One of the most prolific contributors to Bitcoin’s development warns that the major blockchain network is on a dark path towards global regulation.
In a blog post On Saturday, Matt Corallo said that Bitcoin’s long-assumed mission of being a private, scalable, and reliable monetary instrument is now being called into question, with years of efforts failing to implement that vision in any practical sense.
“Unfortunately, all ideas for making Bitcoin (or any cryptocurrency) actually useful for transactions tend to have some untrusted party in the flow of funds,” Corallo wrote. “We simply couldn’t create cryptocurrency payment systems without involving an (untrusted!) party.”
The end result, he predicts, will be regulatory control, a world in which government authorities are able to limit or control cryptocurrencies for their own purposes.
“I’m not saying these things aren’t great or don’t provide scalability, they often are and do,” Corallo said Decipher“but who rely on intermediaries, often of a centralized type”.
Bitcoin scaling technologies in use today, such as sidechains like Liquid or Rootstock, allow for faster and cheaper payments, but they also require users to trust a company or federation not to steal their funds. Meanwhile, adds Corallo, the most popular Lightning network has a notoriously poor user experience, requiring custodians and Lightning Service Providers (LSPs) to build front ends for practical use.
Corallo’s criticism also extends to rollup, a new form of Bitcoin scaling technology that draws inspiration from other blockchains. In fact, the developer believes that trustless scaling remains elusive for cryptocurrencies in general, as even more programmable blockchains like Ethereum have failed to crack the code.
“The point to make that this affects the entire cryptocurrency and not specifically Bitcoin is that it is not solvable with some sort of soft fork to increase expressiveness,” Corallo said Decipher. “This is not meant to judge whether or not we should do some specific soft fork to increase expressiveness, but pointing out this is largely an unrelated issue.”
Obstacles in these areas have contributed to a visible change in how Bitcoin is perceived by its users. Many new participants, Corallo wrote, are “only interested in a 21 million coin limit and view any form of non-KYC payment as inimical to the value of their investment.”
Over the past year, some of Bitcoin’s staunchest institutional supporters have completely rejected the asset’s role as a medium of exchange.
David Marcus, co-founder of Paypal and CEO of Lightspark She said in September he said that BTC is “not the currency that people will use to buy things,” saying that fiat currencies on the Lightning Network will be the preferred means of payment for the masses.
Earlier this year, executive chairman of MicroStrategy Michael Saylor has extolled Bitcoin’s role as a store of value, calling its role as a currency “a distraction” that is “controversial” with regulators.
In fact, the US government recently arrested the developers of Samourai Wallet, a Bitcoin wallet designed to facilitate private transfers via CoinJoin transactions.
Samourai’s software never took control of users’ funds, although it required a centralized server to coordinate it transaction mixinggiving it a single point of failure that regulators can target.
The repression caused a “final warning” by famous US government whistleblower Edward Snowden, which pushed developers to implement a privacy change at the Bitcoin protocol level.
According to Corallo, the cryptocurrency industry has already squandered its chance to provide regulatory protection to non-custodial crypto intermediaries by instead focusing its efforts on securities law reform.
What’s worse is the current state centralization of the mining pool it also left the underlying layer of Bitcoin “ripe for regulatory capture.”
“With the situation Bitcoin finds itself in today, it is hard not to see a bleak vision of the future,” concluded the developer. “If Bitcoiners want to preserve what we have built and fight for it, the focus must be on dramatic improvements to default wallet privacy across the ecosystem, aggressive investments in regulatory change, and functioning scalability solutions around the world .”
By Ryan Ozawa.
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