Yes, the number is going up, everyone’s net worth (on paper) is increasing by the hour, but this is not a matter of celebration.

This is Bitcoin entering the gauntlet. These institutions, this administration, these high net worth individuals, they are not your friends. They are not here for the same reasons as people trying to build a monetary network centered around sovereignty and freedom. They are just here to make a buck, and to maintain this disordinate level of influence and control over the world around them.

These people don’t give a shit about self custody being scalable, or privacy being accessible, or Bitcoin doing anything to bring these tools of freedom to the masses. They care about Number Go Up, that is all. If this run really does turn into what it looks like it could, this presents an existential crisis for Bitcoin. All of these people are buying their seats at the table, and those seats come with much more influence than the aggregate of the average person who has been working hard to accumulate bitcoin the last few years.

Bitcoin consensus is dictated by the economic actors actually using it. If Bitcoin becomes a simple financialized asset dominated by the legacy institutions and actors that it was built to free us from, then proportionally to their level of use they decide consensus. The only choice left to us is to convince them, or deviate by forking off on a much less valuable (and therefore less useful) network.

These people dominating the network this early, before the necessary work is done to make this a viable and scalable network, is sprinting down the road towards ossification. Of people being stuck with no viable option except being wealthy already, or picking their choice of trusted third party to interact with the protocol and network. And none of these people will care.

Why would they support protocol upgrades that improve the scalability or privacy of Bitcoin? They make their living, all they know how to do is insert themselves as middlemen between the average person and the asset they want to interact with, making money by rent seeking as that intermediary. What incentive would they have to unseat themselves from that lucrative position?

Bitcoiners should not get complacent simply because existing holders are watching their net worth increase during this bull market. There is a lot more to do, otherwise Bitcoin will not live up to a fraction of its potential as a tool to spread real freedom.

So what do you value more? Getting rich or helping spread a tool to liberate people who are currently subject to the whims of tyrants and rent seekers?

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.