Bitcoiner maximalism

For some time now, I've been trying to formulate a good way to prioritize my development workThere are so many interesting things around Bitcoin, and it's all "#GoodForBitcoin", so I'd like to have some way to figure out which initiatives are considered more urgent or important than others.

You can approach this question from a cost perspective – "how can we drive up the price of Bitcoin?" – or from a market dominance perspective – "how do we beat all altcoins?" – but both of these approaches seem somewhat limited to me.You can try to answer the opposite: if Bitcoin gets better, they will want itMore people enjoy; so what needs to be done to get more people to use Bitcoin?Finding answers to these questions is common for sales and/or marketing professionals, and they usually usein the analysis of the "sales funnel": before becoming customers, people need to hear about the product, be interested in it, then see it somewhere on sale – and at each of these stages, the circle of potential customers is reduced; decreasing this reduction for each stage (without deterioration at any other stage) increasessales and improves your performance.

One way to look at this might beis to pay attention to what bitcoiners usually do: they buy bitcoins, set up their own wallet to independently control their funds, launch a full node and, possibly, eventually begin to make some contribution to the development of Bitcoin (be then in the form of writing code, participating in discussions, investing, or making public bets and forecasts on Twitter). The problem with this approach is that, although there are some obvious incentives for taking the first steps - increasing the value of bitcoin implies the possibility of a successful investment (at least in comparison with negative rates), while self-storage significantly reduces the risk that what the company simply hides with all the coins that you considered to be yours - after this there is a gap: if you store a hardware wallet under a mattress is cheap and simple, then full node support means constant maintenance, and what is thus a real benefit for you personally? If you look at the numbers, the steps to narrowing the sales funnel in our case are approximately the following: 8 billion, 160 million (2%), 4 million (2.5%), 50 thousand (1.25%), and, probably, 900 (1.8%); and there are no obvious levers to increase these numbers, be it 2.5% or 1.25%, so this approach seems to me not particularly useful.

Another way to answer this question might be to first identify people who regularly committransactions with bitcoins, rather than just buying and storing.The idea is that traders who are actively managing fall into this categorytheir investments in Bitcoin, entrepreneurs, those who receive their salary in Bitcoin, and so on.I have no idea how big this group is. BitPay states on its website that they are "trustedthousands of companies all over the world," which suggests that this is probably the case.So I picked a quarter of a million at random.Moving from "regular transactions" to "self-custody" is not the same as moving to "self-custody" from"Buys and holds": In the first case, it's not about installing a mobile wallet or buying a hardware wallet, but rather about opting for solutions like BTCPay or Lightning.Here I stopped at 15 thousand users based on the number of lightning nodes according to the 1ml.com website (rounded up a bit).

The advantage of this approach is that the incentives at eachstage seem clearer. You hold Bitcoin if you view it as a store of value and it fits into your investment strategy. The transition from simply holding bitcoins to actively transacting with them occurs when spending bitcoins is easier for you than money from a bank account - and it is quite obvious why the depletion rate at this stage is 99.85% and what you need to do about it. Likewise, the shift from transactions to self-custody generally occurs when the benefits of using «Bitcoin Banking» do not outweigh the costs of it: on one side of the scale are the risk of losing funds or being denied access to them, user identification procedures and privacy problems, and on the other side are the ease of setup, plus someone else takes care of the ongoing maintenance of storage equipment instead of you. I hope that the presence of such an option is a fairly good incentive for businesses (and regulators) to keep the implementation of the risks listed above at a relatively low level and for those who have not yet switched to self-storage of their funds. The transition from actively using Bitcoin to participating in its development is a rather big, but also quite natural step (at least it seems so to me). In my opinion, these levels are also consistent with business models: getting people involved in Bitcoin is primarily financial education/consulting and currency exchange services; regular transactions are directly related to banking and trading services; self-storage – these are hardware wallets, as well as solutions like BTCPay and lightning nodes; and even participation in the consensus was monetized through the ability to trade special tokens on Bitfinex and some other exchanges. (The nice thing about this approach is that self-custody for people who regularly make a lot of transactions usually means maintaining their own node, just for technical reasons, in which case the cost of maintaining the node becomes a less significant expense: you You consistently get some benefit from your transactions, which goes a long way toward justifying the small recurring cost of maintaining a full node.)

For brevity, these levels can be called as follows:«pre-coiners», «store of value», «means of payment», «personal sovereignty» and «decentralization»; Moreover, each level is connected with the previous ones and depends on them. You cannot pay for goods with money that no one values; there is no point in independently controlling money that no one except you recognizes or it is simply worth nothing; there is no point in decentralizing this money if it cannot be stolen from you and so on. There's a bit of a circularity here though: there's no point in storing value if you don't have a way to transfer it, and a big part of Bitcoin's value proposition as a store of value or settlement is that it gives you complete control over your funds. , in the absence of such a group of persons who could, at their discretion, inflate the volume of the money supply, confiscate funds or block transactions.

But what does all this mean in terms of prioritization? In my opinion, from the above, several general principles can be deduced:

• In terms of industry growth, the bestthe result would seem to be to increase the percentage shares of the top two and maintain the shares of the bottom two to get, say, a billion people owning Bitcoin and a hundred million regularly transacting, even with «only» 12 million (6% of 200 million) holders of full nodes (including those for self-hosting their lightning channels), and 750 thousand (6% of 12 million) people actively participating in the development of Bitcoin.
• With this approach, the «means of preservationcost» serves as a kind of foundation on which all other properties of Bitcoin are based, and if so, then experiments with it seem to be an extremely risky undertaking. Instead, it is probably more important to focus on working on things that strengthen the existing framework rather than on new ideas about how to change it.
• A step away from «owning Bitcoin» before«regular transactions in Bitcoin» requires perhaps the most work, in perhaps a million different areas - not only in performing actual tasks for Lightning, but also in terms of improving the user experience, and working with regulators, to avoid knee-jerk questions about money laundering, or by tax authorities to reduce the burden of reporting changes in the value of Bitcoin, as well as the deployment of point-of-sale systems and everything else.
• If we manage to attract many more people,simply owning bitcoins, and / or just more people who regularly make payment transactions with it, it will not be easy and require a lot of effort to maintain the share of users who independently store their funds or contribute to the development of the system.

So for me (as for an open source developer) this, in sum, boils down to the following:

• Number one priority is to maintainBitcoin's technical performance: try to avoid bugs, resist potential attacks (both already known and those that haven't been invented yet), maintain backward compatibility, and produce clean, working updates. Tasks in this area include monitoring, tests, code analysis, code review, etc. It also means that the development of Bitcoin itself will be relatively slow, since all the processes associated with it take time and effort.
• Priority number two, in my opinion, isLightning: it represents the best approach to payments, both for people who want to store their bitcoins on their own, and as the main payment mechanism for third-party custodians, when customers instruct them to make a payment. In this direction, much work remains to be done to improve routing, reliability, protection against spam and attacks, privacy, integration with wallets, etc. Other payment-related solutions (like BTCPay) are likely to have a significant impact.
• Next priority in my opinionthe view is preparation for growth, that is, finding more effective solutions (for example, packaging or consolidation), dynamically processing changes in the system (for example, assessing fees), developing standards to simplify interaction with new participants in the system (like psbt or miniscript) and good explanations for new users about how Bitcoin works and why it works that way (podcasts, books, scientific articles, etc.).

And in particular, I think that meansthe priority of stability over the introduction of new functions (so I recommend working first of all on analysis, review and tests and not rush with Taproot-soft fork). And with regard to new features, I am more interested in those that contribute to the development of Lightning or payments in general (so Taproot and ANYPREVOUT are quite high on my list), but growth and compatibility are also very important (so I would not ignore things like CTV).

 

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