Earlier this year, when Tesla added Bitcoin to its balance sheet, CEO Elon Musk became an instant hero in the cryptocurrency’s community. Then he started tweeting about Dogecoin — which is a parody of the whole thing — and started to go from hero to troll. Then last week, Tesla announced that it would no longer accept Bitcoin as a payment because to energy consumption, making the heel-turn complete.
But a statement he made on Saturday night about Dogecoin really picked open an old Bitcoin scab.
That comment might seem innocuous enough: What’s not to like about faster and cheaper transactions? But it actually struck right to the heart of an old fight within the Bitcoin world about how the currency would scale. From 2015 through 2017, the Bitcoin world was almost torn into two by competing visions for the currency.
One group — the small blockers — argued that Bitcoin must be a decentralized store of value, even if that meant high fees and slow transaction times. Another group, which had more corporate backing at the time, wanted Bitcoin to evolve into a platform for fast and cheap payments. Their vision was to expand the size of each Bitcoin block, allowing more space for transactions, which in theory would also lower the fees paid to miners.
The small block contingent argued that there were better ways to scale Bitcoin for payments (using so-called Layer 2 solutions) and that by adding more payments directly to the chain itself, it would become cost prohibitive for individuals to run a full node to monitor the network, thus sacrificing decentralization. After all, if you’re willing to sacrifice decentralization for speed, we have great tools already for that, like the credit card network or PayPal.
Ultimately the small blockers won, and the big blockers broke away and launched Bitcoin Cash, which has largely languished over the last 3 years.
With his Saturday tweet, Musk immediately revived a fight that had been dormant for a long time.
Jihan Wu, the former CEO of the Bitcoin chip mining company Bitmain, who at the time was one of the leading Big Block advocates and a force behind Bitcoin Cash, sprang into action with a series of tweets on the subject.
Other Bitcoiners took to Twitter to attack Musk’s seemingly dated contribution to the crypto scaling debate.
The crypto world runs on memes. Already Bitcoin has been treading water, with much of the fascination migrating towards memecoins or "DeFi” which has been more active on ETH and other competing chains. With Bitcoin well off its recent highs, Musk's revival of the blocksize fight is just another annoyance for the community.
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May 17, 2021 at 12:05AM
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Elon Musk Just Reopened an Old Wound in the Bitcoin World - Bloomberg
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