Does Bitcoin Need A Benevolent Dictator?

In the Spanish Inquisition, people who did not accept the rigid precepts of the ruling church were brutally persecuted and eliminated with the purpose of preserving the prevailing orthodoxy. Today, things are a bit less gruesome, but people are still willing to attack each other viciously based on difference of opinion about what should be the rules.

Mind you, in recent times we had to grapple with new phenomena in the media that made us doubt not only what is true and what not, but even what truth itself actually is. In this case, the debate is about what should be true.

Distributed Ledger Technology, also known as Blockchain technology, has this unique feature: it allows the storage of information that is extremely resilient to being altered or compromised. Moreover, this feature extends to the very mechanism which is employed to process data, i.e. the rules governing the blockchain. For example, the famed Bitcoin blockchain has a simple rule that prevents “double spending”, the ability to spend one bitcoin more than once.

However, as technology evolves, there is the need to change some things about the rules. For example, one “block”, representing a group of transactions that are encrypted and verified with a proof-of-work consensus mechanism and, can only not exceed a certain size (one megabyte) according to the rules set down by the founder of Bitcoin, Satoshi Nakamoto. We do not even know who this person or group of persons is, but the rules that were established at the beginning are still in force and cannot be altered, not by bitcoin blockchain participants nor by its creator himself.

One problem of this one MB size limit is that it limits the throughput of transactions, currently roughly seven per second. For a long time, there have been proponents of a redesign of this particular technical feature who favor an increase in block size. But how can you change the rules of the blockchain which, by definition, cannot be changed?

The only way is to hard fork the existing chain and continue it via a copy of it that adheres to a different set of rules. This technique of “forking” is very familiar to professionals in software development: software is mostly written by teams who need to coordinate their work. As various developers work on different parts of the code, their variant versions of the code base will diverge into so-called “branches” which need to be reconciled, or “merged”, later. If you want to use an open-source project as a basis for your own software, you can make your own branch, a “fork”, and work on that version of the software (without planning to merge it back into the original).

If you had a bitcoin wallet with bitcoins, the most famous hard fork that took place on August 1, 2017 would have placed additional coins, “Bitcoin Cash” into your wallet (if you were using compatible wallet software). There now continue to be these two versions of bitcoins, and both are being used and traded, as long as enough people accept them.

(Actually, there have been over 20 forks so far, most of them in 2017. They have colorful names such as Bitcoin Cash, Bytether, Bitcoin Clashic, Bitcoin Gold, Bitcoin Diamond, United Bitcoin, Bitcoin World, BitcoinX, Lightning Bitcoin, Bitcoin Top, Bitcoin God, etc.)

Predictably, the adepts of the various forks are very convinced that their respective version of bitcoin is the best. For example, on the website of Bitcoin Clashic you are greeted with the slogan “Satoshi’s True Vision”. This shows striking similarities to the schisms of religious groups. In their righteous conviction to be the sole purveyors of the truth, or rather, the more desirable version of the rules that should govern (bitcoin) reality, these factions go to great lengths in defending their view of the world, attacking opponents and evangelizing to their followers.

This is where questions that should be considered, and decided, on their technical merits become issues of political conviction, with all the problems inherent in the business of politics, its dirty tactics and its lack of accountability. Even the comparison with religious sects is not so far-fetched: sects fight about the truth, the text that should be followed, the rules that should govern everyone’s life; similarly, in a bitcoin fork, followers fight about which is the “true” version of bitcoin, which source code should be applied, and what effects the whole mechanism should have on society and our world. Everyone with a divergent opinion is a heretic or infidel.

How can one solve this kind of conflict which seems to be implied in human nature and which in some form or other has been played out for thousands of years? Long periods of absence of such strife have been characterized by one notable political reality: a dictator. Evidently, a dictatorship is only as good as its dictator, so for a happy outcome for everyone you need a dictator who turns out to really be benevolent, whatever that means for you.

It so happens that, quite possibly, this is the best form of governance for large open-source software projects. The most successful such project to date, Linux, has been guided by its benevolent dictator, Linus Torvalds. Under certain circumstances, when there are just too many different points of view, this might just be the most practical solution.

The Catholic church with its pope has fared quite well throughout the centuries, the biggest crises occurring when there were “hard forks”, e.g. in the form of antipopes in Avignon and Pisa, or worse, in outright schisms such as the establishment of the Protestant church. This last example shows that a hard fork can survive if enough people subscribe to it.

What could be the best governance paradigm for bitcoin? While a benevolent dictator might be a good solution, it is also fraught with problems of its own which, incidentally, are at the very core of what blockchain technology tries to solve: Trust. Whom would you trust as your benevolent dictator? I would like to speculate that the most suitable way for the bitcoin community to govern itself and evolve the technology in a transparent and equitable fashion based on informed debate and technical merits is a decentralized, distributed consensus mechanism. After all, that is how blockchain itself works.