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I feel the doom-porn about Blackrock introducing a hard-fork of Bitcoin is dismissed far too casually. We need to have far more imagination about this.

Here’s my elevator pitch for how this thriller plays out:

BTC ETFs get approved across almost every large investment institution, become massively funded as the coming bull market ensues. None allow self-custody.

A narrative-friendly hard-fork of BTC is rolled out, Proof of Stake, ESG-friendly, yadda yadda.

Western/WTF Gov’ts worldwide pass legislation that all financial institutions must convert BTC holdings to this new fork.

To backstop any disruptive market-responses, Central Banks guarantee to support the price of the new offering at par w/ BTC, even provide new inflows as they announce programs to take the new & better BTC into gov’t treasuries.

Of course, trading in old BTC is banned, and miners receive massive incentives/subsidies to support the new protocol, essentially becoming public utilities.

Retail/Service businesses of all sizes are incentivized to accept BetterBTC, led by Amazon - most banks now gladly accept it as collateral for mortgages, loans, etc.

China leads an influx of non-Western countries along this same path. BTC was a threat to them as well, and they fomo to gain influence in the new Proof of Stake BTC.

Normies throughout the richest countries of the world notice nothing other than that Gov’ts ‘solved’ BTCs problems they’d been hearing about for years, and their net worth has soared.

The maxis of today flee to their respective El Salvadors, but find that even Bukele’s successor begrudgingly adopts BetterBTC alongside BTC & $US as currency because “market forces should decide which is best”.

Maxis continue to play “Don’t Stop Believin’” over the next couple decades, waiting for the great rug-pull the new Proof of Stake BetterBTC must eventually become, but secretly harbor fears their children have come to think of them as old tin-foil crazies like the gold-hoarder generations before them.

ANYWHOOO - my only point in spinning the above narrative is that I genuinely think if you’re going to doom-porn, you should throw yourself into it wholeheartedly.

Don’t care, not selling.

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Discussion

bluethroat 2y ago

Effectively, back to the fiat standard. The need for a pow, capped supply money would remain though. Btc can't be uninvented. Let's pray for game theory to prevail 🙏

Mr.Robot 2y ago

this is a intersting scenario for an attack of the network.

Assuming some big actors (financial institution and governament of the West, in this case) decide to hard fork #Bitcoin in BetterBTC, will be initially for a blockchain where allow only transaction compliant with money laundering law. That will require to have miners on their side. Miners care about profit, and illegal transactions on BTC will probably have higher than normal fee for counterattack BetterBTC for keep miners on their side.

Western institutions will not propose immmediatly Proof of Stake changes because thats will push away Miners (they strenghts is the hardware, which doesn't matter in Proof of Stake)

Proof of Stake will also decrease network security, since most of actors know that with enough founds, you can control the network

For Western instituion there is also a bet to make: if they move large capital of BetterBTC, and BetterBTC will be less secure than #Bitcoin, they will risk to lose everything. Remember that BetterBTC will still be a cryptocurrency which can be attacked from bad actors

Other nations not aligned with the West might also decide to ignore BetterBTC and still use BTC

Of course, this is just my opinion of what might happen

Narwhal Tacos 2y ago

Great points, thank you!

I agree with you that the Proof of Stake changes would have to happen slowly. That’s a good point.

Getting miners to abandon Proof of Work for Proof of Stake would be difficult, since the miners would become unnecessary. But all the Gov’t needs to do is to get them to approve the “BetterBTC” fork…and they could create strong incentives & disincentives to do this. Maybe larger ‘fee-based’ transactions. Remember, the Gov’t doesn’t actually care about BTC. They just want to convince people that it is dead, and a new, better one has emerged. This is paramount.

Large miners are businesses, they aren’t Maxis (mostly). And the miners who are maxis will watch their revenues plummet.

I don’t believe Western institutions would actually care or worry about the transition - it would only need to be a move from traditional Bitcoin to a new Bitcoin: without miners needed to verify the transactions. They would have wonderful short-term profits (which is all they pursue anyway).

Even nodes would be shut-out, if they don’t adopt the fork.

Reward the miners for their loss of business - WHICH IS THE POINT of the new ‘BetterBTC’ token - and the majority will give in, going broke, worldwide.

And YES you’re right, Western institutions would be less secure under the new token…but they don’t have a choice if the Gov’t tells them they must adopt it.

And again, YES, many nations will probably not adopt it…but I think most will, because the largest, most influential nations will put pressure on them to do so.

I’m just trying to work this out in my mind, so I really appreciate your contributions!!