Last week, I wrote a response to Antony Zegers’ piece about an apparent “Bitcoin Core Cargo Cult.”  Since then, Carlos Lizarraga has responded with a rebuttal to my piece.  I’m happy when people push back and take the time to address my ideas.  I wanted to take a few minutes to respond to Lizarraga and I think he gets it wrong.

I’ll go through some of his post point by point.

This is my response to the article On Antony Zegers’ “Bitcoin Core Cargo Cult”. I have enjoyed reading the article. The article mentions twice that Zegers’ arguments are a “red herring”, but I don’t see an explanation on why that is true. It’s very easy to dismiss an argument as a red herring without never explaining why.

I would hold that I did explain why Zegers was using red herrings even if it was brief.  Here is the text from my post (from the “Crytpo-Keynesians” section):

But what’s worse is that Zegers says that the “more important fundamental property is the free choice between those options.” This is a red herring. This is cheap pandering to libertarian ideals and doesn’t actually address Song’s points.

Here is my second red herring accusation, which is in the “Bitcoin Immutability” section:

Once again, Zegers defends his position with a red herring that panders to libertarian and Austrian principles of free markets:

In each of these cases, Zegers uses a red herring because he argues in a way that distracts from the actual issue.  Instead of addressing Song’s points about saving and spending, he talks about free choice.  Instead of addressing why Bitcoin’s properties should or should not be changed, he talks about relying on free markets.

Believers in a fixed block size appeal to consensus, but I argue that consensus is not a guarantee of good ideas.

Of course, consensus does not guarantee good ideas.  But the Bitcoin network could not function without consensus, so the consensus is required.  If you want to change the rules of Bitcoin, you need to change the consensus.  Otherwise, it is not possible to propagate the new rules or properties through the network that are less restrictive (like increasing the block size limit).  The nodes would reject them.

Believers in fixed block size are right in that the 1 MB hard limit is the current consensus. But they miss that they are not just spectators, but also actors in the Bitcoin ecosystem. They choose supporting the status quo just for the sake of it, and then they justify their choice by saying that it is what the majority supports. That is circular reasoning.

Lizarraga’s comment that “[t]hey choose supporting the status quo just for the sake of it” is a straw man.  I’m not aware of anyone who argues that.  Furthermore, I explicitly gave reasons why the block size should not be increased in the post that he’s rebutting.  Check out Episode 90 of our podcast where we discuss Bitcoin scaling problems and solutions with J.W. Weatherman (also linked in my previous post).

The other issue is that Lizarraga refers to “the 1 MB hard limit” that is the “current consensus.”  Because of the SegWit soft fork, blocks greater than 2 MB are able to be mined.  But whether or not Lizarraga is wrong here depends on what he’s referring to.

I also think the statement that the Lightning network seems to be a better scaling solution is a fallacy. On-chain scaling doesn’t invalidate the Lightning network. I actually think that, in the long term, scaling will be achieved by a combination of both. Lightning, on its own, cannot provide the security and censorship resistance that proof of work provides. If a Lightning transaction is the same as a transaction on the blockchain, then, why is a blockchain even needed at all? Why not just use Ripple instead?

Lizarraga is correct to say that the Lightning Network isn’t invalidated by on-chain scaling, but it is my view (along with many others) that Bitcoin should be scaled with the Lightning Network or something similar without changing any critical security parameters such as the block size limit.  This is especially true when changing those parameters doesn’t have much relative positive impact.

I’m not sure why Lizarraga says that the Lightning Network needs the proof of work behind it as if there is any disagreement with that.  The Lightning Network is a system of payment channels and routing through them.  Payment channels are nothing new in the world of Bitcoin but certain security issues had made them somewhat risky.

I acknowledge that Bitcoin is very resistant to change, and that can be both a good thing and a bad thing. It’s good because it can stop the spread of bad ideas. It’s bad because it slows innovation and adoption of Bitcoin.

I’m not sure what keeping the block size limit low especially when coupled with innovations like the Lightning Network would slow the adoption of Bitcoin.  What slows Bitcoin adoption is wasting time with altcoins that have no chance at beating Bitcoin in either network security and immutability or being adopted as sound money.

We will have to wait for more people to realize that 1 MB is just an arbitrary number and not the result of careful consideration after objective analysis.

It’s statements like these that leave me very frustrated about the state of debate about scaling problems and solutions.  I suggest that Lizarraga and anyone else who disagrees with keeping the block size limit low go back and listen to the previously mentioned Episode 90 with J.W. Weatherman.

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