It’s a massive problem that Bitcoin is facing today. The Bitcoin blockchain cannot support thousands of transactions per second like Visa or Mastercard do without technology like the lightning network.
Just like our forests and Oceans cannot be exploited indefinitely, the blockchain is a finite resource. Bitcoin blocks cannot be bloated and hold all the transactions that some people wants in it without consequences.
The tragedy of the common is when individual actors spoil a common resource in their self-interest. In political terms, this is commonly called “kicking the can down the road.”
This is exactly the situation we are facing in Bitcoin.
Let’s have a look at what history, science and neuroscience can to tell us on the current Bitcoin crisis.
Humans Arrival to Australia
History is littered with example of humans totally mismanaging their shared resources. It was 50 000 years ago, that we totally decimated the megafauna of Australia as we first set foot on it.
Within a few centuries of our arrival, unseen creatures like the Diprotodon, a giant wombat that could weight up to 6000lbs, a three meters high bird called the Dromornis and dozens of other giant species had all disappeared.
This exact scenario played out again 12 000 years ago, when we first colonized America using the temporary dried out Bering Strait.
Within a few centuries, all the horses that were once native to the continent had all been decimated. We had to wait the arrival of european 10 000 years later to see horses on the continent again.
Mammoths and giant ground sloths were also some of the numerous species that were made instinct from human colonizing the virgin American Continent
The Fertile Crescent and Easter Island.
Even more recently, the fertile crescent in the middle east was once the cradle of civilization. It’s the over grazing and the poor management of the land that turn this once luxurious area into an arid desert.
There’s many more example like this one. Easter Island in the pacific ocean was once a green and fertile island but was turned into a desert by it’s inhabitant.
Every single tree was cut down and today, the only thing that is left, are the statues that remind us how societies can be blind and careless with their resources.
Scientific Denial or Plain Stupidity?
Our thinking has proven itself utterly wrong in the past concerning very simple problems.
There is undeniable proofs that the earth is getting warmer, yet some people just dismissed it thinking that all those scientific study are hoax and that we’ll find some sort of magical solution in the future.
Who are the biggest global warming deniers? They are not the nobel prize winners or acclaimed thinkers of our time but the CEO of energy company… how could it be otherwise? Tragedy of the common at his best.
Over Fishing and Water Polution
We started hunting whales massively starting in 1800’s. By the early 1900’s, we had factory boat decimating whale populations all around the globe.
In 1985, all the big whale hunting countries had to come to an agreement to stop the hunt because it was clear that there would be none left soon. Today many whales species are still at critically low number.
Water pollution is also a very real problem. We are dumping in the ocean and other water bodies tons of polluants. It’s easy to think that one person won’t affect much the total balance of the oceans but because everyone is thinking the same, the accumulated pollution is devastating. This is a cataclysm.
Bitcoin and The Tragedy Of The Common
Our brain hasn’t changed in 100 000 years since we were living in small bands of hunter gatherers but we have to deal with ever more complex problems.
All those examples show that we are really bad at evalutating how we can transform our shared resource by our actions.
Some people want to follow the same mistaken path for Bitcoin today and assume that future generations will find a solution to the bloated Blockchain problem. We are effectively kicking the can down the road and this has proven a very regrettable path to follow in the past.
Some businesses in the Bitcoin industry want to increase the blocksize limit to a point where all of THEIR transactions can go through at zero or very low fees. Then at this point, all would be fine.
But what is likely to happen? Everyone will want to have THEIR transaction on the blockchain and we’ll be back to point zero where fees would increase because it’s impossible to have an infinite amount of demand on the blockchain at zero fee.
It’s the tragedy of the common at his best. Why would people not put junk on the blockchain knowing that they won’t have to pay for it.
Short Term Price Increase VS Long Term Sustainability
That would probably boost adoption in the short term, more businesses would want to use the Bitcoin blockchain because of it’s low fee. But we would have soon completely destroyed the usefulness of the blockchain.
No independent nodes operator could support this humongous bitcoin blockchain. Only big data centre could support such blocks. We would have to rely on google or Amazon running Bitcoin for us. Then we would be back to a centralized system.
But why can’t we all agree on a path forward?
The Reason We Think Differently is Biologic
The neuroscientist Robert Spolsky in his book “Behave” explain the differences between the brain of different people and shows interesting data on liberal vs conservative way of thinking.
Conservative are shown to have bigger amygdlia which regulate fear and agressivity responses.
Liberal on the other hand, have a bigger anterior cingulate cortex (ACC) which is in the frontal cortex (where we do the important thinking)
Conservative Thinking VS Liberal Thinking
Conservative people tend to make surface judgment without thinking about deeper consequences. Liberal people tend to come to the same early conclusion, but then refine their judgments through causation and consequences.
Conservative thinking: The earth is too big and there’s no way we can affect the ecosystem.
Liberal thinking: Yes the earth is really big but if we don’t affect the earth, why have we made so many animal species instinc? Certainly we must have an impact. And what about the CO2 level in the air that increased dramatically over the last 100 years. What about the melting of the ice caps?
Those differences in thinking seems to be driven by biological differences in the brain. So this could explain why some people still believe today that the earth is flat or that the government spray chemical in the air with airplanes…
One ray of hope is that the brain is very plastic and can be biologically modified at any age. The study also doesn’t show which one came first, the thinking or the brain shape.
Bitcoin for The Next Generation
We need to keep our blockchain clean so in 10-15 years from now, it is still censorship resistant and future generations can benefit from it.
Is it our brain shape that forbid us to see the proper consequences of our acts? Is it just how humans are as a species and we just cannot imagine the consequences further in the future?
We all want Bitcoin to be worth 1 Million dollars, but some people seem to be unwilling or unable to to wait a few years for the second layer technology to be created.
Cutting down the Amazonian forest is a great way to boost the economy in the short term but how long before there’s not a tree left?
They’d rater jeopardise the blockchain of future generation so they can profit today…
Well let me ask you something: How are the fertile crescent farmers, the whales fishermen and the fur mommoth trader doing today?
I don’t want to be saying this about bitcoin in 10 years from now because we weren’t responsible. Let’s avoid the tragedy of the common and manage Bitcoin for the future generations.
Many people support 2 layer solutions, even many of those who support Bitcoin Cash. I am one such person. So are people like Rick Falkvinge, Roger Ver, etc. Bitcoin Cash supports 2 layer solutions.
I support Bitcoin Cash because it keeps bitcoin about being censorship-resistant money for everyone, not a settlement layer. I want financial sovereignty and liberty for everyone, not this settlement layer stuff that Blockstream has been pushing. Bitcoin Cash also gets us away from Core/Blockstream, who either openly support total and outright censorship of anyone who disagrees with them, or they don’t speak up about it. Bitcoin Cash also avoids segwit, which is permanent and unnecessary, and changes the nature of what bitcoin is. Bitcoin Cash is also better because 2 layer solutions like the Lightning Network will actually run better on it, and at the same time, allows the developers more time to perfect it. Overall, I like the people involved with or neutral to Bitcoin Cash much more than I do the people who only support Bitcoin Core. People like Gavin Andresen, Roger Ver, Rick Falkvinge, Vitalik Buterin, Bruce Fenton, etc. etc., all seem more intelligent and forward thinking than Greg Maxwell, Theymos, Luke Jr, etc. etc.
Your article is out of touch with the situation as a whole. There are many rational, forward thinking people who support Bitcoin Cash and/or bigger blocks. There are also many extremely selfish, shortsighted people who support Bitcoin Core. It’s a false picture you’ve created.
Hello Alex, I’m new to Cryptocurrency. Wondering if it is still a good time to invest in this type of currency? Right now, it seems like some kind of political and tactical market pressure is trying to bring down the momentum generated in this cryptocurrency world. Top Banker like James Dimon and savvy investor like Mark Cuban seems to be a bit skeptical regarding Bitcoin. At the same time… a lot of believers is backing this futuristic concept.
Before Investing, I have few silly questions in my mind. Here we go…
1, Is it legal for US citizens to invest and trade Bitcoins or another type of Cryptocurrency by using coinbase.com or other Platform?
(a) When you exchange Cryptocurrency for Cryptocurrency. Cash is not involved. But still, your initial investment is by Cash. Are there any IRS forms one has to fill?
2, Is it legally possible to convert Bitcoin/Cryptocurrency to Cash in the US?
3, Do you think currency’s like Bitcoin and other Cryptocurrency can get approval from Central Bank?
4, If Governments & Banks wants to launch their own centralized version of cryptocurrency. How will it affect Bitcoin and other decentralized cryptocurrencies?
5, Finally, what kind of wallet do you recommend to store Cryptocurrency? Is it possible to use one Wallet for all the currency?
Kindly let me know your thoughts. Thank you!
Alexandre Fortin says
1.IF coinbase is available in your state, it is most likely legal. You might want to talk with your CPA when it comes to reporting it on your tax return at the end of the year.
2. yes it is legally possible. Depending on which state you live in, coinbase could be your best bet. you can also use localbitcoins.com
3. They don’t need approval from Central Banks. This is the idea of Bitcoin, to undermine the power of central bank, so i don’t think they would embrace it. On the other hand, Governement around the world are embracing it. Central bank might become an artefact of our old financial system very soon.
4. it wont affect it because Bitcoin’s promise is a pseudonymous, decentralized, permissionless and cencorship resistant method of payment. Bank might create a water down version but it’s never gonna compete in my opinion. Bank will become less relevant with time.
5.Yes, you can use Jaax or mycelium, both are great phone wallet. I would suggest using a trezor or ledger for more important amount.
Dear Mr.Alexandre! Many thanks for taking your time to answer my questions. I wish you all the success.Thank you!
Hi Alex! What about top 5 cryptocurrencies to invest in 2018? What is your opinion? the most undervalued projects. Thank you!
Hello Alex, Is it possible to use Trezor to store any cryptocurrency? Thanks
Alexandre Fortin says
There’s a limited amount of Crypto you can store on a trezor. Currently Bitcoin, ethereum, Zcash and Litecoin.
Thank you Alex!
Md Jamal Molla says
Thank you for sharing it’s great