BlackRock is caught in the eye of a storm from the Bitcoin community after it let out a suspicious line in a three minute Bitcoin explainer.
In the video, the narrator describes one of BItcoin’s core aspects, its 21 million fixed supply, as a hard-coded rule. Yet a subtle disclaimer at the bottom caught Bitcoiners’ attention.
“There is no guarantee that Bitcoin’s 21 million supply cap will not be changed,” read the subtitle.
Bitcoiners baulked.
“Is BlackRock already coming up with a way to implement a hard fork increasing the Bitcoin cap?” asked one Bitcoiner.
“Very spooky,” said another.
BlackRock’s video raised questions among Bitcoiners about whether the line is a warning from the company, and if it plans on eventually exerting some of its influence to change specific features of the protocol.
The company now manages more than 524,000 Bitcoin worth $53 billion via its Bitcoin exchange-traded fund, according to Dune Analytics.
A new conflict over the protocol’s rules brings up PTSD in the Bitcoin community. That’s because of a battle over the rules that took place between 2015 and 2017.
During the Bitcoin Blocksize War, a consortium of companies — exchanges and miners — fought over the amount of data that could be included in a block and control of the protocol’s rules.
Ultimately, ‘small blockers,’ or advocates to keep blocks small won.
Sacrosanct
Bitcoin’s capped supply is sacrosanct to its community.
Advocates say this makes it a better money than traditional nation-state currencies. The hard cap protects Bitcoin from debasement, and is said to be a hedge against inflation – although it hasn’t lived up to that claim yet.
Removing the fixed supply has the potential to destroy Bitcoin. That’s because its fixed supply is a feature of its design.
Security budget
There are people who say Bitcoin’s hard cap needs to be raised, however.
Miners – the computers that secure Bitcoin’s network – need to be paid enough to keep running their operations.
Right now, they get paid in two ways: from newly issued Bitcoin, and from transaction fees.
However, by design, block rewards are programmed to be cut in half every four years. The concern is what happens when block rewards get too small. Will transaction fees be enough to keep miners running?
“Large sustainable fees aren’t happening, the 1 MB limit has to go,” Bitcoin developer Nikita Zhavoronkov said earlier this year.
Others pushed back.
The future of Bitcoin’s so-called security budget — the mechanism, and amount paid to miners to continue securing the network — “is a Schrödinger’s cat,” said Jameson Lopp, CTO of crypto custodian Casa.
People are operating under philosophical, and not provable, assumptions, he said.
“The best way to fend off a security budget crisis is to continue furthering adoption on all fronts.”
Pedro Solimano is a Markets Correspondent at DL News. Got a tip? Email him at psolimano@dlnews.com.
