Why “Smart Contracts For Bitcoin” Really Means “Buy My Altcoin”
Over the course of 2021, I have noticed the emergence of an ever-growing rift between the people that I would call my fellow Bitcoiners. Among the multiple contentious subjects in the Bitcoin community, the way that Bitcoin is meant to evolve has emerged, to my surprise, as one of the leading causes of disputes on Twitter.
The same age-old opposition between chaos and order that I have previously explored between Bitcoin and “crypto” is now creeping up to Bitcoin itself, in what is akin to a traditional battle for identity: Bitcoin progressives versus Bitcoin conservatives. We will explain who they are later.
Real-world political considerations aside (Bitcoin “conservatives” can be progressives IRL), I think this divide is worth exploring to fully understand the 2022 Twitter landscape.
In this short essay, I will dive into the causes of this perennial divide, reflect on the consequences it can have on the future path for Bitcoin development, and finally, explore what can be done to bridge the gap between these two factions before one drives away the other from what is possibly the most important innovation of the 21st century.
The Emergence Of The DeFi On Bitcoin Crowd.
I originally had the idea of writing this essay after the recent wave of hate on Bitcoin “maximalists” (how ironic) by the likes of Udi Wertheimer and Muneeb, people that I would not traditionally portray as unreasonable Bitcoin critics.
How weird coming from the guy that harassed every Bitcoin critic with “HFSP” for the past two years. Looks like “anti-toxic” Udi had a change of mind? I can respect that, but he was literally the most toxic guy against Ethereans for years. I would even argue that he molded an entire generation of “maxis,” — thanks Udi, I guess, you reasonable king.
The recurring theme is that maximalists are hurting Bitcoin’s adoption by refusing to be “open-minded” and that their (apparently unbearable) toxicity is a turn off for newcomers.
This sudden change of narrative had me reflecting on multiple questions, two of them being, “What do they mean exactly by toxicity?” and “What would Bitcoin look like if we went down the ‘open-mindedness’ path for protocol development?”
The way that Bitcoin values have traditionally been shaped is by successive waves of narratives, some newer than others, growing the potential user base for what is meant to become the base for a new financial system. In 2020, inflation was on everyone’s mind and Bitcoin greatly benefited from the somewhat older narrative of “Bitcoin as an inflation hedge.” However, even if inflation remained a major topic in 2021; the greater narrative surrounding “crypto,” NFTs and the “metaverse” have eclipsed the greater role of Bitcoin, at least in the mind of the general population. (Of course, “we” are all aware of how magnificent 2021 was for Bitcoin, on multiple levels).
In response to this feeling of Bitcoin seemingly taking a back seat, many have called for Bitcoin to try and “compete” with the rest of the market for fear that Satoshi’s invention might suffer the same fate as Skyrock. For those of us who were around in 2017, this is nothing new as many groups have attempted to approach Bitcoin with a “business mindset” in order for it to remain relevant. (We know how that turned out.)
In an effort to reduce criticism from the crypto community (which Bitcoiners can be a part of), some have tried to bring to Bitcoin what the rest of the market seems to favor so much lately: DeFi capabilities.
The general consensus among crypto Twitter seems to be that Bitcoin is absolutely dead, uninteresting, and that you cannot do anything with your coins except keep them in cold storage.
I will explore later why this view is absolutely flawed, but it seems to have elicited FOMO from some of our fellow Bitcoiners.
I suspect that, deep down, these people are envious Bitcoiners that have missed on DeFi’s massive gains and want to be part of what they perceive to be the “cool kids” club, with a monkey profile picture and earning 700% APY on a “decentralized” exchange (I’ve long argued that DeFi should be called Distributed Finance because nothing is decentralized but that’s a topic for another day).More simply put, they want to foster a constant state of overexcitement that is so prevalent within DeFi in the form of big promises and innovative new concepts for fear that Bitcoin will not be able to “stay ahead.” They look at the Bitcoin dominance chart on CoinMarketCap and ask themselves: How can we reverse this trend?
While I can understand this point of view by newcomers, not necessarily molded by years of bear market and overexposure (in my case) to some of the greatest minds in Bitcoin (Nic Carter, Yorick de Mombynes, Dan Held, Gregory Trubetskoy, Yassine Elmandjra…).
I cannot wrap my head around this kind of behavior from people I used to look up to.
Why Attacking Maximalism Is Fundamentally Dishonest
First, a quick reminder on the absolute need for maximalism because I, and many others, have already dove into this at great lengths.
Just like the lock on your door, maximalists are absolutely useless 99% of the time and they can be a pain in the ass to deal with on a daily basis.
Maximalists are the gatekeepers of the protocol rules and of the original Bitcoin ethos. When everything is fine, they are not needed, but in times of extreme crisis such as the Blocksize War of 2017, these harbingers are crucial to remind us of the core values that make this community so great and to call out bullshit where they see it.
People tend to forget that Bitcoin’s most important security metric is not the proof-of-work consensus, but rather the community of like-minded people willing to die for the greater purpose it serves. The people’s consensus. This level of commitment necessarily comes with its trade-offs. It requires a constant adversarial mindset in order to identify any potential threat. We must remember, our enemies are numerous and powerful, in addition to being corrupted to the core.
This might result in overaggressiveness toward ideas that are perceived as “threatening” to these core values. If you cannot understand this, or deal with a couple of mean tweets, maybe it’s time to rethink your commitment to decentralization because the war against the State is not going to be pretty.
OK, so, if you can understand why a minority of Bitcoiners will always be extremely skeptical of anyone bringing new ideas to the table (because Bitcoin already works fine without you), then we can dive into what these ideas look like and what they bring to the table.
As I’ve presented above, much of these ideas come in the form of added programmability to Bitcoin in order to compete with other chains that have been capable of attracting arguably more interest last year. Whether you like it or not, DeFi is a fascinating space when you exclude the token aspect of it.
They say “smart contracts for Bitcoin,” but what they really mean is “buy my altcoin.”
I guess what is bothering me with all this, is that these people claiming that nothing happens on Bitcoin, are the same who will build an entirely different protocol and come out with a token. When’s the last time that you have attended an RGB community call?
I’m not personally against altcoins as a sort of equity in an innovative fintech company (think SushiSwap), but I will always put into question the incentives of these people compared to mine. You can be a maximalist and own altcoins by the way, just like you can own gold and equities, but do not conflate one for the other.
While I, personally, think that RSK or Stacks can be super interesting, my focus is Bitcoin as a monetary asset. You can’t change that.
When it comes down to it, this idea of “open-mindedness,” at its core, is really not about being “open” to new ideas but being open to their ideas.
Allow me to doubt your intentions when you spend the majority of your time trying to replace Bitcoin’s most important defense mechanism (its historical maximalist community) with another, newer community that is only interested in monetary gains. They will famously say, “Do you want to be right or do you wanna make money?”
“Look at how slow Bitcoin is, please buy my coin to fix it.”
This has created a situation that I’ve decided to call: the duality of Bitcoin development. Where one community is actively pushing to add “smart contract” capabilities to Bitcoin, while the other is trying to cement the progress that has been made and ensure its survival for the next century.
The crazy thing is that these critics, from the DeFi world, are completely disconnected from reality on the ground. Because they live in an echo chamber where the consensus is that Bitcoin is the “boomer coin,” they are not aware of everything that’s happening. They have never talked to a Lightning company, they don’t know what DLC is, they do not understand the fundamental blockchain trilemma.
The only way to reconcile with these people is to encourage them to step out of this bubble and share with them our vision for what’s to come.
The paradox is that everything that these people want is already being worked on by incredible people (God bless our developers) within the Bitcoin community, they just don’t know them.
Of course, there is the possibility that they are not interested in them because there is a much weaker financial incentive to launch a Lightning company that will change the lives of millions using remittances than launching a brand new DEX on Avalanche, but we are not cynics, are we?
When it really comes down to it, this whole debate is a perfect barometer for your time preference and your confidence in the Bitcoin protocol. Let’s explore why.
Bitcoin Being Inherently Conservative Doesn’t Exclude Progressive Ideas
Strike’s CEO Jack Mallers once said during a speech that he was ultra-conservative when it comes to the base chain, but that he was happy to be a progressive fiddling on top of the Bitcoin blockchain.
This is a view that is shared by many in the community, the Bitcoin blockchain will be the settlement chain because of its overwhelming security assurances, and we can then build in a layered approach on top of it for computation. This approach has the benefit of not threatening the core protocol in case something ever goes wrong.
If you are confident in Bitcoin’s capacity to remain the most secure chain for the settlement of transactions, then you have to trust that eventually, even smart contracts will be settled on Bitcoin. It will just take time.
To my fellow plebs, I say this, rushing smart-contract capabilities to Bitcoin in order to pander to the DeFi crowd and feel “inclusive of new ideas” will not change anything in the grand scheme of things. The .eth people on Twitter have already made their choice, and you will not convince them to drop the massive financial opportunities they have with altcoins. And again, that doesn’t mean you can’t get interested or even involved with altcoins, I’m interested in the technical side of them because I want to bring the economic activity over to Bitcoin. It just means that trying to change the core ethos of Bitcoin in order to “fit” the latest narrative is dangerous, and you’ll be called out for it.
People like Muneeb focus on “keeping the #1 on CMC” and think that BTC needs to compete against other cryptos, they cannot understand that we are trying to build something that can resist government attacks. That comes with necessary trade-offs. Bitcoin is not a tech stock, we don’t need a “new” version every year.
If you truly believe in Bitcoin’s superior design, lower your time preference to accommodate for the slow pace of innovation deliberately chosen by the community. We are already winning; it’s just a matter of time. Just like Schrodinger’s cat, Bitcoin is already the settlement layer for all transactional activity, it’s just not revealed to the rest of the world yet.
Conservatism is a feature of Bitcoin at the base layer. Progressive ideas are welcomed at every other layer.
But don’t take my word for it, go down the rabbit hole:
- Play to earn/gaming? Look at ZEBEDEE on Lightning + THNDR games.
- Generating yield in a noncustodial way with your bitcoin? Look at Lightning Pool and Liquidity Ads by Blockstream.
- Smart contracts on Bitcoin? NFTs? Look at the insane progress the LNP/BP team has made on RBG over the past year.
- DeFi on Bitcoin? Look at what the Atomic finance team is doing with DLCs.
- Oracles? Check out what Suredbits are working on.
- Stablecoins? It’s coming to the Lightning Network.
These are just some examples of what is happening on top of Bitcoin. But a lot has been happening on the base chain as well. Taproot was obviously a massive upgrade in 2021, but are you familiar with BIP-119? Are you familiar with BIP-118? They will massively improve Bitcoin, and the list goes on.
The next time you come across someone claiming that they know what’s wrong with Bitcoin, either the “toxic” community or the pace of innovation, ask them if they know what I have listed above. Ask them if they understand the role that maximalists play. You can tell a lot about people’s motives by asking them simple questions.
Are these people here to sell you something or to truly make you reflect on a fundamental question for the future of Bitcoin? Are they prioritizing the present over the future? Do they understand that waiting 20 years, if we have to, for the next Bitcoin upgrade is worth it because, in the grand scheme of things, 20 years is negligible?