Mike Hearn
Dec 12, 2020
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20 min read
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The philosophical origins of
Bitcoin’s civil war
I left the Bitcoin community five years
ago. My final essay explaining why —
“The resolution of the Bitcoin
experiment” — is to my great
surprise even half a decade later still
being reshared on social media every
few days and gets a steady stream of
visits. I also regularly get emails
asking me about it.
Although that was the last essay I
published on Bitcoin, it wasn’t the
last I actually wrote. The other essay
was shared with a few people privately
over the years but never made public.
There was no deep reason for this: at
the time, the New York Times had told
me they’d be publishing an article
about the ongoing events whether I
liked it or not. I didn’t know what
their article would say but did know
they’d been talking to people who had
a habit of lying about me, so I
prioritised writing and publishing The
Resolution to get my side of the story
out. Then it went viral and in the
furore that followed I figured that was
as good a place as any to draw the
line. So the second essay never got
published.
I’m releasing it now because somehow
over the years it seems to have become
more relevant rather than less. At the
time I assumed I’d eventually just
delete it, as it’s a political and
psychological analysis of an obscure
and old online dispute that most people
have never heard of. But the underlying
themes of pseudo-expertise,
intellectualist theorising vs pragmatic
experience, suppression of debate and
the “Conflict of Visions” are
highly relevant to both COVID lockdowns
and Brexit, both of which are
contemporary issues of great importance
(to me at least). Although the
conclusion at the end is bleak, I’ve
not yet been convinced by anyone that
it was wrong.
If you have no idea what the block size
debate was then please read “The
Resolution” first, otherwise nothing
written here will make any sense.
Written January 2016.
In today’s article I want to discuss
the underlying differences in politics
and philosophy that have driven Bitcoin
to the brink of collapse. Why has
something that started as an apparently
minor technical disagreement exploded
into the biggest crisis Bitcoin has
ever seen? The reason is certainly not
technical deep down, so what leads
people to act in the ways they have?
I think the answer can be found in a
book called “A conflict of visions”
by Thomas Sowell, an American academic.
This article explains Sowell’s theory
and applies it to explain the block
size debate.
On collective decision making
For some time I have been fascinated by
a disturbing phenomenon: the Bitcoin
community is full of people who hold
democracy in contempt.
A typical quote would be this one from
a man named Michael Marquardt, better
known as “theymos”:
Democracy is pretty ineffective at
making good decisions in general
Later he elaborated:
You can promote BIP 101 as an idea. You
can’t promote the actual usage of BIP
101. When the idea has consensus, then
it can be rolled out.
Bitcoin is not a democracy. Not of
miners, and not of nodes. Switching to
XT is not a vote for BIP 101 — it is
abandoning Bitcoin for a separate
network/currency.
It is good that you have the freedom to
do this. One of the great things about
Bitcoin is its lack of democracy.
His comment about what you can or
cannot promote is related to the
systematic censorship of the forums he
controls: the official Bitcoin website,
and the two biggest community forums
(on reddit and bitcointalk.org).
The censorship was triggered by the
launch of Bitcoin XT, which allowed
users and miners to vote for an
increase of the block size limit after
the Bitcoin Core developers refused to
allow such an increase. I explained
more about Bitcoin XT and the events
that led up to it in my article, “Why
is Bitcoin forking?”.
Marquardt claims to be a strident
libertarian yet not only erases any
posts that mention XT but, naturally,
any mention of competing forums and
discussion of the censorship itself. He
recently started quietly reordering
discussions where people are expressing
their anger … from being sorted by
“best” to being sorted by
“controversial”, thus preventing
the highly voted comments that
criticise him and Bitcoin Core
developers from appearing at the top.
This kind of subtle manipulation has
become endemic.
Marquardt does these things because he
doesn’t like the idea of voting, and
he is not alone. I have lost track of
how many times I’ve seen comments
from Core supporters saying that Gavin
and I have been engaged in
“populism” or whipping up “the
mob” or trying to impose a “tyranny
of the majority”.
Adam Back, CEO of Blockstream which
employs some of the Bitcoin Core
developers, told IEEE Spectrum magazine
that he thought XT was a “coup” and
gave a presentation to the Chinese
miners arguing that democracy was the
strong preying on the weak:
Someone anonymously released a program
that casts fake votes for BIP 101 such
that it could be hard to know how much
support the proposal really has. Pieter
Wuille, a Blockstream employee and one
of the few people with the ability to
directly change the Bitcoin Core code,
also opined on democracy:
If you want to let a majority decide
about economic policy of a currency, I
suggest fiat currencies. They have been
using this approach for quite a while,
I hear.
Bitcoin’s consensus rules are a
consensus system, not a democracy. Find
a solution that everyone agrees on, or
don’t.
Wuille’s statement is of course
bizarrely wrong — currencies like the
dollar or the Euro are controlled by
un-elected central bankers, who cannot
be influenced by voting. The will of
the people isn’t even measured, let
alone respected.
Even Coinbase, the leading Bitcoin
startup in Silicon Valley, was erased
from the bitcoin.org website as a
punishment for announcing support for
XT. Coinbase employee Charlie Lee said
on that discussion: “It scares me
what the Bitcoin community is turning
into. Any opinion that’s not the
party line is being stamped out.” The
Coinbase website was then forced
offline for hours by a denial of
service attack — direct retribution
for their stance.
I could keep going … but take a
moment and ponder how weird this all is.
People who grow up in the west grow up
in a culture that reveres democracy.
Every year in the UK there’s a
minute’s silence for the soldiers who
fought and died in World War 2, ‘for
our freedoms’. The story of the cold
war is told as a story of democracy vs
dictatorship. Our leaders give entire
speeches and justify entire wars on the
basis of spreading democracy. In Europe
and America democracy is widely
regarded as an idea that should be
worth dying for. Saying you hate
democracy is more socially acceptable
than saying you are sexually attracted
to 13 year olds …. but not by much.
Yet the Bitcoin community is filled
with people who believe exactly that.
What’s going on?
A conflict of visions
In 1988 Thomas Sowell published a book
that sought to explain why people end
up being political adversaries on so
many different and apparently unrelated
issues. If you hear that someone
supports strong military spending and
free markets, you can probably guess
that they’re against gender quotas
for company boards, even though these
issues have nothing to do with each
other. Sowell wanted to know why.
I’d never heard of this book before
2015. It was recommended by an
anonymous observer and at first I was
skeptical — what relevance could a
book written in 1988 have to the block
size debate? But I was intrigued enough
to buy it.
Sowell argues that political conflicts
have their roots in a difference of
deeply held intuitive assumptions about
human nature itself. These assumptions
are so deep they are rarely articulated
or discussed directly, but they lead by
logical extrapolation to a whole host
of viewpoints that colour our outlooks
on almost any political debate. He
calls these different assumptions
“visions” and describes a spectrum
between two opposing visions: the
constrained and the unconstrained.
People with the constrained vision
believe human nature is essentially
flawed and unchanging. They believe
that deep down we’re all pretty much
the same, always have been the same and
always will be the same. Individuals in
the constrained vision cannot
comprehend the whole vastness of the
world and attempting to do so is
overreaching. By implication then, the
spectrum of human potential is small:
the difference between the most
moral/intellectual people and the least
is fairly trivial.
People with the unconstrained vision
believe human nature is malleable,
perfectible and essentially good. They
believe that deep down there are big
differences between people’s moral
and intellectual potentials, and that
people at the upper end of the spectrum
are more immune to greed, dishonesty,
stupidity and corruption than people at
the lower end. Advancement to the
summit of human nature comes through
thought, reflection and debate.
Obviously almost nobody is fully
constrained or fully unconstrained and
people’s views can move around as
they progress through life. But from
this simple starting point Sowell
explains how the visions quickly lead
to a variety of other less abstract
opinions.
Because people with the constrained
vision believe everyone is pretty much
the same deep down, they conclude that
wisdom and knowledge are spread out
across the whole population. They
prefer to trust systems that gather and
process decentralised wisdom …
processes like markets, referendums and
the evolution of traditions. If these
systems sometimes result in an outcome
that seems undesirable, that’s a pity
but unavoidable unless the system can
be improved. Compromise is essential
because nobody has the full picture.
And because man’s wisdom is
inherently limited, direct intervention
often causes unexpected side effects.
By implication there are no solutions,
only tradeoffs. The value of intuitions
or ideas is low, and the value of
practical experience is high.
People with the unconstrained vision
tend to feel the opposite. They often
distrust or lose patience with large
institutions and decentralised
processes that constrain human action.
They focus on solutions and find
tradeoffs or compromises to be
unacceptable. Because human potential
is a path, by implication some people
are further along it than others and
decision making is therefore best done
by finding those people and putting
them in positions of power. Those with
the unconstrained vision often believe
in delegation of authority to powerful
people whose legitimacy is derived from
their moral purity and the complexity
of their ideas. Sowell refers to such
people as “intellectuals”.
On intellectuals
Sowell’s theory talks extensively
about the role of intellectuals, so we
must review his definition of the term:
someone whose compensation or status in
society comes from their production of
ideas. This is subtly different to the
definition of expert; Sowell
distinguishes between intellectualism
and expertise.
The existence of expertise is
uncontroversial: people with all
visions agree on the value of experts
and who they may be. The disagreements
are about intellectuals: people who are
believed to be generically smart or
good, and who often have expansive
ideas about how to restructure society.
Academics often fit Sowell’s
definition of an intellectual as they
are paid for their production of ideas
rather than, say, correctly drilled oil
wells or efficient computer programs.
Academics can be experts, but experts
are much more numerous than academics.
People with the unconstrained vision
tend to conflate expertise and wisdom,
thus they highly value intellectuals
and put significant effort into
searching them out. The opinions of
small groups of intellectuals is
weighted heavily, and obedience to
their suggestions is seen as obviously
the right thing to do, even if what
they’re saying might seem to violate
common sense. Indirect mechanisms like
voting and markets are unnecessarily
roundabout, so it’s preferable to
directly give intellectuals power.
Those with the unconstrained vision
often see a problem and conclude the
solution is a regulator: someone who
can overrule the system when the less
wise, honest or more corruptible people
that inhabit it screw things up. The
EU’s “Committee of Wise Men” is a
classic example of this mentality.
But those with the constrained vision
believe the opposite. They regard even
the existence of “intellectuals” as
a suspicious proposition, because they
don’t believe that some people are
just inherently better than others.
They see direct intervention as likely
to cause collateral damage and elevate
common sense over the abstract,
academic ideas of the ‘ivory tower
elite’. To someone with the
constrained vision, you should listen
to an expert when they speak on a topic
that’s within their narrow area of
specialism, but that doesn’t imply
the expert should be given any power.
Rather, their views should inform the
market or when that isn’t possible
for some reason (e.g. defence policy),
inform a vote.
The political spectrum
So far there seems to be a fairly
direct mapping to the political left
and right, so why are we futzing around
with this constrained/unconstrained
terminology?
Sowell does this because the typical
left/right terminology doesn’t always
map exactly to his theory, and often
the conventional mapping of an ideology
to the left/right spectrum is debatable
at best. By defining his own terms,
Sowell avoids these problems. For
instance Nazi-ism is regarded as an
extreme right wing ideology although
their policies and actions were very
similar to those of communist regimes.
To make things even more complicated,
sometimes people arrive at similar
conclusions for very different reasons.
Different visions don’t own specific
policies and you can’t always pick an
individual policy preference then find
someone’s vision from it.
But let’s try applying Sowell’s
theory to a non-Bitcoin topic and see
how it holds up: conflict.
People on the left tend to be pacifist
and consider social/welfare spending a
higher priority than spending on the
military. They are often in favour of
nuclear disarmament. People on the
right often have opposite views.
To someone with the unconstrained
vision, war is a grievous fault of
human nature: a deviation from the
natural state of things, which is
peace. War demands an explanation and a
solution. The explanation is people
lower on the moral/intellectual
spectrum. The solution is engagement,
debate and peace conferences to raise
the other side to our level. The
decreasing frequency of wars over time
on the other hand is almost too obvious
to need explaining: human nature has
got better, exactly as you would
expect. A good way to avoid war is
therefore to simply avoid weapons.
But to someone with the constrained
vision it’s not war that demands an
explanation, it’s peace. Because they
assume human nature is fixed and
unchanging, war is the natural state of
humanity. Peace is explained not by
improvements in human nature itself,
but by the creation of armies and
weapons so terrible that it would be
insane for countries to attack each
other, along with ever-greater trade
integration that makes war economically
infeasible. The solution to a conflict
is to win it, through overwhelming
military might. The best way to avoid
wars is therefore a mix of greater
defence spending and the creation of
free trade deals.
On Libertarianism
The cryptocurrency world is full of
people who claim to be libertarian
(American definition). It isn’t
immediately obvious how libertarianism
fits in with this theory. On one hand,
libertarians seem right wing: they like
small government and dislike
regulation. But on the other hand, they
tend to be against big militaries and
strict adherence to tradition.
Maybe the theory is wrong?
Or maybe libertarians arrive at some
conservative sounding conclusions by a
different path?
Imagine yourself to be someone in the
west with an extremely unconstrained
vision. You believe there are vast
differences in people’s moral and
intellectual potential … so huge that
to those at the top the people at the
bottom are little better than ants. You
believe this so deeply that it’s not
even worth mentioning, as it seems
obvious to you. What might you conclude?
You might conclude that democracy is
not a virtue but a threat, as the vast
majority of people are stupid, immoral,
easily misguided and corrupt. To put
power in their hands seems like dooming
humanity to rule by mediocrity at best,
or disastrous incompetence at worst.
But you live in a country where
democracy is revered, and there is no
chance of another system of government
taking over any time soon. To even
voice such a thought is tricky as it
risks you being labelled an extremist,
a communist or mentally ill.
And besides, who cares? It’s unclear
what would replace democracy if it was
to be removed. There are so few people
who really get it that to find them and
collect them into some sort of power
structure would be hard … and in the
quantities needed to run a state?
Impossible. So revolution would be
worthless anyway.
If democracy is the tyranny of the
majority, yet making a better State is
impossible, then obviously the only
alternative is no State at all. Hence,
extreme libertarianism or
anarcho-capitalism of the Ross Ulbricht
variety, and the use of “statist”
as an insult for the lesser beings who
somehow still don’t get it.
Visions of Bitcoin
One day, you find Bitcoin. How would
you perceive it? You might read the
forums, attend a few conferences and
conclude the following:
The goal of the project is to create a
perfect kind of money.
Perfect money is, almost by definition,
money that is designed by people at the
top of the moral/intellectual spectrum.
Such money cannot be democratic also by
definition, because democratic money
would be mediocre, and that would be
against the goals of the project.
Bitcoin wouldn’t have been created if
existing currencies weren’t mediocre,
therefore, by logical implication
existing money must be democratic (see
the reasoning above by Wuille for an
example of this). Ergo the best kind of
money is designed by the best people
and then frozen such that it can never
be changed again.
This is the meaning of decentralisation
— the abolition of power such that
nobody can wield it, once the wheels
are set in motion.
You might conclude that because Bitcoin
involves maths and because true
intellectuals would recognise the
threat posed by democracy, that Bitcoin
must be “ruled by the laws of
maths”. You might tell people that
Bitcoin is a kind of “digital
gold”, the nature of which cannot be
changed no matter how many people
demand that it be done.
In its cleverness and complexity,
Bitcoin would seem like a solution
designed and shepherded by
intellectuals … people who are not
only computer experts but morally and
ideologically pure as well. You might
begin to regard the Core Developers,
whose arcane arts you barely
comprehend, as superior beings whose
wisdom and committed libertarianism are
fundamental to the success of the
project.
Their decisions are not always
understandable but they were reached
via long and complex debates, so the
outcome must be correct. If they often
seem to reject a piece of code that
would be useful on the grounds that a
more theoretically perfect solution
might exist, this is only evidence of
their intellect and admirable
commitment to finding solutions instead
of tradeoffs.
Then one day, something terrible and
unthinkable happens. The Core
Developers disagree with each other!
They are fighting over the “block
size limit” and are splitting into
two factions! How might you perceive
this event?
One faction, led by Gavin Andresen who
was famously left in charge by Satoshi,
wants to increase the limit. Allowing
the block chain to grow seems obvious
but wait … another faction, led by
Gregory Maxwell, claims raising the
limit would be dangerous because it
would threaten decentralisation for
technical scaling reasons.
Gavin and Mike have written many blog
posts on the different arguments
involved but the posts are long and
complicated and I’m not an expert so
I don’t know who is right. I’m
suspicious that they’re bypassing the
rest of the experts and wonder if
they’re trying to manipulate the
masses somehow.
But I don’t worry. Because hard
problems always have a solution, if the
developers cannot currently agree on
one then they must engage in more
debate. With sufficient debate and
reflection a solution is always found.
Gavin, Mike and those who agree with
them are stating that the other side is
refusing to negotiate and time is
limited, but this is unthinkable
because Core Developers are amongst the
best of us and would never stop
striving to find a solution no matter
how long it takes. So the only
plausible explanation is that for some
reason Gavin and Mike are less
intellectual or moral than the others
and lack their patience.
Blockstream/Core Dev have proposed the
terribly clever sounding Lightning
Network, which they say is the final
solution to scalability and involves no
tradeoffs. This sounds ideal and it’s
frustrating that Mike and Gavin don’t
seem to be on board with this plan.
The fact that Blockstream are
organising not one but two conferences
to debate “Scaling Bitcoin” is
clear evidence that these men are of
superior intellect and temperament.
Debate, reflection and peace
conferences are always a good path
towards a solution. As us mere users
are not worthy or capable of judging
their discussions, the safest thing to
do is wait and accept the outcomes,
whatever they may be. It is
inconceivable that the conferences will
not result in a solution because the
Core Developers have the best interests
of the project at heart.
But Gavin and Mike don’t seem to care
about the conferences. They think the
conferences will go nowhere. Instead
they are proposing ….. a vote! If
only 75% of the miners support BIP 101
then it will activate and the minority
would be forced to go along with it.
This is horrible and clear evidence of
their power hungry, dictatorial
tendencies. If voting works to raise
the block size then Bitcoin’s
guarantees lie in ruins, and … gulp
… even the 21 million coin limit
isn’t safe.
The other actions taken by Bitcoin Core
supporters flow naturally from
Sowell’s theory of the unconstrained
vision. For instance, censorship is
justified because otherwise “the
mob” would be misled by “slick
marketing” (i.e. blog posts with
pictures at the top). The right
alternative to voting is
“consensus”, which means everyone
must agree for something to happen.
This is good because it means the most
intelligent people always have a veto.
Unless of course, someone is
disagreeing with a change the
Intellectuals want. In that case
consensus is optional.
And most unfortunately of all: lying is
cost-free, because the people you’re
lying to didn’t have any insight to
contribute anyway, so it doesn’t
matter if they’re misled for the
greater good.
The opposing vision
What if you’re of the constrained
vision? How might the same project and
the same events be interpreted?
The goal of Bitcoin is to create
decentralised money, where
“decentralisation” means the
spreading of control over the
population of users. This is good
because central bankers and other
regulator-type figures aren’t really
wise enough to control a system as
complex as the economy; indeed nobody
is.
The rules of Bitcoin are just common
sense and anyone can be convinced of
their merits. The 21 million coin limit
is protected by the fact that in the
end “escaping the arbitrary inflation
risk of centrally managed currencies”
is best for everyone.
The developers of Bitcoin are not
particularly important. Nobody knows
who Satoshi is and that doesn’t
matter, because his work speaks for
itself. The political beliefs or moral
purity of the developers are
irrelevant. Developers can and should
be abandoned if they stop building what
users want, as would the developers of
any commercial product.
Bitcoin is better than PayPal because
it’s open source, and so anyone can
innovate without asking permission. The
mechanism behind this is forking of
software, thus to criticise this is to
miss the point of open source and
decentralisation itself.
Bitcoin uses maths to coordinate social
decisions over the internet. The
Bitcoin white paper talks about the
block chain as “voting with CPUs”
and the community often discusses the
“51% attack” in which a dishonest
majority could break the system. So it
isn’t ruled by the laws of maths any
more than a search engine is, in fact
it can’t be, because it’s just
software that people can change any
time they want. That means Bitcoin is
actually a democracy.
The block chain is a tradeoff. It takes
anywhere between 10 minutes and hours
to confirm a transaction, and wastes a
lot of electricity on solving arbitrary
puzzles, but these downsides are worth
it to get the upsides.
The “Core Developers” are a group
that can’t even be enumerated, but
appears to be simply made up of whoever
was around early on. Whilst a few of
them are clearly experts in very narrow
fields, this doesn’t imply any wider
expertise in other areas like
economics/software usability/business,
nor any particular wisdom or intellect
— obviously it can’t, because
according to the constrained vision
nobody is much wiser than anyone else
and developers have no special
importance.
Censorship and DoS attacks are
abhorrent because they interfere with
the flow of information and the
gathering of wisdom from the whole
community.
And the interpretation of the block
size debate?
Blockstream’s position gives them
severe commercial conflicts of
interest. As knowing whether they’re
corrupted by that or not is impossible,
the traditional thing for people in
such positions to do is resign rather
than risk the credibility of the
project. But Blockstream ignore this
tradition and claim to be offended at
the mere suggestion that they may be
conflicted.
Raising the block size limit is just
common sense. The arguments for it
being a bad tradeoff are weak and the
arguments for it being a good tradeoff
are strong. Also, Gavin says it’s the
simplest thing that can work, and that
sort of practical thinking appeals to
me.
Gavin and Mike have written many blog
posts on the arguments. I like how they
take the time to explain things to us
ordinary users, this shows respect. The
Bitcoin Core developers don’t bother
writing responses, and this is
concerning. If they can’t explain
their position then this could mean it
doesn’t make sense.
It’s normal for people to disagree,
even experts. Full agreement is
impossible, so the best you can ever do
is establish a process for resolving
disagreement. A committee might work,
but as Bitcoin rests on user consent a
referendum of the users through a free
market of competing implementations is
always the ultimate option.
The Lightning Network is a completely
new design that bears no resemblance to
the Bitcoin I learned about and told
everyone else about. It is exists only
in theory, which makes it inherently
worse than an existing system that we
have practical experience with. As time
is always limited, improving what we
have is obviously better than throwing
it all out in a quest for unattainable
perfection.
The fact that Blockstream are
organising one conference that isn’t
intended to produce results, and
simultaneously organising another
conference three months later, proves
that they are academics who prefer
talking to writing code. As ideas are
cheap and practical experience is
important, this indicates that they
aren’t qualified to be running a live
payments network.
Conclusion
The Bitcoin block size war is best
understood not as a technical debate
about the setting of a number, but
rather as a fundamental conflict
triggered by differences in underlying
assumptions about human nature.
As should be obvious, the tension
between the political left
(unconstrained) and political right
(constrained) is something that has
existed for centuries, almost since the
birth of democracy itself. Now it’s
re-emerged in a different context we
can predict the outcome: the two sides
will never agree.
With the breakdown of the
blockchain’s voting mechanism due to
censorship, DoS attacks and miners
refusing to run anything except Core
because they are afraid that
‘conflict’ will lower the price,
there is no process in place to ensure
the proponents of the two visions
fairly compete over the project’s
direction.
In such an environment it is inevitable
that people with the unconstrained
vision will win because their beliefs
naturally justify wildly aggressive
tactics. Deception, censorship,
obfuscation, delaying, making the rules
up as they go along and outright
criminal attacks on people who disagree
with them can all be justified as being
necessary to ensure the right outcomes
are achieved. Their feelings of
superiority combine with severe levels
of groupthink to blind them to their
own mistakes. The howls of anger and
frustration from across the community
are ignored and written off as merely
the ‘baying of the mob’.
Finally, switching to an alt coin
won’t solve anything. The problems
are psychological and not technical, as
the owner of the ProHashing mining pool
discovered when he repeated the XT
exercise with Litecoin.
These factors lead to the conclusion
that Bitcoin-style cryptocurrency has
structural flaws that mean it cannot
ever achieve the goal of true
decentralisation (defined as the
absence of ruling authorities), because
deep down, the idea of “digital
gold” is too attractive to people who
simply don’t agree with that goal in
the first place … even if they may
claim they do.