The assault on Bitcoin and the challenge of resistance

The assault on Bitcoin is an issue which in itself deserves a treaty. What

motivates you? How it is being executed? What are the forces in conflict?
What factors favor it? What factors counteract it? How it repels? When asked
on each of these points opens before us a range of disciplines that would
have delighted Carl von Clausewitz

We watched last month to try to anticipate what awaits us. The assault on
Bitcoin has triggered a sequence of events that, in our opinion, is as
predictable as the phases of the moon. Many wonder when it will be each
one of those-particularly the last events: the fall of Blockstream-. That, of
course, we know not; no one can know. The "how", however, can itself be
glimpsed; and that we will work today to try to identify some processes that
guide and modulate the contending forces in this new battlefield.

A common mistake often committed by supporters of Bitcoin Core, is to

confuse the inertia of the status quo with the massive and enthusiastic
adhesion of Bitcoin users. The premise can be reduced to the following
argument: "The market reveals the preferences of people. Core is now the
most used customer. Therefore, now the market prefers Core ".

Although syllogistically valid, the argument contains two errors: one in the
initial proposal and another in the conclusion.

First, it should be noted that in the absence of mechanisms for the market to
efficiently express user preferences, it is not possible to know "what the
market prefers" now. Under current circumstances (absence of a futures
market forks Bitcoin, among other catalysts), infer that "the market prefers
Core" is to infer that a gagged woman is tacitly condoning acts of her rapist,
or the inhabitants of East Berlin that did not risk their lives to cross the wall
were under Soviet policies.

Second, although the use of personify concepts to explain certain

phenomena can be pedagogically useful, it should be recalled that the
market is not a man who makes decisions. "Market" is a highly abstract
concept that serves to bring to an understandable level interaction between
supply and demand for goods and services in a large order. If the demands
of users (savers, investors, consumers, merchants, payment processors,
etc.) are not taken into account (because they are irrelevant in view of the
central planners), the market, by definition, is not being given account.

To illustrate the characteristics of the assault on Bitcoin, as well as the

challenge of organizing effective resistance, best analogy I cannot think of a
people that invaded and occupied by a foreign army. Assuming that the vast
majority of people want to expel the invaders, and the invaders are properly
incentivized to impose their will on local, what options do the latter?

Launch a massive frontal assault may be tempting. But if the attack on the
invading forces is not simultaneous, determined and persistent, the chances
of success are practically nil. In Bitcoinlandia, this would be equivalent to
throwing a fork untimely.

Again, that people are not rebelling actively and explicitly does not mean
that everyone is satisfied with the presence of the invaders. Although the
villagers invaded have a common goal (to expel the invaders) may not end
the occupation if they do not act simultaneously, determined and persistent.
We have, then, a problem of sicronizacin.

Once infiltrated local institutions, the great advantage of the occupying

army is what you would call social inertia. In other words, the occupants
have in their favor the force of the convention, or simply the force of
precedente-. Under the new government, if a person has to make a
municipal process, it will head to the same building in which he had
previously made a similar process, although all city employees are now -a
reluctantly or not at the service of the invaders.

To understand the social dynamics that has facilitated and sustained assault
on Bitcoin, as well as obstacles faced by attackers, you need to become
familiar with the concept of point Schelling.

Schelling point is that place in which naturally converge and scattered social
forces are enhanced. In the above example, the municipalities brings
together people with pending proceedings and despite his displeasure with
the new government, do not find a safe and effective way to communicate
your preferences or to coordinate their actions to enforce their preferences.
The power of the occupiers is thus reinforced.
This explains why Blockstream has set its sights on Bitcoin and not in any
other cryptocurrency: for the same reason that an invading government
seeks to assault the institutions of a society already established, rather than
venturing into the virgin forest to face many dangers with the difficult,
remote and improbable goal of building a productive society that can be
despoiled. Control of local institutions without great effort allows access to
the wealth created and accumulated in the conquered territory.

The invaders are attracted by Schelling points because these are foci in
which the productive efforts are already concentrated. For Bitcoin, the
gravitational power Schelling point is a function of network effect the
system deployed; and the net effect is the great promoter of economic
growth that has gestated around Bitcoin over the years. Strictly speaking,
the goal of the invaders is not Bitcoin, but the resources that Bitcoin has
attracted thanks to its potential as a universal currency resistant to
manipulation.

Stung by an unshakable ideal, one day ventured Satoshi Nakamoto,

machete in hand, in the unexplored jungle. Alone and ignored if not
despreciado- by his peers, he grappled for years in the hostile wilderness
with all kinds of poisonous creatures, unforgiving insects and stealthy
predators, until finally managed to clear the land on which founded the city
that today we all inhabit .

Potential invaders know how much easier it is to hijack the network effect to
play starting a new project. Thus, the inhabitants of Bitcoinlandia have to
get used to living with the threat of invasion -before and after the fall of
Blockstream-, while we perfect the science and art of repelling invaders.

Now let's see what advantages has the resistance to the occupation:

Bitcoin lacks a governing center from which it is possible to force people to

hand over their wealth. In that sense, it is more like the backwoods that a
people whose institutions may be subjugated.
Bitcoin users can act against the interests of Blockstream without
compromising (in fact, strengthening) the network effect, but Blockstream
cannot act against Bitcoin users without compromising network effect.

The resistance is strengthened as abuses of occupants increase the

incentive to mount an effective local rebellion. And we can count on it,
because Blockstream need to squeeze increasingly Bitcoin users to keep
their investors happy.

When the interests of users ultimately converge on a new point of Schelling,

inertia happens to play for change and detrimental to the status quo.