Why Bitcoin’s Ossification Will Eventually Be Necessary

 Ossification is a word thrown around very frequently in Bitcoin. “The protocol will ossify.” “Ossification is good.” “Bitcoin doesn't need to change, ossify it now.” 

Bitcoiners are a skeptical group of people, and as such they are naturally skeptical about change.

There's a very good reason for that: the blocksize war was effectively a combination of certain developers (thankfully gone now) and influential figures attempting to strong-arm and coerce people into adopting damaging change through threats and misinformation. 

After such a significant attack as that, it's only natural to view every proposed change as some slightly better-disguised and subtle mechanism that could be used to undermine the system as a whole.

In theory, Bitcoin is something that can be upgraded and changed forever; as long as the supermajority of participants choose to enact a change, and all voluntarily adopt and enforce that change, then Bitcoin can incorporate it. 

At the end of the day Bitcoin is just a protocol and software used to enforce and interact with that protocol. 

Any arbitrary change can be made to the protocol as long as people are willing to adopt and enforce it.

The catch there is that will people all get on board with a change? If history shows us anything, the default answer is no, not without a very convincing case for a value-add and one that doesn’t create any new externalities or negatives.

Ossification is frequently discussed as a cultural phenomenon; i.e., "Bitcoin must have a culture of ossification!" I think this completely misses what the original discussion around protocol ossification pointed out in terms of social dynamics. 

The discussion around ossification had nothing to do with people intentionally building a culture of "no change," or deciding consciously "Bitcoin is good enough!" — it was about the basic incentives around system growth. 

The more participants there are, the more people there are with less understanding of the trade-offs of potential changes. 

When someone enters this space they start learning about Bitcoin as it is now and the trade-offs of things as they are now. 

To take their understanding beyond that, to analyze the trade-offs of how things could be, takes time.

Add to that very clear historical examples of people having tried to push through changes that would have been very detrimental to the system, and the natural tendency in an environment of growth is for changes to asymptotically approach being impossible. 

Why? Not because of some culture that says "change is bad!" Because the natural incentive if something is working properly to maintain or grow your wealth is to not mess with it unless it stops doing that successfully.

People are not going to get on board with change until they are confident that the change under discussion is a net positive to their economic value. 

That isn't culture, or "Bitcoin maximalism," that is just pure unadulterated economic incentives.

Bitcoin will naturally ossify eventually; if it does not then the entire system has somehow wound up being influenced or controlled by a central group of people who are able to push through changes without any hesitance or skepticism from the wider user base. 

If that is the future of Bitcoin, then I would personally consider the entire system a failure.

So eventually, if it does not fail, Bitcoin will cease to be something that can be fundamentally upgraded on a protocol level. 

There will be a point where consensus rules do not change anymore, and everyone has to settle for what Bitcoin is at that current time. What's the problem with this?

Right now, Bitcoin does not scale. If we wind up discovering that Bitcoin is ossified as it is right now the next time we attempt a soft fork, then it does not scale to even a small fraction of the planet if everyone tries to use it in a self-custodial way. 

So if Bitcoin ossified today, the entire dream of a money that everyone can self-custody and be free from the risk of third parties effectively is dead for most people on this planet.

Bitcoin will eventually stop changing, but if it hits that point too early then there are huge downsides. 

A Bitcoin where only 5% of the world can possibly self-custody might still enact massive change to the world by being a neutral platform opening up competition for custodial services, but it is not the true revolution of sovereignty that many Bitcoiners are here for. 

It's one thing if many people consciously choose not to self-custody; it is entirely another if most people are not even given that choice.

Post a Comment

Previous Post Next Post