This article can be found in Bitcoin Magazine’s “The Halving Problem” Click here to get your copy.
Every morning at 6 a.m. in Punxsutawney, Pennsylvania, cynical weatherman Phil Connors wakes up to relive the same day over and over again. Stuck in a time loop, Connors tries everything he can to get his life back to normal—he gets stabbed, shot, burned, frozen, and electrocuted, only to wake up the next day as if nothing happened. Connors quickly comes to the only plausible conclusion: he must be a god.
Thinking we’re invincible 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, a finite realm of possibilities that repeats itself infinitely—the only thing we can really do is change how we respond. Unless we learn from our mistakes, we’re doomed to experience the same things over and over again.
While we often pride ourselves on our exceptional intellect – I discovered Bitcoin early, I must be very smart – learning from mistakes seems to be hard for even the most seasoned ‘Bitcoin advocates’. The public debate seems to have shifted from discussing technological challenges and limitations to Deutsche Bank after-work chats – anything is possible, we just need returns to stay the course.
When Bitcoin was first debated in the German parliament in 2014, ‘experts’ stressed how easily Bitcoin payments could be deanonymized via network analysis, and talked about the risks of widespread Bitcoin adoption leading to total financial surveillance. Now, ten years later, with Bitcoin back in the German parliament, ‘experts’ have been replaced by influencers pitching Bitcoin as CBDC alternatives. Current ‘Bitcoin political debates’ can’t help but remind us of Bart Simpson running around in circles and banging a frying pan on his head.
As we inch ever closer to the opportunist’s echo chamber, we’ve successfully traded academic debate for cheerleading squads. As long as you’re willing to get your tits out, you’ll be fine. “We’re winning!” has long been the go-to meme – between ETF approvals, stablecoin issuances, and potential nation-state adoption, we’re so confident in Bitcoin’s success that we can’t seem to wrap our heads around the fact that this is exactly how you lose. Arrogance is the root of most declines, and its exploitation has always been deliberate. By sowing manic delusions of invincibility, even the most trained commander will lead his sheep to the slaughter.
Groundhog Day
A long time ago, in a galaxy far, far away, we plugged our computers into landlines to access the big three Ws. For anyone who didn’t live alone, this practice was often doomed to cause a fair amount of chaos: Get off the computer, Mom’s waiting for a call.
So we can all agree that sucked. But due to the lack of technological advancement and the ability to communicate wirelessly over distances (think your favorite mesh network), it was the most convenient option we had. The only problem: it led to a monopoly on web access points by telecommunications providers. Fast forward 20 years and we now know that telecommunications providers monitor, analyze, and report everything we do on the internet to government agencies under the guise of national security. A technology that was thought to be invincible to the liberation of the people quickly turned into its greatest enemy.
Now, we can’t really talk about the success (and fall) of peer-to-peer technologies without talking about Linkin Park. Linkin Park’s music, then called Hybrid Theory, circulated widely on the first P2P music file-sharing network, Napster. Downloaded from other people’s computers, access to Linkin Park’s music was completely free. Their first studio album, Hybrid Theory, is still one of the top five best-selling records in the world, selling 15 million copies in its first three weeks alone.
Napster was a veritable Internet revolution—and the music industry was furious. As people infected their devices with potential computing tools, bands, rappers, and singer-songwriters like Arctic Monkeys, Dispatch, or EMINEM were building fan bases before they even released their first major records, and the music industry wasn’t having it. When Metallica sued the P2P platform for copyright infringement, clearly unhappy that their cult status and the resulting revenues were being threatened, peer-to-peer music file sharing didn’t exactly die, but was quickly absorbed into more business-friendly formats—from purchasing music on iTunes to streaming music on Spotify.
While it seemed unthinkable to put a technology like Napster back in its box, convenience was once again king. Today, the majority of listeners don’t own the music they listen to, instead subscribing to corporate databases that profit neither artists, labels, nor producers. Instead, the music file-sharing industry’s big winner turned out to be surveillance once again. Just last week, when Spotify updated its cookie policy, a push notification informed EU users which 695 data brokers would be gaining access to their information. Downloading files like ClapYourHandsSayYeah.mp3.exe (RIP) was clearly risky business, but the risks of surveillance capitalism extend far beyond a broken computer.
In essence, the same thing happened with search engines. Going online in the early days of the World Wide Web was like being dropped off in the middle of Yellow Stone National Park without a map. There were thousands of places to go, but you had to know where they were. With extensive link collections, platforms like Yahoo, AskJeeves or Google offered enormous value to those less adept at navigating the WWW. Instead of asking your peers where something cool was on the Internet, you simply asked Google. But by moving away from word of mouth, we ended up with what we now call the great enshittification. The first few links are paid affiliate sites, and the links after that are from those who figured out how to efficiently play Google’s SEO formats, all packaged and tailored to your perceived needs, of course. Today, Google is one of the most valuable surveillance companies in the world. A software that was meant to help liberalize free information became, in effect, a tool for censorship.
Time and again, thinking that “technology has won” has only made its downfall worse. We choose what is comfortable now, but stab ourselves in the back later. And before you know it – BING! It’s the whistling belly button at the high school talent show, while the weatherman strikes again. To put it bluntly: we fuck up.
It’s the filters, idiot
In the current Bitcoin discourse in pop culture, ignorance reigns supreme. Lightning works until it doesn’t, let’s spend millions to put the dollar on Bitcoin; it’s called priorities, baby, look it up.
When Ordinals hit Bitcoin—think about it—we suddenly realized we were in trouble. People in the Global South quickly lost the ability to transact without custodial obligations. All the people you told DCA about suddenly found themselves facing exorbitant transaction fees and unable to move their money. For those who value their privacy even for smaller spends, participating in coinjoin rounds became prohibitively expensive. Everywhere we look, we still have a scaling problem. This problem doesn’t exist because of Ordinals. It exists because we were so convinced of the payoff that we lost the perspective to keep our ignorance in check.
For the past four years, the majority have been more concerned with advancing their own narratives—everything is great and Bitcoin is the best currency on Earth—than with facing up to uncomfortable truths. And then we’ve responded with an inordinate amount of myopia: It’s the filters, you idiot.
Filtering Ordinals transactions is a short-term solution to a long-term problem. Sure, blocking arbitrary data on the blockchain will lower costs by definition, but if you want global Bitcoin adoption, you’re not doing yourself any favors by proposing selective solutions to systemic problems. The point is, getting mad at JPEGs is easy. Addressing issues that challenge the “greatness of Bitcoin,” which some seem to have turned into their entire persona, is not. For every tweet claiming that Bitcoin will bring world peace—clearly through pure magic, or what the Wall Street losers Bitcoin economists call a backwards form of game theory—a little bit of the system dies.
We don’t need your hopium; we need real solutions to real problems. That means putting down the crack pipe and talking about the uncomfortable stuff: we’re not winning – we’re doing the opposite, because our “long-term bias” is about as far-reaching as our investment portfolios. You can kill Bitcoin. And it’s easier than you might think.
Embrace, expand, extinguish
Over the past few years, the debates about “winning” Bitcoin have looked pretty much the same. Senators embrace Bitcoin: see, we’re winning. BlackRock embraces Bitcoin: see, we’re winning. First they ignore you, then they laugh at you, then they realize all you want is a pat on the back before the cops come and take your toys. The laughter hasn’t stopped, it’s just happening behind your back.
The most plausible death of Bitcoin would happen less in name than in total incorporation, at a point where the technology is simply not ready for “mass adoption” – just as we killed every peer-to-peer technology that came before it. The death of Bitcoin is not the death of the technology, but the death of its usability.
At the heart of Bitcoin’s death, at least in essence, is still the scaling debate. When Gigablocks were first proposed, it seemed pretty clear that a blockchain that took 10 years to sync wouldn’t be decentralized. Then came the Lightning Network, which seemed to solve all our problems: Scale off-chain, secure on-chain. Smart. Except we can only fit about 5,000 channel opening and closing transactions into a block — barely enough to allow 8 billion people to use Bitcoin non-custodial.
Unfortunately, that didn’t stop influencers—or anyone, really—from shouting their Hail Marys of despair; scaling Bitcoin is clearly a problem for the future me. The excitement of finally being able to sit down at the corporate dinner table and say the obligatory “I told you so” was too great. There was simply a need to put nonbelievers in their place; if Bitcoin doesn’t exist to feed our fragile egos and inflate our pathetic little bank accounts, what was the point? Freedom, Carajo! Welcome to your involuntary conversion to the Church of Satoshi’s Witnesses, where we make more speeches about saving the world from tyranny than Biden changes diapers.
So here we are. Six years after we bought our first stickers from the Blockstream store—the only thing you could buy when the first Lightning implementations launched, besides beer—and we’re still struggling. Instead of fostering broad discussions about covenant proposals, which do come with real trade-offs and risks, we’re busy labeling anyone who isn’t willing to fossilize a ghost, when fossilization is surely the surest way to kill it at this point in Bitcoin.
Sometime in the near future, we will wish ourselves back to a time of a few hundred vBytes of fees. By then, we will have no choice but to use Bitcoin as a custodian. Say goodbye to freedom money: Bitcoin as we know it will be dead unless we stop making the same mistakes.