The Challenges and Opportunities of the Bitcoin Protocol's Rigidity

In the context of network protocols, rigidity refers to the slowdown in the evolution and change of these protocols. This seems to be a law of network physics. Essentially, as network protocols gain wider adoption, the "quality" of the network increases, while the effort required to change the direction of the network by coordinating software updates among protocol users increases significantly. Ultimately, due to the inability to coordinate a large number of decentralized participants, the ability to securely activate any protocol changes is crushed under the immense weight of the network.

Therefore, the rigidity of Bitcoin is inevitable. However, as of today, we are still debating whether we should actively make the protocol rigid. I personally strongly oppose this position and believe that there is still too much room for improvement; it is too early to abandon changes to the foundational protocol.

I believe that Bitcoin can only maintain vitality, relevance, and security in the long term through the implementation of reasonable and broadly beneficial protocol improvements in a cautious and consensus-driven manner. The rigidity of freezing progress at this current point in time is arrogant, disregarding history, and is a rejection of the foresight that originally created Bitcoin. Thoughtful and continuous evolution is key to Bitcoin's long-term value proposition. The reason digital gold is superior to physical gold is precisely because it is not inert. The properties of physical gold cannot be improved, and thus financial innovation for gold is achieved through centralized IOUs... but the properties of Bitcoin can be improved, thereby enhancing its permissionless use.

Learn from History

Bitcoin has only a 15-year history and has undergone many consensus changes and upgrades. It is still too early to assume that the current point in time is an ideal stopping point. The protocol needs to adapt over time to remain viable.

We should learn from other popular network protocols like SMTP. If Bitcoin becomes rigid, developers will build increasingly complex layers on top of it to add the necessary functionality. Complexity will introduce vulnerabilities and exploits.

This is not a criticism of the zero-knowledge rollups of complex layers like BitcoinOS / BitVM / Botanix's Spiderchain / Citrea - they are doing their best to leverage the available toolset. While we do not wish for Bitcoin to become an all-encompassing protocol, it makes sense to add low-level functionalities at the base layer if it can significantly reduce the complexity of building functionalities at higher layers.

Potential Path Forward

Many ideal features, such as contracts, vaults, and payment pools, require upgrades at the base layer. Building these features clearly on the protocol itself is far better than using a hacky overlay. A base layer with more building blocks opens up new design space for Bitcoin.

Cautious and well-tested upgrades, thoroughly discussed and reached community consensus, will not harm property rights or the core stable currency claims of Bitcoin. The upgrades reflect the will of the users, rather than overriding the users.

I believe that the potential of Bitcoin far exceeds what we have achieved so far. I see the Bitcoin blockchain as a crypto accumulator that various systems can be anchored into. But we have only scratched the surface of possibilities. If we become rigid today, when building permissionless second-layer networks is so difficult, we will tie developers' hands, greatly limiting the experiments to find the most valuable uses for block space.

People often say that we don’t need to change Bitcoin because we can scale through other layers. Of course, it would be great if developers had no restrictions! We simply don’t have all the necessary raw building blocks on the base layer to easily launch permissionless second-layer networks. For example, we could make Bitcoin scripts powerful again.

Please note that we have implemented 3 different forks to enable 3 different building blocks to create the Lightning Network. Without the functionality enabled by these forks, the Lightning protocol would be much clumsier, and the game theory would not be as refined.

We can perform other soft forks, such as SIGHASH_ANYPREVOUT, which will greatly enhance the Lightning Network and allow for the existence of channel factories, improving the efficiency of the Lightning Network by several orders of magnitude. We can carry out some privacy-enhancing forks, such as cross-input signature aggregation. We can also implement forks like OP_CTV to improve the security of self-custody through contracts and vaults. We can see many potential futures, but moving towards these directions is becoming increasingly difficult.

About Sovereignty and Self-Custody

Scalability is another long-term issue. Greg Maxwell said in 2015:

If the system costs are too high, people will be forced to trust third parties instead of independently executing system rules. If the resource usage of the Bitcoin blockchain is too large compared to the available technology, Bitcoin will lose its competitive advantage over traditional systems because the verification costs will be too high (making it unaffordable for many users), forcing trust back into the system. If the capacity is too low and our transaction efficiency is too low, then the cost of accessing the chain for dispute resolution will be too high, again pushing trust back into the system.

Winning the block size debate is just part of the story of decentralized verification. The decentralization of economic participants is also crucial for the long-term success of Bitcoin. Remember, it is not the willingness of nodes that will determine the future of Bitcoin, but rather the willingness of the economically majority nodes. Economic participants in Bitcoin include miners, holders, and traders (including companies and custodians). The key point is - if centralization leads to a reduction in the number of economically relevant nodes, and most Bitcoin users are unable to self-custody due to costs, we should expect the "governance" of the protocol to become more centralized and fragile.

Given the current state of Bitcoin, there may only be 100 million entities globally that can access the basic attributes of Bitcoin. In a world with 8 billion people, this situation will not bring about a new type of decentralized currency that changes the dynamics of value and scarcity, but merely creates a new elite class, which over time will, like all elite groups in history, initially create prosperity and ultimately devolve into bread and circuses. Bitcoin has the potential to do more than just transfer power from one elite group to another, provided we continue to commit to achieving maximum decentralization by improving the protocol and enabling more people around the world to access the basic attributes of Bitcoin.

Please note that the argument "we can do anything we want on top of other layers" often overlooks the fact that any layer built on top of Bitcoin cannot provide the same security model as the underlying layer. Whenever you build a layer on top of Bitcoin, you need to create a brand new game theory and trade-offs for the self-custody users of that layer.

Rigid Thought Stamps

Hardliners believe that Bitcoin has already achieved its core functions as a sound currency and store of value. Further changes, even if well-intentioned, could introduce unnecessary risks that might undermine the characteristics that make Bitcoin valuable. Through the solidification protocol, we ensure that Bitcoin remains a reliable, decentralized, and immutable currency system in the long term.

1. Maintain trust in the fundamental properties of Bitcoin:

The main value proposition of Bitcoin is its fixed supply and immutability. Any changes to the protocol, even soft forks, could undermine people's confidence in these core attributes. Some claim that the ability to change the protocol will reduce people's confidence in the inflation scheme, no matter how good the intentions may be.

2. Reduce developer control and centralization risks:

Allowing further modifications to Bitcoin would give developers excessive protocol influence. This could lead to centralization risks, as a small group of people might change Bitcoin's attributes.

3. Preventing Unforeseen Consequences:

Even changes made in good faith and after thorough testing can have unforeseen effects on the network. As the value and importance of Bitcoin continue to grow, the potential impact of these unintended consequences becomes increasingly severe.

4. Increasing difficulty of changes with growth:

As the adoption rate of Bitcoin increases and the economic value built upon it grows, any changes become more risky and destructive. Hardliners believe that the protocol should reach a stable point, similar to other foundational protocols like TCP/IP or power socket standards.

5. Maintain Bitcoin as a sound currency function:

The main goal of Bitcoin is to serve as a new currency system that is immune to depreciation. Rigidity ensures that this core function is preserved without risking changes to its fundamental properties for potentially unnecessary improvements.

Rigid Common Arguments

The hardliners believe that Bitcoin is currently operating very well, and the protocol rules should be extremely resistant to change in order to maintain its core value proposition as a stable, non-inflationary, and depoliticized form of currency. Even well-intentioned changes could pose significant risks that might jeopardize Bitcoin's long-term success and stability.

1. Do not fix what is not broken

Bitcoin has achieved success under the current protocol, with its market value growing from $0 to $1.4 trillion in just 15 years. There is no need to risk undermining this success through hasty or unnecessary changes.

2. Stability is crucial

The core value proposition of Bitcoin is its stability and predictability. Protocol rules should not be changed arbitrarily. Frequent modifications can undermine people's confidence in the immutable nature of Bitcoin.

3. Think twice before you act

Changing the Bitcoin protocol is an extremely serious task, akin to amending a constitution or designing laws intended to last for hundreds of years. Any changes must be made slowly, cautiously, and conservatively, and can only be implemented after considering all long-term effects.

4. The higher the stake, the steadier the hand

The larger and more successful Bitcoin is, the more important it is to be cautious about any protocol changes. Now, with over a trillion dollars in value and national-level buyers involved, we cannot afford to make mistakes or take unnecessary risks.

5. The road to hell is paved with good intentions

Even well-intentioned changes to the protocol can have unforeseen negative impacts, such as harming the economic interests of miners, developers, and holders. The potential risks may outweigh any theoretical benefits.

6. Keep it simple, stupid

Not every new feature or improvement needs to be implemented at the base protocol layer. Many things can be implemented at higher levels such as Layer 2 or Layer 3, without jeopardizing the core security model and stability of Bitcoin.

7. The Unchanging Currency in a Changing World

Constant "improvements" and protocol changes violate Bitcoin's commitment as a stable, depoliticized currency and settlement network. Rigidity is a feature that prevents Bitcoin from being captured by special interest groups or undergoing unpredictable mutations.

8. Bitcoin should only be used as a currency

Using block space for tokens/NFTs and other non-monetary purposes will only fuel fads and pump-and-dump schemes, which will crowd out legitimate users' opportunity to utilize Bitcoin as currency.

My Response to Rigid Arguments

Maintain trust in the basic properties of Bitcoin:

The trust in Bitcoin's properties and the ability to resist the implementation of bad ideas ultimately depends on the governance process of protocol changes, rather than making changes impossible. Bitcoin is crypto-anarchism; it is a system that defaults to indifference, which is a powerful veto. You either believe that Bitcoin's governance has served us well so far, or you think we have just been lucky and that the entire system could collapse at any moment.

Reduce developer control and centralization risks:

Similar to the above situation, either you believe that the game theory surrounding the protocol changes is reasonable, or we have just been lucky so far. Bitcoin developers cannot force anyone to run code they do not agree with.

In addition, the internal development process is highly challenging. Most proposed rules and code changes fail to pass the rigorous tests.

Summarize my research from four years ago:

After reviewing all the rejected Bitcoin Core pull requests, we found:

• 9,011,209 total rejected new lines of code
• 6,279,435 Total number of rejected lines of code for deletion

This means 15,290,644 lines of rejected code changes compared to 3,651,046 lines of accepted code!

This indicates that as of the time of writing, only 19% of the proposed changes to the code lines have been accepted into Bitcoin Core.

Preventing Unintended Consequences:

In my opinion, the fear of the unknown unknowns and unintended consequences is not a valid argument.