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Every morning at 6am, in Punxsutawney, Pennsylvania, the cynic weatherman Phil Connors wakes up to experience the same day over and over and over again. Stuck in a time loop, Connors tries everything to get his life back to normal – he gets stabbed, shot, burned, frozen and electrocuted, only to wake up again the next day as if nothing had happened. Connors quickly comes to the only plausible conclusion: he must be a god.
Thinking ourselves to be undefeatable has never been a particularly smart strategy, in times of war or otherwise. If we believe in cosmology, from Nietzsche to Hinduism, time is a loop, and there is a finite realm of possibilities which infinitely repeat – the only thing that we can really do is change how we react. Unless we learn from our mistakes, we are doomed to experience the same things over and over again.
Though often priding ourselves in exceptional intellect – I’ve found Bitcoin early, I must be very smart – it seems that learning from mistakes comes hard even for the most seasoned ‘Bitcoin advocates’. Public discourse seems to have shifted from the discussion of technological challenges and limitations to Deutsche Bank afterwork chats – Anything is possible, we’ll just need returns to remain on track.
When Bitcoin was first discussed in German Parliament back in 2014, ‘experts’ highlighted the ease with which bitcoin payments could be deanonymized via network analysis, speaking to the risks of widespread bitcoin adoption to lead towards total financial surveillance. Today, ten years later, as Bitcoin has returned to German parliament, ‘experts’ have been exchanged for influencers proposing Bitcoin as CBDC alternatives. Current ‘Bitcoin political debates’ cannot help but remind us of Bart Simpson running in circles banging a pan on his head.
As we continue to close in on the opportunist’s echo chamber, we have successfully swapped academic debate for cheerleading squads. Things will go great so long as you’re willing to take your tits out. ‘We’re winning!’ has long become the prevalent meme – Between ETF approvals, stablecoin issuances, and possible nation state adoption we are so confident in Bitcoin’s success that we seem incapable of realizing that this is precisely how you lose. Arrogance comes before most declines, and its exploitation has always been by design. By sowing manic delusions of invincibility, even the most trained commander will lead their sheep to slaughter.
Groundhog Day
A long long time ago, in a galaxy far away, we plugged our computers into landlines to access the three great W’s. For anyone who didn’t live alone, this practice was often doomed to reap a fair amount of havoc – Get off the computer, mom is waiting for a phone call.
So we can all agree that that sucked. But, due to a lack of technological advancements and accessibility to communicate wirelessly across distances (think of your favorite mesh network here), it was the most convenient option we had. The only problem: it led to a monopoly on web access points lying with telecommunications providers. Fast forward 20 years, and we now know that telecom providers monitor, analyze, and report anything that we do on the internet to government authorities under the guise of national security. A technology thought invincible for the liberation of the people quickly turned into its biggest enemy.
Now we can’t really talk about the success (and downfall) of peer-to-peer technologies without talking about Linkin Park. Linkin Park’s music, then still Hybrid Theory, circulated widely on the first P2P music file sharing network Napster. Downloaded from other people’s computers, accessing Linkin Park’s music was completely free. Their first studio album, Hybrid Theory, yet remains one of the top five most sold records in the world with 15 Million copies sold in the first three weeks alone.
Napster was a real world internet revolution – And the music industry was furious. As people happily infected their devices with potential computer AIDS, bands, rappers, and singer songwriters like the Arctic Monkeys, Dispatch or EMINEM were building fanbases even before breaking their first big record releases, and the musical establishment wasn’t having it. When Metallica sued the P2P platform for copyright infringement, clearly unhappy that their cult status and its consequential returns felt threatened, peer-to-peer music file sharing did not exactly die, but was quickly incorporated into more corporate friendly formats – from buying music via iTunes to music streaming via Spotify.
While it seemed unimaginable to put a technology like Napster back into the box, convenience, again, became king. Today, the majority of listeners do not own the music that they listen to, but subscribe to corporate databases of which neither artists, labels nor producers profit. Instead, the big winner of the music file sharing industry again turned out to be surveillance. Just last week, when Spotify updated its cookie policy, a push notification let EU users know which 695 data brokers would gain access to their information. Downloading files like ClapYourHandsSayYeah.mp3.exe (RIP) clearly was risky business, but the risks of surveillance capitalism reach much farther than a trashed computer.
In essence, the same thing happened to search engines. Going online in the early days of the world wide web was like getting dropped off in the middle of Yellow Stone national park without a map. There were thousands of places to go, but you needed to know where they were. With comprehensive link collections, platforms like Yahoo, AskJeeves or Google offered tremendous value to those less versed in their way around the WWW. Instead of asking your peers where something cool on the internet was, you simply asked Google. But, with moving away from word-of–mouth formats, we ended up with what has today been termed the great enshittification. The first few links are paid affiliate sites, and the ones after that are those who figured out how to efficiently play Google’s SEO formats, of course all packed and tailored to your supposed needs. Today, Google is one of the most valuable surveillance companies in the world. A software meant to aid in the liberalization of free information essentially became a tool for censorship.
Again and again, thinking that ‘technology has won’ only exacerbated its demise. We choose what is comfortable now only to stab ourselves in the back down the road. And before you know it – BING! It’s the whistling belly button at the high school talent show as the weatherman strikes again. To put it bluntly: we’re fucking up.
It’s the Filters, Stupid
In today’s pop-culture Bitcoin discourse, ignorance runs rampant. Lightning works until it doesn’t, let’s spend millions to put the Dollar on Bitcoin; It’s called priorities babe, look it up.
When Ordinals hit Bitcoin – think of them what you will – we suddenly realized that we were in trouble. In the global south, people quickly became unable to transact non-custodially. All the people you’ve told to DCA suddenly saw themselves facing exorbitant transaction fees, unable to move their funds. For those valuing their privacy even for smaller spends, participating in coinjoin rounds turned prohibitively expensive. No matter where we look, we still have a scaling problem. This problem does not exist because of Ordinals. It exists because we were so convinced of winning that we lost track of keeping our ignorance in check.
Over the past four years, the majority was more concerned with furthering its own narrative – everything is awesome and Bitcoin is the bestest currency on earth – than facing uncomfortable truths. We then proceeded to respond with an exorbitant amount of shortsightedness: it’s the filters, stupid.
Filtering out Ordinals transactions is a short term solution for a long term problem. Sure, blocking arbitrary data on the blockchain will necessarily drive fees down, but if global Bitcoin adoption is what you want, you’re not doing yourself any favors by proposing selective solutions to systemic issues. The thing is that being angry at JPEGs is easy. Taking on problems that challenge the ‘greatness of Bitcoin’, which some appear to have turned into their whole personality, is not. For every tweet that claims for Bitcoin to bring world peace – clearly by pure magic, or what the Wall Street losers turned Bitcoin economists call some backwards form of game theory – a little of the system dies.
We do not need your hopium; We need real world solutions to real world problems. That includes laying down the crack pipe and talking about the uncomfortable stuff: we are not winning – we are doing the opposite, because our ‘long time preference’ reaches about as far as our investment portfolios. You can kill Bitcoin. And it’s easier than you’d think.
Embrace, Extend, Extinguish
Over the past few years, debates around Bitcoin ‘winning’ looked pretty much the same. Senators are embracing Bitcoin: see, we are winning. BlackRock is embracing Bitcoin: see, we are winning. First they ignore you, then they laugh at you, then they realize that all you want is a pat on the back before the policeman comes to take your toys away. The laughing hasn’t stopped, it just happens behind your back.
The most plausible death of Bitcoin would happen less in name than in its total incorporation, at a point where the technology is simply not yet ready for ‘mass adoption’ – just like we have killed all peer-to-peer technologies that came before it. The death of Bitcoin is not the death of the tech, but the death of its usability.
At the center of the death of Bitcoin, at least in essence, continues to stand the scaling debate. When Gigablocks were first proposed, it seemed fairly obvious that a blockchain that takes 10 years to sync will lack in decentralization. In came the Lightning Network, which seemed to solve all of our issues: Scaling off-chain, securing on-chain. Smart. Except that we can only fit around 5000 channel opening and closing transactions inside of a block – hardly enough to let 8 Billion people use Bitcoin non-custodially.
Unfortunately, that didn't stop influencers – or really anyone - from proclaiming their Hail Mary of desperation; Scaling Bitcoin obviously is a problem for future me. Too high was the thrill of finally being able to sit at the corporate dinner table and smug the obligatory 'I told you so'. Putting non-believers into their place simply had to come first; if Bitcoin doesn't exist to feed our fragile egos and pump up our sad little bank accounts, what really was the point? Freedom, Carajo! Welcome to your involuntary conversion at the church of satoshi's witnesses, where we drop speeches on saving the world from tyranny more often than Biden changes his diapers.
So here we are. Six years after we bought our first stickers at the Blockstream store – the only thing you were able to buy when the first Lightning implementations launched, besides beer – and we're still scrambling. Instead of fostering broad discussions around covenant proposals, which do come with real trade-offs and risks, we are busy labeling anyone not willing to ossify a spook, while ossification at this point in Bitcoin will certainly be the surest way to kill it.
Sometime in the near future, we'll wish ourselves back to a time of a few hundred vBytes in fees. By then, we will have no choice but to use Bitcoin custodially. Say goodbye to freedom money: Bitcoin as we know it will be dead, unless we stop making the same mistakes.