Bitcoin Fact: Smaller blocks => Financial exclusion => Censorship

I’ll just say it. Small blockers are elitists who want to censor out Bitcoin users who cannot afford to transact on mainchain.  I’ve lost count of how many times I’ve heard the old argument that scaling onchain damages decentralization, which in turn may damage the censorship resistance of Bitcoin.

Free as in Free speech and Free beer!

Free as in Free speech and Free beer!

It is important to realize the hypocrisy in this line of reasoning.  It is subtle, so I bet most of the proponents don’t even know that they are guilty of it.

Simply put, the fee market is a form of censorship. If you cannot pay for a bullet proof car in Mexico city, then you and your family is at risk.  If you cannot afford to install a home alarm system, then you have been prevented, indirectly, from keeping your property safe from burglars.  If you cannot afford insurance, then you are at risk of a fire, or an accident etc.  Similarly, if you cannot afford to pay for the privilege of transacting when you wish in the Bitcoin network, then you must be delegated to 2nd layer networks like Lightning to do your payments. Which will have centralized payment hubs to service you and collect fees from you. How is this any different from the current banking system that we have now?  Isn’t this form of slavery to debt one of the exact reason why Bitcoin was created in the first place to solve?  Why then should Bitcoin treat those of means different from those without?  Shouldn’t all the underserved be equal in the eyes of Bitcoin?

For small blockers, it is funny to say that one is pro censorship resistance in Bitcoin, when what they are actually saying is that censorship resistance comes at a price, and for those who can pay it, then it should be the best protection that money can buy.  This comes as no surprise as the biggest purported use of Bitcoin in US is for the dark markets and drug purchases, or anywhere where you are ‘underserved’.  (which is just a euphemism some Bitcoiners use for those who engage in not-entirely-legal activities).  This lobby group seems to have a large voice in the current community, along with the folks who believe in e-gold and that Bitcoin should be a settlement network, instead of cash.  To them, a bigger block more inclusive Bitcoin (via uniformly near-zero txn fees**) is a threat to their usage model, and a perceived erosion of the magic “unicorn” quality of Bitcoin — ‘decentralization’.  It is magic, because the term has been twisted to mean something much different from what was originally intended.  A term that has been transmogrified to mean ‘more diverse operators in the network the better’ (and thus easily used to support the idea that small blocks are better to keep the diversity high) whereas initially, meant simply that ‘no central authority is required to operate’ the network.  This doesn’t mean that no central authority will ever operate it, it certainly can for a time, but there is no way that such and authority can grab the reigns of power and hold it indefinitely without the network participants allowing them to do so.  The central power (or small cabals) can always be overthrown by a majority of the network, if they so desired.  Not that I believe this will ever happen, but the fact that the system does not require a central authority is the key.  This means that power can never be forcefully held by a malicious party, so long as not more than 51% of the network is malicious and colluding.  This of course does not automatically mean that if 51% of the network is controlled by one party that they are malicious.  What this boils down to is that Bitcoin is free to move from more-centralized, to more-decentralized, to completely distributed configurations, as the market forces change and adapt in pursuit of efficiency.

So you see, some feel that making the system inclusive for everyone, damages the efficacy of this privacy system for the elites, in a tragedy of the commons kind of reasoning. So they don’t want the poor have-nots people coming into the pristine park and make a mess of the place, so will instead insist that they stay in the cordoned off area made just for them (and charge them a small fee for the trouble to boot) in the form of 2nd layer networks on top of Bitcoin which have a different set of rules and security guarantees.  Bitcoin stratification.

What they don’t realize is that this is EXACTLY the pyramid power structure that Bitcoin is trying to eliminate. Not just to simply replace the ones one top with a different set of rulers and elites.

The only way we can guarantee censorship freedom is allowing all txn fees to be set by the market without externality of an artificial limiting resource like block space, such that there will always be a miner who may choose to mine a txn no matter how low the fee.  Having no effective*** block limit allows such txns to be swept up all at once if necessary (even if it takes a while because the miner who will mine them has low network hashpower).  By not making block size a limited resource (which pushes low-end economic actors out of the system, censoring them) The system is truly open and accessible to all.  After all, isn’t that a characteristic that most people would assume a censorship-free system would have?

Yes, this means that there will be a shared cost of more storage and bandwidth use on the blockchain.  But the idea is that as more people start using Bitcoin, the incentives to fix these tractable problems increases in turn, and thus solutions will naturally emerge.  For instance solutions have already been devised to solve most of the bandwidth concerns voiced just 1 year ago.  Also, the shared cost of the storage and infrastructure can be offset by the increasing price of the asset for miners and companies in the business of providing security and services for the system.

/EOL

** Those of economic theory may find the Coase Theorem an interesting read.  (it stipulates that the pareto optimal trades are possible when transaction costs are near zero).

*** This is an ideal, there will always be some technical or theoretical limit, though the idea is that it will be high enough that most of the time the network usage won’t hit it.

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