Segwit2x Post Mortem: Divorce of Crypto-Austrians and Crypto-Keynesians

The Great Divorce

The final nail in the coffin of a united community was the abandonment of the 2x hard fork earlier this week, but to be truthful, the Bitcoin community has been divided for a long time.

Economics

Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.

This is a quote from John Keynes, an economist of some renown. I bring up this quote because I believe it to be relevant to the scaling debate. The real conflict over the past several years wasn’t so much about the technical specifics, but about economics.

Crypto-Keynesians

If you think about the block size limit, it’s essentially a speed limit on money moving through Bitcoin. I define Crypto-Keynesianism as a perspective where moving money through the economy is more important than perhaps an extra level of security around the money itself.

Crypto-Austrians

I define Crypto-Austrianism as a perspective where security of sound money is the basis of Bitcoin’s utility.

The Conflict

In this light, the block size increase is really a difference of economic perspective, not only a technical one. Technically, a hard fork is riskier than a soft fork. Economically, a hard fork to enhance medium of exchange properties at a cost to the store of value property is what we’ve been arguing about all along.

Businesses vs HODLers

Businesses require revenue to survive and a limit on transactions can be deadly. Most businesses, therefore, tend to promote Crypto-Keynesian policies to encourage economic activity as more transactions clearly benefit them.

Conclusion

The Civil War is finally over. Bitcoin has had its divorce and there are now two different blockchains: Bitcoin and Bitcoin Cash. What led to this divorce are fundamentally different economic philosophies.

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Jimmy Song

Jimmy Song

Bitcoin Educator, Developer and Entrepreneur. Book: https://amzn.to/2RSlnTb PGP Fingerprint: C1D7 97BE 7D10 5291 228C D70C FAA6 17E3 2679 E455