Opinion Does the BitCoin Governance System Need a Rehaul?

Does the BitCoin Governance System Need a Rehaul?

May 7, 2016

regulationThe turbulent period brought about by Craig Wright’s revelation that he is, in fact, Satoshi Nakamoto, the creator of the BitCoin digital currency is by no means over. As he steps away from the limelight by backing away from his statement that he will provide additional claims that would verify his identity, some are wondering whether or not the BitCoin system can overcome situations like this.

This is reflected in the fact that the cryptocurrency governance system is currently struggling to assert itself. While BitCoin is evolving and trying to meet a constantly growing demand, the structure put in place to govern it seem to be lacking the capacity to keep up. Of course, the highest level of the BitCoin structures are no strangers to conflicts and severe differences in opinion but the latest situation once against showed the lines of division.

When Wright came out with his claims, several high-profile members of the community came out to support him, but when he declared a week later that he will not provide any additional evidence, the atmosphere became tenser. Wright did not retract his claims that he is Satoshi Nakamoto, but he did apologize to the expert who had believed him. For many, this was seen as a proof that he is not the creator while others argue that he might be simply leaving the spotlight and returning the network to a state of a leaderless system.

This is enforced by the notion that BitCoin so far did not need any caretaker figure to be active and keep on growing. However, as it aspires to make its place in the domain of traditional banks and financial institution, where governance is one of the most developed and safeguarded domains, the question of BitCoin’s top management remains valid.

The same network is run in a substantially different manner, where complete decentralization of a P2P system uses internal validation and verification of transaction. It operates with no third-party influence and does not demand any nationally-issue documents for anyone to join in.

While these are the exact reasons why so many people are attracted to it, some argue that an overhaul of the rules is needed. Here are the key factors in the same BitCoin governance discussion.

A Need for a Figurehead

In many ways, BitCoin is very different compared to other systems, but this is especially prominent when it comes to the idea of having a creator. By residing on the hashing power of the computers in its network, the BitCoin is a network of redundant nodes, which means that a failure of a single point will not impact the functioning levels of the network. The hashing computers are more and more located inside of mining pools, which produce new BTC blocks as a reward for their actions.

This way, they continue to operate, even though the cost of mining new BTC is constantly rising, just as the network was initially designed. So far, the network has been without an actual person or persons who made it, but also without any clear figurehead or leader. However, in practice, there are some who have more say in the community and those who are seen as having a potential to impact any issue.

A Turbulent Line of Succession

When Nakamoto stepped away from the scene in 2011, he handed control of the software that runs BitCoin to Gavin Andresen. Later, Andresen shared the same access with other people and when Wright stepped out, he supported his claims. This resulted in other developers revoking his so-called commit access which leads to a repository of BTC rules that are shared between the top echelons of relevant players in the network. It appears that the same access will not be reinstated, which can be interpreted as Andresen’s removal from power.

A similar thing happened in January 2016 when Mike Hearn, one of the lead developers in the network, stepped down thanks to an ongoing power struggle. He, as well as Andresen, proposed in an increase in the size of the individual block while others opposed this. When he relinquished control, Hearn said that BitCoin turned into a system that was supposed to be decentralized, but is in fact controlled by a small number of people.

For those on the lower levels of the BitCoin network, as well as for those who are thinking about entering the same domain, one of the most pressing issues is the question who is in control. Some of these might be regular users who simply want to use BTC to engage in BitCoin gambling, but the dilemma is equally important to them as it is for new developers and miners.

Overcoming Internal Conflict

2016 has been so far an exceedingly good period to the BitCoin community. The fears of a new crash are constantly diminishing as more nations begin to adopt legislation that will recognize BTC. Developers are rapidly expanding their projects both in BitCoin itself but also when it comes to other blockchain technology solutions. However, the ongoing internal conflict is providing many with a source of worry.

Any structure, no matter how decentralized, has to be managed using solid rules and transparent governance system. Electronic ventures are not an exception to this rule, which is why, for example, E-Sports have their regulatory bodies and the Internet has its set of rules that is safeguarded by a multitude of organizations. The BTC network demands the elements inside of its structure and this is the only way how BitCoin can retain its value and continue to grow.

Since it started working, the network did exceedingly well in this domain in spite of having many factions with different agendas. In spite of this, all of them were in agreement that BitCoin should grow like Satoshi Nakamoto imagined it. Years passed and there was no need for a regulatory overhaul, but now, the block size debate and the Wright’s appearance showed the deep divisions in the top layer of the BitCoin community.

Now, the network will have to evolve further and decided how it desires to instate and empower its own leaders. Whatever the decision might be, it should follow the basic premises of the network and be built on transparency and independence from any third party influence. Hammering out an agreement of this will not easy but it still needs to be done. Hopefully, the resolution of the mentioned issues will be perceived as an opportunity for this process and seized by the leaders in the BitCoin community.