I’m just merging the next two lectures together. They’re short one is regarding the open source Bitcoin developers and the other is the stakeholders. Unsurprisingly, these topics are interconnected and thus I’ll quickly cover them since it seems pretty cut and dry. Not boring and dry just simple and quick.
Questions answered in this Post:
- What are BIPs?
- Explain the roles of the Bitcoin developers,
- What happens during a hard fork
- Who has power in Bitcoin?
Bitcoin Open Source
As everyone knows, you can just go GitHub, and look at the Bitcoin repository. Thus the Bitcoin core is the de facto rule book. It’s interesting that the lecturer mentioned that even those who are building new cryptocurrencies will look to it as guidelines for their own rules.
In addition to the core, there is also Bitcoin Improvements Proposals (BIPS). This is a formal proposal for changes to Bitcoin. Essentially, since everything is public and people need to be in consensus, this is the way to formally propose changes to Bitcoin including the technical specification changes and rationale. They are usually referred to like BIP32/BIP39. I personally have spent the most time looking at the BIPs related to mnemonic code for generating deterministic keys. This is because there is crossover between Ethereum and Bitcoin for how the deterministic keys are generated for each chain. I highly recommend people technical or nontechnical to read at least one BIP. They are clear, well formatted, and easy to read even if they are not that easy to understand. Each BIP has a champion to evangelize for it. Other projects have something similar such as Ethereum which has EIP (Ethereum Improvement Proposals) and Ripple which has RIP (Ripple Improvement Proposal). There was a repo for lips (Litecoin Improvement Proposal) but given that acronym perhaps they moved it elsewhere. Enough of this tangent, essentially if Bitcoin were a government we now have the Constitution (rulebook) and a Legislative system (way to make/lookup laws).
There are five main lead developers on Bitcoin. One of them Gregory Maxwell has been discussed in earlier lectures who proposed coin tumbling strategies i.e. CoinSwap. The lecturer points out that even though they are the lead developer their power is muted and they tend just to “lead the parade” because anyone can fork the software at any time. This gives power to the individual users which is more than what you would get in a centralized currency. With a centralized currency users have the right to exit. However, if there is only a single bank, exiting the bank would be detrimental to your everyday life. Life would become more difficult. Beyond that maybe you can join another if it exists but there isn’t a mechanism to make it better. With Bitcoin, users can fork the rules i.e. meaning more empowerment. Thus the right to fork ensures that the community retains more power as opposed to the central deploying entity. What exactly is a fork though?
Hardforks with Developers
I’ve discussed hard forks before. However, the lecturer goes more in depth of users behaviors. If the fork was mean to start an altcoin then the altcoin goes its separate way and branches coexist nicely. Otherwise, forks could reflect a fight to the future. Thus when miners fork, it means there needs to be mass adoption of a new set of rules and that eventually takes over the entire network of Bitcoin nodes. If mass adoption doesn’t occur, or it’s only a small subset that want to fork, well that becomes it’s own currency ie Bitcoin Cash. Now we segue to the stakeholders.
Stakeholders in Bitcoin
There are several individuals in the Bitcoin. If there is BIP or negotiation about rule setting what happen which I’ll expand on below which some thought experiments.
Claiming the Bitcoin developers have the power
This seems obvious to me because they write the rule book. Almost everyone users their code and follows their rules. In addition, for some of the technical details, they may be the only ones knowledgeable enough to make informed assessments about changes. However if they do something that only benefits them, they run into the case that people ie miners and users just stop using this blockchain. They perceive that they are at a disadvantage and because Bitcoin is not the only chain, they can move their business elsewhere. As we talked about behavior, this empowerment is something you don’t find in centralized currency.
Claiming the miners have the power
Miners are powerful. They write the history and without them, the blockchain doesn’t move forward. History has to be consistent with the future.
Claiming that investors have the power
Investors have power. They determine whether Bitcoin has value and with hard-forks they investors can decide which branch prevails by keeping or buying the successful currency. However again, they are relying on the developers to build code and miners to mine their transactions.
Claiming that merchants and consumers have power
While the populus has power, the lecturer also claims that they generate primary demand for Bitcoin and drive the long-term price. I’m still unclear what sets the price for Bitcoin so I’m a little more skeptical on this argument. He then claims that investors have to guess where the merchants and customers will go. Then you can think of the payment services who handle the transactions.
However, all have some power. For success, there needs to be some relationship across these different slivers for the blockchain to exist and be stable. If anyone gains too much power, the other I’m sure will be able to impact them negatively to almost enforce this balance.
Bitcoin Foundation
The last group which should be a category of their own is the Bitcoin Foundation. it began in 2012 and has the mission “standardize, protect and promote the use of bitcoin cryptographic money for the benefit of users worldwide.” They pay the developers. They evangelize Bitcoin to governments. While it’s not fully powerful, they do have quite a bit of support. There are controversies among the foundation which is interesting. Each of the members clearly have their own agendas. Roger Ver wanted to start his own nation this year. Additionally, whenever each of the foundation members speak about price movement, they have the ability to shift sentiment positive or negative.
Wrap Up
I spouted out a lot of facts. Not much of this is relevant to the every day user. I still recommend reading a BIP. I also recommend considering who has power when looking at Bitcoin are any other token. In the orders of Ron Swanson, I should have started off with, “I’ll be delivering a speech of facts.”