Topic: Hypothetical ETF disaster hardfork - page 2. (Read 886 times)

I don't worry too much about it, because of the "in good faith" clause. Not that I trust them, but I trust the American claim culture enough to know it would end up in a lawsuit if they screw their customers.

I raised that same concern before, but only a few wanted to share their thoughts and opinions.

That part in BlackRock's proposal is dangerous because they, and the rest of the "ETF Cartel" composed of their fellow asset managers, could come together with a combined holding of more than 50% of the total supply in the future. I believe with such amount of the total supply, they could push their weight on the network and they might start making demands on what path of technical development Bitcoin should follow. Possibly start a hash war.

That's probably a Doomsday way of looking at the situation, but perhaps that's the right way of looking at the situation because there are bad actors everywhere.

Whoever write that is stupid. They should choose all forks which have running network and doesn't have very low exchange rate. Although rather than attempt to control the network, IMO it's more plausible they want to rip-off ETF buyers.

Who is "the Sponsor" in this?

Even if they act in good faith picking the correct chain, I'm missing details on what happens to the value in a possible Fork chain. When the BCH Fork happened, the value of the Forkcoin varied, but could have been sold for 10-20% of the Bitcoin value. If they keep that instead of sharing it with the ETF investors, it just adds to the list of reasons to keep your own keys.

To me it seems evident at this point that all the ETFs are is an attempt to control the network. They want to centralize the supply in the hands of a few actors (ETFs) which are ultimately all the same hand at play (the US government in this case) which then will proceed to attempt to fork the network for whatever agenda that is trying to be meet with that. It is literally on the documents:



So while this may be bullish for the price now, we'll see how this turns out eventually when shots start being fired.

I can imagine a scenario where there is a contentious MASF, and popular Core developers insist this is an attack on Bitcoin. Economic nodes like Coinbase could attempt a new idea called a User Rejected Soft Fork (URSF) that will invalidateblock any blocks with upgraded transactions.

While a URSF is called a soft fork, it is actually a hard fork because it breaks the heaviest chain rule. Then suppose Core officially releases a real soft fork update, without the code from the other soft fork. This is still a hard fork.

The nodes that never updated have already confirmed the blocks, so any attempt to block a soft fork with 51% hash power is always a hard fork.

BlackRock says if there is a fork, they will decide for themselves which is the real Bitcoin. So imagine one soft fork gives us global scalability and privacy, but BlackRock wants an expensive rock that does nothing. While I don’t think BlackRock could single handily crash Bitcoin’s price, they could choose the rock and adequately effect the price enough to invoke fear.

As of today...
Yellow light: I would start being concerned if one entity held 431k BTC (2.2%).
Red light: Any entity or cabal that could liquidate 1,600,000 BTC (~8% of the circulating supply) at the drop of a hat makes me think BTC is not the market to be in.
Get off the road: Any one entity that owns 6,860,500 BTC (35.01%) makes me consider BTC to be functionally centralized and a complete failure.

Reasoning:
Yellow light: Practically speaking, when should we start being concerned? I would say if any one entity owns enough BTC to fill the current open interest, that would be where I'd start being concerned. Right now that's 431,000 BTC.

Red light: When is Bitcoin potentially failing its vision? I would argue that any time any one entity owns enough BTC to cover the highest daily traded volume over the last month plus all current open interest (OI is currently around $18.3b), that is concerning. To me that seems like they could then completely collapse the market at any time. Based on where things stand right now with OI at $18.3b and the highest daily trading volume in the last month being around $50b, any single non-regulated or government entity or cabal owning 1,600,000 BTC or more makes this an extremely serious concern and makes me question if Bitcoin is failing. That's around 8% of circulating supply.

I would be slightly less concerned if ownership was in the hands of entities that can only survive and thrive if BTC keeps running strong.
I will say non-governmental regulated entities that are unable to practically divest their full supply of BTC at will would be less concerning.
Government actors possessing 431k BTC or more seems contrary to the purpose of BTC. I'm torn on whether government possession of BTC that is slated for sale as part of forfeiture for illegal cabals should be included or not, but lean toward "probably".

When we're done: I think the obvious starting point is 50.001% circulating supply is clearly too much to be in the hands of any one entity, that would give practical market control, since selling that much quickly would completely crash the market, liquidate speculators, etc. and refusing to sell that much freezes the majority of the market based on the decisions of one entity. That is completely centralized at that point.

If we take the assumption that 30% of BTC is functionally lost, then we'd have to bring that number down to 35.001% of circulating supply could theoretically have practical control of the market.

What's the threshold for Bitcoin to start becoming "that scenario"? How much of the total circulating supply must be in the vaults of a cabal of banksters/asset managers before we could say that Bitcoin is failing?

I have asked the same question before and made a topic about it, but it never had a direct answer, with most of the replies were dodging the issue.

I'm not sure how anyone could write laws that force bitcoin developers/miners to do rollback plans or anything else. The jurisdictional nightmare of trying to force compliance would make the point moot. I'm pretty sure if a any city/state/country tried, Argentina and maybe other countries would come out with a law that made it illegal to comply...

What type of control would they want to gain? It might be beneficial to examine gold's history, as both BTC and gold share some economic attributes. Gold has always been legal to mine and own, but there was a time when it was illegal to own and mine BTC. Then, buying gold became legal, while mining was restricted and heavily regulated.

While I haven't worked for any government or held a position of high authority, I can make a safe guess about what most governments have in common:

-They want to monitor your every move, including everything related to money.
-They aim to keep you as busy as possible, making life difficult and ensuring you stay at work or in transit for as long as possible, essentially keeping you financially restrained.
-They seek to increase the labor force, possibly pushing for more people to work. This could explain certain societal shifts(feminism and shit), and the emphasis on everyone working, even at a young age.

So, how does BTC impact any of that? BTC doesn't make everyone rich; it's only a handful of early adopters who were fortunate to accumulate BTC at a low cost. The number of people who would become wealthy from simply investing in BTC won't be large enough to disrupt any government. Therefore, BTC is unlikely to significantly impact points two and three above.

Is BTC private? No, it's not. Governments understand that, and the public ledger is a valuable asset for them. What they fear is the use of privacy tools that make tracking more expensive and potentially impossible. Hence, efforts to take down privacy enhancement tools and potential future requirements for users to KYC outside of exchanges, possibly even for wallet usage, all wallets need to impose KYC or be deemed illegal.

When that time comes, what do governments expect from their citizens, or what should we expect? The majority of people will comply because they are in BTC for wealth, have no issue with KYC, and are willing to share information with the government if required. The minority valuing privacy will be treated as outlaws and potentially terrorists.

It will become a matter of who gives up first. I recall a childhood memory when people woke up to a new law declaring firearms illegal. They had 7 days to turn in their guns or face serious consequences. Most complied, standing in line to surrender their firearms while expressing frustration at the government's decision  . However, a minority held onto their weapons unlawfully for 15 years. The government eventually changed the laws, requiring a firearms permit or an offer to buy those firearms at a premium. Buying guns remained illegal for citizens, but those who didn't hand in their weapons 15 years ago were not pursued unless a gun was found under their car seat for example. Laws changed, but people are still the same, the strong ones still have their weapons at home and the government can't do shit about it, or they have sold them to the government at a very high price (I recall they paid a few years worth of average salary for small arms like pistols), the weak gained nothing and probably most of them are already dead shaming themselves under the dust.

Governments have deep pockets and long reach, but they don't possess God's power. If they decide something, it doesn't necessarily mean it must happen. Sometimes, a small group of brave citizens can bring down an entire regime. Bitcoin might face a similar fate; the weak will comply, and the strong will resist until they end up in jail or forcefully secure their right to privacy and anonymity, so ya, it's going to be a long interesting journey for everybody onboard.

In addition to Synchronice, even if we assume that governments do not share interests, each one can take it over for their people. The communist party of China forbade using Bitcoin. US followed by funding surveillance programs and is a matter of time until trading peer-to-peer or using bitcoin outside a KYC exchange becomes forbidden too. EU, same. Sure, Bitcoin isn't "destroyed", but governments have developed effective measures to control it.

You can name any of them you wish, US, EU, China. They have a common interest that unites them all, governments want monopoly in every country. Look at governments like a group of criminals. In every country, there is a group of criminals that can ruin any rule they want but still get protected by police. Governments and their big (under shadow) supporters want to launder money back and forth, to avoid paying taxes and to control their citizens. So, when these people from the US/EU/China, etc, see that Bitcoin and some altcoins give possibility to average Joe to do things without their involvement, they start to unite for one major thing, to trace transactions and make things visible for them. In the end, they all have their own interest and that might lead to decentralization again but that decentralization will not be a decentralization for average Joe because each government in every country already restricts average Joe. The task just moved on another level.

Of course they will gain full control over BTC I give it under 32 years.

But I have often been wrong.

@Synchonice is not wrong. If governments and financial institutions have their way they will own it instead of destroy it because underneath all those disguises they know what Bitcoin really is and what it could still be and they're too greedy to destroy something like that. But since they can't own it and control it the best course of action is to fight it.

But just like you pointed out, no single government can claim it even if an entity could claim ownership of Bitcoin (I don't know how possible that is). Everybody wants it. China wants it, The U.S. wants it, Europe wants it, and the biggest banks and other financial institutions want it, so who is going to be in control of it and own it since they can't all own and control it?
They're so busy fighting each other on relatively smaller things, what do we think will happen when they all try to acquire something as grande as Bitcoin?

Vitalik hyped a centralized shitcoin that abandoned it's one USP ("code is law") the instant it was convenient for the rich creators. You can't compare that to Bitcoin.

Even if ETFs hold 99% of all Bitcoins in the future, I expect several competing ETFs to all have a fair share. Just like several mining pools have a large share of the market.

We'll get Bitcoin ETF (BTF), and normal real Bitcoin. One will be fully centralized and regulated, and one will be Bitcoin.

Which governments and financial institutions? US? China? EU? BRICS? Bank of Japan? JP Morgan? HSBC? They'll all have their own interests, which will lead to decentralization again.

I think that there will not be any devastating disaster. They might try to test their power and influence but it doesn't mean they'll ruin the things if they are not 100% sure and even if they ruin, they'll be the only losers because Bitcoin is not the universal cryptocurrency, there are some other altcoins that can carry the weight that Bitcoin carries on their shoulders. For example, Monero. I bet this coin is going to become what people wanted Bitcoin to be.

To be honest, I think that the strategy of governments and financial institutes is to not destroy Bitcoin but to take it over. Imagine, the development of blockchain analysis companies will give them the possibility to track transactions easily. What's the next step? To push miners to accept regulations and confirm transactions according to the blockchain analysis firms, i.e. it will get censored and miners will reject transactions that BA companies don't want to be made. This will easily be possible, just build another hype about how Lazarus launders billions of dollars and how all the war and illegality is funded via Bitcoin, people will believe it and there won't be massive protest (but they'll happily use JP Morgan).

So, there is no necessity of disaster hard forks or something devastating. Just take it over, keep it in the corner like cat keeps mouse and that's all. They won't do anything dramatically terrible because there are billions of investments into Bitcoin, there is a huge sum of money made, they act very smart. They shout Massive Adoption, bring regulations and people are happy.

Agree. For this reason, in my posts before I clarified that there has something more to happen for this attack to succeed: the community becoming indifferent about the "values" of Bitcoin. And then, if the "top influencer club" moves slowly away from Bitcoin's original values it could become an attack vector.

Isn't really what I wrote about. I believe the Blockstream-Bitcoin model (paying devs to maintain an open-source software project essential to the company's business model) is similar to the Google-Linux model for example and thus completely legit. I only mentioned it because it shows that a company can definitely afford to pay high-profile Bitcoin devs - the "top influencer club". And I wanted to emphasize that if something similar happens with a company with values not entirely compatible with Bitcoin's, and additionally the community not caring about these values anymore (because all they want is BTC going to moon ...) then it could become dangerous.

With your last sentence I agree though.

I don't see it that way. Without real authority over Bitcoin, popular devs are just members of the top influencer club. And their values must align with the values of Bitcoin. Otherwise it would be like running for president of the US while wearing a North Korean flag pin. I think if devs want to stay popular, they do what the community has committed to their values.

As I understand it, the Blockstream conspiracy is about the Bitcoin Cash community being butthurt about the Bilderberg Group aquiring a company (supposedly) soley dedicated to Bitcoin. And they are going completely insane and claiming that Bitcoin is now somehow being taken over because they already had a conspiracy theory about Bilderberg and this new conspiracy theory about BTC, which builds on top of the first conspiracy theory about Bilderberg, somehow proves the first theory and therefore also proves the second one.


I mean the amount of effort it would take to attack Bitcoin is much different than the amount of effort it would take to attack some random unpopular altcoin (based on a clone btc blockchain). And even then, the damage would be reversible.

The more decentralized something is, the more secure it becomes.

Some Bitcoin Core devs are already on payrolls of Bitcoin service providers (Blockstream being probably the most well-known example). When we talk about developer influence on the public opinion in the community, then quality -- i.e. that these devs are "respected voices" -- is also more important than quantity. I believe from the current Bitcoin Core team nobody would agree to a rollback. But it's perfectly possible that a group of new developers in the coming years gain influence who don't consider immutability as that important anymore. If some of these devs are perceived as "the voice of Bitcoin", like people like Greg Maxwell today, then a handful of them could be actually quite dangerous.

Just to be clear: I don't consider such an attack likely, only possible. I think there's a high likelihood that we'll never see such an attack. But the community should be aware of the danger (see also my answer to HeRetiK below).

There isn't such a "number" or "limit". All decentralized systems can eventually degenerate. Bitcoin has however fortunately a quite good balance between powers, so the probability of a successful attack is much lower than it was in Ethereum where the rollback finally occured quite fastly.

I agree, fortunately in the present and probably in the coming years such an attack seems highly unlikely.

I think however that this may change in the future if certain developments materialize, like a growing dependance on centralized providers (be it ETF operators or our good ol' exchanges, doesn't matter) and possibly if the connection to the cypherpunk movement and other groups which were essential for highlighting and defending Bitcoin's qualities like censorship resistance is lost. Thus the community should be aware of these dangers.

There's an (imo erroneous) belief that Bitcoin due to its current qualities, or software-related characteristics, is completely immune to such attacks. Bitcoin is a social system, and thus can be deeply changed and harmed if changes in the social composition of the community and its "values" change the way people perceive what Bitcoin should be. The Overton window thus could change in the future. I honestly was myself a bit shocked as a highly respected member of the German subforum once wrote here that he considers a rollback scenario quite likely (I hope he was wrong there).

In general I'm optimistic though.

True, but fortunately the Overton window for making a Bitcoin blockchain rollback acceptable seems far, far away.

I'm not even sure what kind of apocalyptic financial loss event it would take to nudge the community's openness towards a rollback in the slightest. Even with Ethereum it took something the scale of the DAO hack; and even then it wasn't entirely uncontroversial and would have had a good chance of failure if it weren't for Ethereum's heavily centralized leadership.