I have spent the last couple of days listening over and over a presentation by Craig Wright, the man whom the BBC claimed, citing secret proof, to be Satoshi Nakamoto, the creator of Bitcoin in his presentation at the Future of Bitcoin conference last week in Arnhem, Netherlands.
It was interesting to see how Wright tore into segregated witness and lightning – the two key technologies that Bitcoin core developers see as the future of Bitcoin scaling – and praised the work on Bitcoin Unlimited for, as its name suggests, larger block sizes. In other words, to use the western developers vs chinese miners analogy, the man who many believe is Satoshi Nakamoto sided very much with the Chinese miners. Incidentally, he threatened to sue anyone who says he is a fraud though and reiterated it many times in his presentation so I shall not make any claim one way or the other on that point.
The Q&A was fun especially how he answered a question on why he used the “monkier”‘ (to use his mispronunciation of moniker) of Satoshi Nakamoto because one of people who brought him up was Japanese and his love of the cooperative culture.
After talking about an unlimited block size and pouring expletive-filled scorn on the Core developers and Luke-Jr in particular he told the audience that you’re with us or against us.
Well, that ultimatum undoubtedly made the decision much easier for many.
The full, expletive-filled video is on YouTube for all to listen to and judge for themselves.
There are many points I like about Wright’s presentation and love him or loathe him, it was fun to listen to. However, there are two points that I cannot disagree with more.
To solve the scaling problem, Wright advocated on-chain scaling – giant blocks which would need $20,000 computers with Intel Xeon Phi coprocessors and petabytes of storage to do the block verification in time for the next block. Core developers have warned that the network would split if big blocks were introduced hastily as it could take more than the ten-minutes between blocks to verify the last big block.
He had quite rude words for people who were not willing to invest $20,000 in a Xeon Phi to help secure the network too. This is what the Chinese miners want – centralisation and control – and is the opposite of how the Core developers have mapped out – first SegWit to fix the transaction malleability bug (which Wright now claims is a useful feature and not a bug) and get a small effective size increase as a side effect, then off-chain scaling via Lightning. Wright argued that anything that makes the network smaller makes it vulnerable and he put it that Bitcoin can only succeed when it is too big for anyone to ignore, even the largest countries who will have to behave fiscally when people can choose to use Bitcoin instead of their national currency, which is a good point one must admit.
Wright declared war on SegWit and said he would set up a non-SegWit pool with around 20% of the hashrate and reject SegWit transactions. At the very least this means that SegWit transactions may be confirmed slower than conventional ones though he said that depending on how the miners decide, the pool might reject blocks with SegWit entirely, an act that would lead to a hard fork of Bitcoin into two different coins. Which in my humble opinion is what the Chinese seem to be trying to do all along first with Bitcoin Unlimited and now the secret development of Bitcoin1.
He postulated that SegWit was pointless as a scaling exercise. SegWit, or segregated witness, segregates the witness, the signature part of a transaction, which can later be discarded after the block is confirmed by the network. However those in the big block camp have argued that the signatures need to be kept for legal reasons which makes segregating them pointless as they have to be kept anyway and doing so separately only increases the total demand on storage.
My own argument to that point is why do they need to be kept? To be proven in a court of law that payment was made? I thought the entire point of Bitcoin was that it was cash good without having to trust centralised institutions such as central banks, government or even courts and rather just trust in the consensus of the network. At the very least the fact that a SegWit Bitcoin transaction happened would mean that at the time the majority of nodes were in consensus that all the criteria had been met even of the signature had been discarded. Even then, even if SegWit is an untrustable legal mess that cannot be upheld in court, there is nothing stopping users who do not trust SegWit from using regular Bitcoin transactions (called Pay to Public Key Hash / P2PKH) instead and simply pay more for the privilege.
I also wonder if the man who is reported to be Satoshi Nakamoto even understands Lightning. He said that lightning cannot work because of the number of hops involved in the network (80) and said that Bitcoin’s mining nodes were not susceptible to sybil attacks (an attack that relies on forged network nodes) because they are on average just three nodes apart. I wonder if he who was outed as Satoshi Nakamoto even listening to the original presentation by Joseph Poon on Lightning who was deliberating if it should be three or five hops between users.
“Lightning does not work because no one spends that way. I do not go over to Waitrose (a supermarket) and ask them to take a bag of carrots and give me money. Bi-directional models do not work,” he said.
Either he does not understand lightning or he does not understand lightning.
Lightning is a channel-based system whereby only the net settlement of the channel is broadcast to the Bitcoin network for inclusion into the blockchain. Channels can remain open for days, weeks or even months. In the original presentation Poon talked about 10 billion using Bitcoin every day and only closing the channel once every six months. Most of us end users can use Lightning in bidirectional mode to save on mining fees but merchants do not have to.
Yes, a merchant could choose to pay its suppliers or workers via Lightning and change the value in the net settlement, but there is no reason that the merchant can simply choose to use that Lightning channel as a one-way channel for accepting payments and have more frequent channel closures. There is nothing forcing them to pay their suppliers via Lightning though it would be cheaper for them to do and reduce the workload on the Bitcoin blockchain, but they are free to simply receive via Lightning. Supermarkets will need to pay someone and they can pay it via lightning, but that does not mean the model does not work.
For something that does not work, the Lightning community blog recently published a list of Lightning apps that are already live on the Bitcoin and LItecoin test networks. One of which is a Lightning tip bot that is integrated into slack where you can instantly tip users small amounts of money for something nice they said. In the example they tipped 50 satoshi (0.00000050 BTC, 0.13 cents), something that is impossible with Bitcoin today as the transaction fee alone is now over a dollar.
I doubt Craig Wright’s presentation changed many minds about the future of Bitcoin. Stating that you are either with us or against us only has urged more people to take sides. But the date of 1 August for the BIP-148 User Activated Soft Fork to force through SegWit is rapidly approaching. The future of Bitcoin may well be decided then. Has Satoshi Nakamoto fired the custodians of Bitcoin who have kept the network alive and well for eight years and will he take back control helped by his corporate backers? Or will the future of Bitcoin remain true to the model of open source development collaboration and engineering principles and continue with Core?
It is increasingly likely that come 1 August Bitcoin will split into Core and Bitcoin1 networks and coins. The question is which will be the main one left standing a few months later when the dust settles?