in his take As of Wednesday, Shinobi argued that the rise of institutional Bitcoin adoption would lead to a premature ossification of the Bitcoin protocol. Although I share his concern to an extent, I am less convinced that it is necessarily true.
Bitcoin is basically a permissionless system. Especially for protocol changes, it “only” requires users to upgrade their software. And when it comes to deploying soft forks, it takes a lot of miners to actually upgrade. (This is admittedly a simplification for the sake of brevity, but I’d say it’s still “true enough” to state it that way.)
Miners will follow economic incentives for the most part. If a protocol upgrade makes Bitcoin (say) more scalable or more private, there’s actually good reason to think that it will make Bitcoin more valuable, which means there’s good reason to think that the miner upgrade will activate
Even in an extreme scenario where a soft fork occurs through a User Activated Soft Fork (UASF) that splits the blockchain, and even in this scenario organizations prefer the non-upgraded version of the chain (this scenario ), it’s not clear to me that the non-upgraded chain will “win”.
Simply owning a lot of Bitcoin does not give you a “say” on which side of a chain split is more valuable. In the beginning, everyone gets coins on both sides. only If you are willing to buy or sell these coins (eg: “dump” coins on one side of the split to get more coins on the other side) depends on your financial weight. But that means you have to take a risk: skin in the game.
Will large organizations be willing to bet everything they own on a version of the protocol without upgrading? This is a big assumption to make.
This article is a take. The views expressed are solely those of the author and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.
