Sunday, February 5

Vitalik: Bitcoin decentralization would help it survive, but not prosper

Key facts:
  • Technical robustness and public legitimacy are essential elements in an anti-censorship cryptocurrency.

  • According to Buterin, second-layer solutions still have many limitations.

Vitalik Buterin, co-founder of Ethereum, published a thread on the social network Twitter in which he reflects on some of his opinions in previous years and took the opportunity to talk about Bitcoin and its decentralization.

According to Buterin, the decentralization of Bitcoin would not be enough for this network to emerge successfully in the face of extreme regulatory systems imposed by governments. While he did not cite examples or mention specific scenarios, the Ethereum co-founder acknowledged that Bitcoin technology is, in essence, censorship-proof.

The decentralization of Bitcoin would allow it to “survive” in an extremely hostile regulatory climate, but it could not prosper. A successful strategy to resist censorship requires a combination of technical robustness and public legitimacy.

Vitalik Buterin, co-founder of Ethereum

In the quoted tweet, Buterin notes that Bitcoin could barely survive in a very rigorous regulatory environment. However, the properties that he considers necessary to successfully overcome censorship are two of Bitcoin’s strengths. While it is fair to admit that the original cryptocurrency still has a long way to go in terms of “technical robustness and public legitimacy,” bitcoin is clearly far ahead of altcoins.

In fact, the 2021 was a key year for decentralization in Bitcoin. The Chinese veto on Bitcoin forced miners to emigrate to other latitudes, and thus distribute half of the total hashrate of this network among several countries, which remained concentrated in the Asian giant.

Regarding technological development, CriptoNoticias recently reported that Bitcoin was one of the cryptocurrency projects that has made the most progress, despite not having extraordinary financing.

Bitcoin vs regulations

It is crucial to keep in mind that the bitcoiner community includes three groups that are primarily responsible for its growth and success: its developers, its miners, and its users.

Bitcoin developers have a duty to improve the efficiency with which the network works while maintaining the libertarian philosophy that gave rise to it. The miners are the power of the network, allowing it to remain safe and active thanks to the energy provided by its hardware. Meanwhile, the users of this cryptocurrency are in charge of promoting its use and adoption, as well as ensuring that the work of the developers favors the majority and not only themselves.

It is also important to note that most of the mechanisms used by governments to regulate and even prohibit the use of Bitcoin arrive at the crossroads between this cryptocurrency and the traditional financial system. That is, in exchange houses, stock exchanges, banks, etc. Bitcoin, as Buterin himself says, has a native system resistant to censorship.

Regarding the promotion of the use of Bitcoin, the co-founder of Ethereum commented something interesting that he himself corroborated in his recent trip to Argentina. Although the adoption of cryptocurrencies is great in this country, stablecoins have a high commercial acceptance. This suggests that many people still trust traditional financial systems, even if they come disguised as blockchain.

Vitalik Buterin also talked about Ethereum and other altcoins

Buterin, logically, is someone who is in favor of the coexistence of Bitcoin with other cryptocurrencies, or altcoins, as they are known in the bitcoiner ecosystem. This idea was reinforced in her recent tweet thread.

According to the Ethereum co-founder, there are three arguments that he already estimated in 2013 and with which he still agrees, which defend the coexistence of various blockchains and cryptocurrencies that are not necessarily related to each other.

The first of these is that “different blockchains optimize the scope of different goals.” Second, “the costs of having many blockchains are low.” By this, the Ethereum co-founder meant that maintaining different blockchains that can interact with each other is not as expensive as it may seem. Although later he admits that it is much more cumbersome than he thought. Finally, according to Buterin, it is important that there is another alternative to Bitcoin, in the event that the work of the main developers is negatively affecting the network.

Despite presenting such pro-altcoin cases, Buterin acknowledges that These arguments have much less force today. However, for him, although the development of second layer solutions (such as Bitcoin’s Lightning network) may be a more efficient response than a collective of cryptocurrencies and blockchains, in his opinion, there are limitations in this type of technology than a chain main would not face.