It's basic incentives. If Bitcoin is expensive on the base layer, users need banks to hold it for them. This allows all the shady practices of traditional banking to continue. Bank runs are difficult because the network becomes congested and fees climb prohibitively high. Anyone who holds a lot of Bitcoin can become a bank and profit off others. Whether it's Saylor or Swan, BlackRock or Coinbase, this is their incentive.
But Bitcoin is controlled by proof of work, not proof of stake.
Miners are incentivised to maximise on chain transactions, fees x volume. If the fees prevent transactions they would rather scale the base layer.
Users are incentivised to control their own keys to prevent losing funds and having the value of their Bitcoin diluted by fractional reserve banking. They also want the lowest cost nodes, so would rather scale through permissionless scaling solutions.
The block size wars were users vs miners, users prevailed with the UASF for taproot which enabled lightning for scaling, rather than large blocks. There are limits to lightning which is becoming clear.
The next will probably be users vs bankers.
In Bitcoin, be ready to burn your heroes.
Azz
npub1wv…tjhd0
2024-04-09 02:30:24
in reply to nevent1q…ypkv
Author Public Key
npub1wvtljy7rmeeeaqat9hwxwq9g7h90ghavtgpvd2yxk400ndlrf4qsytjhd0Published at
2024-04-09 02:30:24Event JSON
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"content": "It's basic incentives. If Bitcoin is expensive on the base layer, users need banks to hold it for them. This allows all the shady practices of traditional banking to continue. Bank runs are difficult because the network becomes congested and fees climb prohibitively high. Anyone who holds a lot of Bitcoin can become a bank and profit off others. Whether it's Saylor or Swan, BlackRock or Coinbase, this is their incentive. \n\nBut Bitcoin is controlled by proof of work, not proof of stake. \n\nMiners are incentivised to maximise on chain transactions, fees x volume. If the fees prevent transactions they would rather scale the base layer. \n\nUsers are incentivised to control their own keys to prevent losing funds and having the value of their Bitcoin diluted by fractional reserve banking. They also want the lowest cost nodes, so would rather scale through permissionless scaling solutions. \n\nThe block size wars were users vs miners, users prevailed with the UASF for taproot which enabled lightning for scaling, rather than large blocks. There are limits to lightning which is becoming clear. \n\nThe next will probably be users vs bankers. \n\nIn Bitcoin, be ready to burn your heroes.\n\n\n",
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